Why AB257 Could Be Life Changing For California’s Fast Food Workers

Born in California, fast food is a truly American institution. It suits working peoples’ hectic schedules and is a cultural and dietary fixture thanks to decades of advertising. Yet many of the costs of fast food are externalized, such as the climate footprint of animal agriculture, the health consequences of frequent consumption and the low wages and tough working conditions faced by grill cooks and cashiers.

Supporters of AB257, California’s FAST Recovery Act, hope to address that issue of worker exploitation through groundbreaking new legislation. The FAST Act would establish a council of fast food employees, worker advocates, franchisors, franchisees and public officials that would set wages and workplace standards for the industry and protect workers from retaliation. AB257 has already been approved by both houses of the California State Legislature and on Labor Day, Monday September 5th, 2022, was signed into law by Governor Gavin Newsom, stating “Today’s action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry.”

Over 500,000 California workers across more than 30,000 worksites would benefit from the law. California’s current minimum wage is $15 and is set to increase by 50 cents on Jan. 1. The FAST Act council would start setting hourly wages at $22 an hour and increase in sync with the consumer price index, or up to 3.5% a year. The bill covers fast food chains with 100 or more locations nationally. Worker advocacy groups such as the California AFL-CIO and Fight For $15 have been organizing on such issues for years and in June 2022, workers at over 300 fast food restaurants walked out to show support for the legislation.

AB257 has drawn stiff opposition from fast food companies. “It’s this solution in search of a problem that doesn’t exist,” said Matt Haller, chief executive of the International Franchise Association, which represents some 1,200 franchise brands such as McDonald’s, Wendy’s, and Papa John’s. “Obviously, we think it’s problematic on many, many fronts,” said Paul Brown, chief executive of Dunkin’ and Arby’s owner Inspire Brands Inc.

Chipotle, Yum Brands, Chick-fil-A Inc., In-N-Out Burgers, Jack In The Box and Burger King have spent more than $1 million to lobby lawmakers against the bill and the International Franchise Association has spent $615,000. And Inspire Brands recently bragged “We were successful in our advocacy efforts to remove the Raise the Wage Act, which would have increased the federal minimum wage to $15 and eliminated the tip credit” in a 2021 letter sent to frachisees regarding the defeated national living wage legislation. Meanwhile, the company has among the highest number of employees relying on food stamps. McDonald’s is likewise ranked among the top 5 employers with workers relying on SNAP assistance. On the other hand, the CEO of McDonald’s took home $20 million in compensation in 2021. The company approved over $3.4 billion in share buybacks to investors since March 2020, an average of $865 million in buybacks per quarter over the last 5 years that could have instead been invested in higher wages and job training.

The industry may also be concerned that the FAST Act will have implications beyond California. The state accounts for 14% of U.S. restaurant sales and is the birthplace of modern fast food culture, as Eric Schlosser documented in Fast Food Nation.

But slinging fast food it is not an easy job. Fast food cooks had the highest Covid-19 mortality rates, particularly among Latinx workers. Over 87% of fast food workers are injured on the job at least once a year and 90% report having been forced to work off the clock, denied breaks or refused overtime pay. At least 12% have been assaulted on the job and a 2016 survey documented that 40% of women in the sector experienced sexual harassment. 85% of California fast food workers have experienced wage theft, with one Fight For $15 activist personally documenting over $150,000 in stolen wages over the past decade. And in what amounts to massive subsidies to fast food company shareholders, two thirds of California fast food workers were either on public assistance or had a family member who was, with nearly 1 in 3 on SNAP due to food insecurity, amounting to $4 Billion in statewide expenditures and $1.2 Billion in Los Angeles County alone.

According to a 2021 survey, over 80% of workers at McDonald’s, Wendy’s, Burger King, Arby’s, Sonic and Taco Bell earned below $15 an hour, averaging under $26,000 a year. To put this in context, the individual living wage in California, prior to the current inflationary era, was at least $19.41 or $40,371 a year. To afford a modest 2 bedroom apartment in California, you would need to earn at least $39.01 an hour. Nearly 7 in 10 fast food workers in Los Angeles are women and 90% are people of color, a stark example of racial capitalism.

And while fast food wages have recently crept up as employers attempt to attract workers back to service jobs, over half of inflationary pressures can be linked back to corporate profits, not higher wages. Wall Street has experienced its highest profits in almost 75 years, particularly in highly consolidated industries such as oil and gas, container shipping, meat and poultry, commodity grains, as well as consumer packaged goods and grocery retail as conglomerates raised consumer prices above and beyond their rates of cost increases. Meanwhile, the labor share of the national income has declined, worker raises are not keeping pace with profit-driven price inflation and bankers are betting that the Fed’s interest rate hikes will “help push up the unemployment rate”. This is par for the course: if wages had kept up with American workers’ enormous productivity since 1975, the minimum wage would be $21.50 an hour. If the minimum wage had kept up with Wall Street bonuses, it would be $44 an hour.

Or as the late Barbara Ehrenreich put it in Nickel and Dimed, “We can hardly pride ourselves on being the world’s preeminent democracy, after all, if the large numbers of citizens spend half their waking hours in what amounts, in plain terms, to a dictatorship.”

It is no wonder then that over 70% of Americans support unions, the highest level since 1965. There has been vocal public support for high profile union campaigns at Amazon
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, Starbuck
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s, Appl
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e and Trader Joe’s. But what AB257 also does is add another tool in the toolbox for workers and living wage advocates: sectoral bargaining.

Sectoral bargaining is when workers bargain with multiple employers in order to set standards across an industry, not just at the enterprise level. This is especially important considering the gaps in U.S. labor law that allow employers to coerce and manipulate employees during union campaigns, fire organizers and even close facilities. Sectoral bargaining enables the benefits of unionization to be shared by all workers in the sector, such as well-documented higher wages, better benefits, better and safer working conditions, protection from retaliation, and elimination of gender and racial pay gaps.

Sectoral bargaining is even more important for workers in fissured industries such as franchises, or the sectors that are not covered by labor law, such as independent contractors, agriculture workers and domestic workers who are majority women, people of color and immigrant. Sectoral bargaining also prevents a race to the bottom, where unionized workplaces have to compete with non-union shops with lower wages, leveling the playing field for owners and management as well as workers.

And sectoral bargaining is quite widespread around the world, from Argentina and South Africa to Germany and Norway. There is historic precedence in the U.S., such as the wage boards of the pre-WW1 Progressive Era, as well as various initiatives during the New Deal, including the National Industrial Recovery Act. And even in the present day, deep in the heart of Houston, Texas’ Harris County, an “Essential Workers Board” has been created to give workers a voice in issues that affect them on the job.

It is no wonder then that the fast food industry is up in arms over AB257. When you have had the privilege of unilateral decision making and profit-taking for so long, steps towards equality surely feel like oppression. Then again, if your business is dependent on poverty wages to survive, maybe it’s time for a new business model.

As Barbara Ehrenreich wrote in Nickel and Dimed, “When someone works for less pay than she can live on — when, for example, she goes hungry so that you can eat more cheaply and conveniently — then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life. The ‘working poor,’ as they are approvingly termed, are in fact the major philanthropists of our society. They neglect their own children so that the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect; they endure privation so that inflation will be low and stock prices high. To be a member of the working poor is to be an anonymous donor, a nameless benefactor, to everyone else.”

AB257 is a positive move towards normalizing living wages, dignity and worker power in a hugely popular and profitable industry, and one good step towards paying down society’s debt to fast food workers.