An Increase in the Minimum Wage Strengthens the Economy for All

Striking fast food workers demonstrate for higher wages in Milwaukee, WI, May 15, 2014.Striking fast-food workers demonstrate for higher wages in Milwaukee, Wisconsin, May 15, 2014. (Photo: Joe Brusky / Flickr)

The battle for a higher minimum wage, led primarily by fast food workers, has become one of the biggest labor stories in the United States in decades. A new book from one of the organizers involved in that struggle shows how victories were won and makes the case that higher wages can revitalize the US economy. The Fight for $15 offers tools and inspiration for anyone interested in making change happen in our lifetimes. Order this inspiring book today with a donation to Truthout!

The following is a Truthout interview with David Rolf, union organizer and author of The Fight for $15.

Mark Karlin: How does the nationwide Fight for $15 as a minimum wage represent the importance of grassroots activity and tenacity in achieving social and economic justice goals, particularly in terms of advocates taking the lead in compelling politicians to take action?

David Rolf: November 2012 marked the beginning of a new movement of underpaid workers in a particularly infamous industry — fast food. New York Communities for Change and SEIU, along with a host of other community, civil rights, labor, and religious organizations, supported some two hundred workers in walking off the job. Two hundred is a tiny number in a city of 8 million people, but still newsworthy because it was the first labor protest by fast-food workers within living memory. Then, in the summer of 2013, with support from SEIU and union workers in other industries, the first coordinated national fast-food strikes ignited in cities all around the country: Seattle, New York, St. Louis, Detroit, Harrisburg, Milwaukee, Chicago, Flint, Kansas City — 60 cities in all. Over the next two years after the 2013 strikes, a broader call for $15 emerged, as fast food and other low-wage workers protested in hundreds of cities around the globe.

In a country that had seen fewer strikes in the past 20 years combined than in a single year at the height of labor’s power (1952) — this was huge news. These weren’t traditional strikes, in that none of the workers had a union, and they weren’t protesting against a single employer or an illegal labor practice. They were striking against poverty wages and an entire low-wage industry.

The strikes coincided with the 50th anniversary of the March on Washington. An editorial in The New York Times drew a connection between the civil rights and minimum wage movements, saying that, “The marchers had it right 50 years ago. The fast-food strikers have it right today.” In the wake of the massive protests over the racially linked police killings in 2014 and 2015, demands for a $15 hourly wage have increasingly linked the struggles for fair pay and civil rights. Grassroots energy in both areas is sparking change for marginalized citizens around issues that deeply affect their lives. Home health aide and fast-food worker Ebony Hughes, who is African American and makes $7.50 an hour at both of her jobs, told The New York Times that, “I feel like the Fight for 15 and the Black Lives Matter movement is connected. Most of the people who are fighting for 15, they look like me.”

The critical element in the success of the Fight for $15 has been workers stepping into the streets and the public limelight, showing the nation that even some of the most poorly paid and disrespected segments of the American workforce have the strength and self-respect to demand better for themselves and their families. Fast-food workers went on strike, held mayoral debates, and organized boycotts, marches, weeks of action, street demonstrations, and attendance at city hall forums, public debates, and town halls. These workers effectively focused public attention on the fact that no one can live with dignity on the minimum wage in the post-recession era.

Ultimately, the workers built the power that transformed the national conversation.

David Rolf. (Photo: Nichael Maine)David Rolf. (Photo: Nichael Maine)

Can you describe a bit about the successful campaign in Seattle, in which you played a role, and how that set an important precedent for moving the effort to establish a $15 minimum wage into the national political debate?

We knew we were operating in a changed public opinion environment post-Occupy, when income inequality and wage stagnation finally took their place among the principal moral issues of our time. After 40 years of stagnant and declining wages, people had had enough. In Seattle in 2014, the political expression of the low-wage worker movement became a demand on the candidates running for mayor and city council to support a $15 minimum wage. This bold demand captured the imagination of the Seattle public, and soon the candidates were vying with one another to express their support for $15 in the strongest terms. It would be only a year from the first Seattle strike in May 2013, to a unanimous city council vote to raise the wage to $15 an hour in June 2014 — with the support of 74 percent of the public.

How did the impossible become the standard that mayors and governors around the nation are rushing to emulate?

The victory in Seattle lifted wages for 100,000 people, far more than just about any union leader could ever hope to do at the bargaining table. And over ten years, it will transfer $3 billion in income from corporations to the workers who help make those businesses profitable.

Why has the fast-food industry been such a focal point in the Fight for $15?

The fast-food industry is notorious for employing millions of Americans at poverty wages. Many of the largest low-wage employers in the nation are fast-food companies, including McDonald’s and Yum! Brands (the operator of fast-food chains such as Pizza Hut, KFC, and Taco Bell). And it’s not just low wages that make fast-food companies the target of workers’ ire — it’s s high profitability (as well as serving unhealthy food). Annual earnings in the fast-food industry are well below the income needed for self-sufficiency, and fast-food industry jobs are also much less likely than other jobs to provide health benefits.

But it’s not that fast food companies can’t afford to pay better wages — their profits, cash holdings, and dividends have not only rebounded but are now substantially higher than before the 2007 recession. Fast Food CEOs are among the country’s most highly compensated individuals, while fast food workers are the lowest paid. Subway President Fred DeLuca, for instance, has an estimated net worth of $3 billion. For McDonald’s, the company’s profit, after wages are paid, works out to $18,200 per employee — more than most McDonald’s workers make in a year.

Fast food also has a uniquely difficult business structure for workers to achieve better wages and working conditions. Franchising is also the dominant model in fast food, unlike in most other industries. The modern franchising model was created by blender salesman Ray Kroc, founder of McDonald’s, to maximize corporate profit by distancing the company from risk and reducing overhead costs while still drawing a fixed percentage of the revenues from each restaurant. And most fast-food workers can’t easily join a union, because they don’t work directly for their parent company, such as McDonald’s or Subway. Instead, they work for individual franchise owners, ensuring that each individual fast-food outlet would have to organize and win union recognition separately. So there’s not one central employer to bargain with, as in a traditional union campaign.

But there was a way around this (intentional) barrier. The fast food strikes that began in August 2013 marked the beginning of a new form of unionism, in which a movement of underpaid workers in one service industry — fast food — received support from workers in other service industries through SEIU.

In Chapter 7, “But Won’t the Sky Fall?,” what are some of your counter arguments to corporate opponents of raising the minimum wage?

We’ve had 40 years of wage stagnation in the US, in which wages shrank for the bottom 50 percent and flatlined for the bottom 90 percent — even as the nation has gotten richer and more productive. We’ve created more wealth in the past 30 years than the rest of human of human history combined. But half of Americans make less than $17 an hour.

What we’ve been told about how to create a prosperous economy, i.e., trickle-down economics, has been proven incorrect. The free market hasn’t done a very good job “figuring out” how to pay workers enough. If it was solely up to the market, the people with the least power would be paid pennies … or less. There’s a reason people fought and died for basic labor laws in the 1800 and 1900s. People decide what markets should do — they are not a force of nature. Over 80 percent of fast-food and similar low-wage service jobs are held by adults, people with bills to pay and families to feed. Now is the time when we must decide to do better than the “minimum.”

Some specific myths that are repetitively raised against higher minimum wages:

Myth: Higher minimum wages inevitably cost us jobs.

Facts: Minimum wage increases have no negative effect on employment as shown in independent studies from economists across the country. Some studies even show job gains. But the net impact on jobs when you look at all of the studies is centered on zero. When workers make more money, they respond by being more productive in their jobs and are less likely to leave, reducing turnover costs. This puts money in business’ pockets, and workers also then have more money to spend in the local economy. In addition, research shows that businesses generally deal with minimum wage increases by finding efficiencies in their business practices or slightly increasing prices if they have to, not cutting jobs. Of course: because they need staff to make their businesses run!

Myth: $15 is bad for the economy.

Fact: New research from University of California economists shows that, unlike small wage increases, a $15 minimum wage generates billions in new consumer spending, which offsets the higher costs to businesses and grows the economy while reducing reliance on taxpayer-supported government benefits. Low wages are contributing to dragging our economy down — growing the economy relies in part on better wages. When families can afford the basics, they can reinvest in their communities, and higher wages means a broader consumer base for businesses. We have almost 100 years of evidence to support these facts: Since 1938, the federal minimum wage has been increased 22 times, and for more than 75 years, real GDP per capita has steadily increased, even in years when the federal minimum wage has been raised.

Myth: The minimum wage is a “starter wage” mostly earned by teenagers.

Facts: Because of the decimation of our economy during the past 40 years, and particularly after the Great Recession, the minimum wage is now mostly earned by adults. And not necessarily young adults, either: The average minimum wage earner is 35 years old. The vast majority (over 80 percent) of fast-food and similar low wage service jobs (<$9.24/hr) are held by adults. A quarter are adults over 40. Another quarter are moms raising kids.

Myth: $15 is too high.

Facts: Approximately 42 percent of the US workforce now makes less than $15 per hour, as wages have eroded over the past 40 years. Today, the gap between productivity and compensation for the typical worker is larger than at any time since World War II. If wages had been indexed to productivity since 1968, the minimum wage would now be $21.72 an hour. Productivity grew eight times faster than typical worker compensation. If minimum-wage workers received only half of the productivity gains over the period, the federal minimum would be $15.34.

And the minimum wage isn’t earned only by people working at fast food restaurants and in service industry work — the average income for positions like nursing assistants, preschool teachers and paramedics are all under $15. Americans also don’t believe that $15 an hour is an exorbitant wage: 63 percent of Americans favor raising the minimum wage to $15 by 2020, including a majority of Americans living in states that voted for Republican Mitt Romney in 2012. A September 2015 poll found that, by a 3-1 margin, voters are more likely to support political candidates who favor raising the minimum wage. As Republican pollster Frank Luntz explained to the Council of State Chambers of Commerce, “If you’re fighting against a minimum wage increase, you’re fighting an uphill battle, because most Americans, even most Republicans, are okay with raising the minimum wage.”