By Jo Mathis
Legal News
Dozens of people fighting for a minimum wage hike to $15 were arrested at a Detroit McDonald’s recently. The protesters are part of a “Fight for $15” campaign organized by labor unions. Jo Mathis of The Legal News talked to Cliff Hammond, senior attorney at Nemeth Law, P.C. in Detroit—which counsels clients in management labor and employment law— about the issue.
Mathis: What are your thoughts on the “Fight for $15″ campaign? Will their tactics get them what they want?
Hammond: Labor groups have poured millions of dollars into the Fight for $15 campaign over the course of the last several years, struggling to get a foothold, but the issue is nothing new. It’s an ongoing battle for more money and benefits and a continuation of how unions and employers have dealt with each other for decades. Sometimes unions are successful, other times they are either unsuccessful or so successful that the company is not as competitive, or worse — the company fails.
The “Fight for $15” campaign is not about fast-food workers. It’s really about raising the minimum wage for all workers. But the key to this campaign is its emphasis on fast-food restaurants because they are everywhere. To make a statement about low wages and income disparity, fast-food restaurants are probably the most visible place to do so. There are national chains with huge name recognition that make millions of dollars — and everyone knows their employees do not make a lot of money.
While the campaign may appear to have an unreasonably high goal and is targeting an industry with low margins, it’s important to remember that Seattle just passed a $15 an hour minimum wage. Further, the President is calling for a $9 per hour national minimum wage at the same time Michigan and several other states are enacting minimum wage hikes of their own.
All of this is on the heels of the high profile Occupy movement. The Fight for 15 campaign is part of a national multimillion dollar effort financed and organized by unions and other social activists attempting to capitalize on perceived income inequality to drive up wages and vilify profitable companies who do not pay their employees high wages. Ultimately, either companies will decide it is better for business to give in and hope customers will choose their product by paying their employees more — even if it means less profit or potential business failure — or it will be up to state, local, and federal governments to change minimum wage laws.
Mathis: What is the source of the cause?
Hammond: It’s not from fast-food workers. It is coming almost exclusively from unions and activists. While it appears more fast food workers are joining in, organized labor is bankrolling this. These types of broad based actions are part of the union’s goal to make themselves more relevant, more public, and more visible than they have been. Union membership has dramatically decreased; one of the newest goals of organized labor is to change its emphasis and cast a wider net to include those who are not in a union but are interested in these types of social causes. The ability to attract people who may not have known or been interested in unions is the objective of this campaign — to show that unions are involved in larger causes. The ultimate goal is the same though: attract more members by increasing density and influence to affect change.
Mathis: Do you represent workers engaged in the fight?
Hammond: No. While I represented employees in the past as an attorney for a labor union, I now exclusively represent employers who are dealing with unprecedented changes placed on them by the enactment and rollout of the Affordable Care Act (known as Obamacare), stricter and shifting enforcement of federal regulations, and laws on such issues as wages, workplace rights, overtime, and leaves of absence.
Mathis: The restaurant industry says it operates on thin margins as it is, and that higher wages would lead to steeper prices. Is $15 an hour realistic?
Hammond: Sure, it’s as realistic as any number, such as $20 or $100 per hour. If the minimum wage increases across the board to $15 per hour, we can expect the market will change to accommodate $15 an hour. Stores will close, small businesses will be put in a very difficult position to force change, and owners will be looking to see if they can cut jobs, buy technology to replace workers, or outsource work somewhere cheaper. But some will survive and time will move on.
If only fast-food workers’ wages go up, that may be great for the employees whose restaurants don’t close. However, the cost of a Big Mac may go up 60 percent while customers’ wages stayed the same. So the higher cost food may not be an option for the customer who doesn’t work for a fast-food restaurant, but goes there on her lunch break from the big box retail store or small office, where she hasn’t seen a raise in years. Those who frequent fast-food restaurants will most likely see more of their income distributed to the employees at that restaurant. At the same time, it’s safe to say wealthy one-percenters won’t be significantly impacted by the change in the price of their favorite fast-food product, but they most likely will move their investment dollars to other companies.
Because the fast-food restaurant is still in business to make money and most fast-food restaurants are owned by independent franchise owners, they will continue to look for ways to make a profit and keep the doors open. Accordingly, we can expect prices at the restaurants to go up for two reasons: 1) to make up for the cost of the increased wages and; 2) for the loss of business associated with customers choosing not to pay for the higher wage. In addition, we could also see prices go up in other stores. For example, a store across the street from a fast-food restaurant that almost doubled its employees’ wages will at least be tempted to raise the prices of what it sells. The cost of managers will most likely go up too. There is a good chance employees in other businesses will tell their bosses the stress of their jobs don’t match their wages anymore, and perhaps they will get a job at the fast food restaurant unless they get a raise.
Mathis: Some say the market should drive wages. Your thoughts?
Hammond: Of course the market should drive wages. If wages are artificially raised for a large group without a curb on the cost of products, then the cost will inevitably catch up. Employees in lower skilled professions are more interchangeable and that helps keep the cost of labor and the product down.
Mathis: With Michigan an “at will” state, should employees worry that higher wages would lead to more lay-offs?
Hammond: Employees should worry about whether employers will look to technology to eliminate their positions or outsource their jobs to another community, state or country unless their jobs are highly skilled or competitive. If fast food restaurants are paying $15 per hour while everyone else is at $8.10 per hour, employees can expect competition for those jobs to increase. If you are a poor performer, have attendance issues, or have issues with the boss, there will be more employees looking to take your job.
Mathis: What’s next for the cause?
Hammond: I anticipate more large scale public demonstrations and pressure on corporations and politicians to increase minimum wages for low-wage earners. The only way to advance the cause is to engage in a public discourse that brings enough attention to force companies to make the changes on their own due to customer backlash and demand, or through political action
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