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Fat Profits, But Lean Wages: Workers To Protest At McDonalds Shareholder Meeting

  • Fight for $15 Vows Biggest-Ever Protest at McDonald’s Shareholder Meeting
Mcdonalds fight for 15 strike

Fight for 15 strike in 2015

As Fast-Food Giant’s Profits Grow, 10,000 Workers to Flood Company HQ, Demand Higher Pay So They Don’t Have to Rely on Food Stamps

Strike for $15, Union Rights by Chicago-Area Fast-Food Workers to Kick Off Two Days of Protest

Oak Brook, Ill. – McDonald’s cooks and cashiers announced Thursday that thousands of underpaid workers fighting for $15/hour and union rights nationwide will converge in the Chicago area next week to wage the largest-ever protests to hit the fast-food giant’s annual shareholder meeting.

Fast-food workers across Chicago and its suburbs will kick off two days of protests by walking off their jobs Wednesday morning, followed in the afternoon by a massive march of a record 10,000 fast-food, home care, child care, and other underpaid workers on the company’s Oak Brook, Ill. headquarters. The protesters will argue it is wrong for a company whose stock just hit an all-time high to pay wages so low that its workers are compelled to rely on public assistance to scrape by.

McDonald’s profits in the first quarter rose 35%, propelled largely by the company’s move to serve breakfast all day, prompting the New York Times to argue in an editorial, “Fat Profits, but Lean Wages,” that it’s time for the company to share its good fortune with its workers.

“McDonald’s sales are going through the roof, but my children have to live with their grandparents because I can’t afford to keep a roof over our heads as long as my paycheck is stuck at minimum wage,” said George McCray, a McDonald’s worker from Chicago, Ill., who is paid $8.25/hour. “We’ve been working hard to make new changes like the All-Day Breakfast a success and have helped make the company billions, but our wages haven’t budged. How much longer will McDonald’s workers have to wait before the company’s success benefits us too?”

On Thursday morning, thousands of workers will take their demand for $15/hour and union rights directly to the company’s shareholder meeting. Underpaid workers from across the service sector – joined by McDonald’s workers from five countries spanning three continents – will demand that McDonald’s use its global economic footprint to lift up working families across the economy rather than hold them down. They’ll argue that McDonald’s is driving a race to the bottom that is hurting workers across the service economy.

Rob Mercier, a low wage worker from New Hampshire, will be one of those speaking out at the McDonalds shareholder meeting next week.

“I worked for McDonald’s for more than two years, struggling to pay bills and unable to afford to buy basic items like diapers and bottles for my newborn son at the time, said Rob Mercier, a member of the Fight for $15 in New Hampshire and a line cook at 5 Guys earning $9.00 an hour. “I worked long hours, picked up shifts, and worked overnight because my pay was too low, and when raises came around I was rewarded with a measly ten cents. That was a slap in the face. McDonald’s is the largest fast-food restaurant in the world and it’s time they do more than lead the fast-food industry by profits and start to lead by lifting up struggling families like mine.”

McDonalds low wages are not only hurting fast food workers they are driving down wages for workers all across the country in their race to the bottom.

“This isn’t just about fast-food workers or McDonald’s workers – McWages are holding us all back,” said Vicki Treadwell, a Milwaukee home care worker who is paid just $10.75/hour after 25 years on the job. “As long as McDonald’s fails to pay fair wages and rips off taxpayers, moms like me will have to turn to food pantries to feed our families. With its record profits, McDonald’s can choose to lift up all workers and the economy.”

While McDonald’s sales have soared in recent months, exceeding analysts’ expectations, and the fast-food giant’s stock hit a record high in May, the company’s low wages cost taxpayers an average of $1.2 billion every year in public assistance. This low-wage model drains revenue that could be used to support the country’s home care, child care and public education systems.

“Even though I educate and care for a classroom of three- and four-year-old children, I am paid just $8.40/hour, which means I have to choose which bills to put off so that I have enough cash for food,” said Shannon Mettie, a child care worker in Detroit, MI. “McDonald’s sets pay and standards at employers large and small. But as long as the fast-food giant keeps skimping on pay and dodging taxes, communities like mine won’t have the money we need for quality child care and strong schools.”

As McDonald’s faces louder calls from workers across the U.S. demanding higher pay and the right to a union, the company is also coming under fire from regulators and elected officials worldwide over a range of harmful business practices, including tax avoidance, labor violations, and anti-competitive practices.

In April, the French government sent a letter to McDonald’s demanding the company pay back €300 million ($340 million) in unpaid taxes and fines as a result of a scheme that funneled royalties through Luxembourg. Late last year the European Commission opened an investigation into McDonald’s over allegations the company avoided more than €1 billion in taxes via the same Luxembourg machinations.

Earlier this year, Spanish tax authorities opened a criminal investigation into McDonald’s tax avoidance, and leading consumer rights advocates and NGOs petitioned Italy’s top tax authorities late last year to investigate McDonald’s over allegations that the fast-food giant has dodged at least €74 million ($84 million) in taxes owed to Italy since 2009.

In January, Italian consumer groups filed an antitrust complaint with the European Commission, alleging exorbitant rents and onerous contracts thrust upon franchisees give the company an unfair advantage. Meanwhile, in the United Kingdom – the home of turf of CEO Steve Easterbrook – McDonald’s is facing more scrutiny than ever before. In April, Labour Party Leader Jeremy Corbyn announced his party’s support for a global campaign to hold McDonald’s accountable, saying, “We will extend that campaign all across this continent.” Also last month, Labour Party leaders barred McDonald’s from sponsoring its party’s convention because of the company’s unfair treatment of workers. Worker protests in the UK forced McDonald’s to abandon its controversial zero-hours scheduling policy in which workers are required to be available to work all the time, but receive no set hours.

In March, Brazilian prosecutors launched an investigation of alleged “fiscal and economic crimes” committed by McDonald’s, including suspected tax avoidance and violations of Brazil’s franchise and competition laws. As McDonald’s looks to sell or refranchise thousands of company-owned stores worldwide, the Change to Win Investment group sent a letter to McDonald’s Board of Directors earlier this month expressing concern over flagging sales and poor corporate governance by the company’s master franchisor in Latin America, Arcos Dorados.

“In France, like elsewhere, McJobs leave us without enough to feed our families or live with dignity,” said Lynda Zarif, a McDonald’s worker from Paris, France, who will join the protest in Oak Brook next week. “At the same time, McDonald’s and its shareholders are enriching themselves and benefiting from billions in profits. McDonald’s workers are the ones in the kitchen making the Big Macs that the company sells every day, and we deserve to benefit from the company’s success.”

Low Wage Workers Walk Out In A Nationwide Strike For $15 An Hour

Emboldened by Victories in CA, NY, PA, Fast-Food Workers in New Hampshire Walk off Job, One of Record 320 Strikes Nationwide Demanding $15, Union Rights

Image by Rose Lincoln, 1199SEIU on 4-14-15

Image by Rose Lincoln, 1199SEIU on 4-14-15

More than Fast-Food: Home Care, Child Care, Airport, Workers Flood Manchester Protesting against Low Pay, Tax Avoidance by Corporations

Workers across Service Sector Zero In on McDonald’s
as Symbol of What’s Wrong with Economy

Manchester, NH – Emboldened by a historic string of victories for $15/hour from California to New York to Pennsylvania, fast-food, home care, child care, higher education, and other underpaid workers intensified their Fight for $15/hour and union rights in Manchester Thursday. Before sunrise, local fast-food cooks and cashiers walked off the job, part of a nationwide walkout in a record 320 cities.

Holding signs that read, “McJobs Cost Us All” and “McWages Hold Us All Back,” underpaid workers poured into Manchester streets Thursday, stressing – days ahead of Tax Day – that low wages and tax avoidance by companies like McDonald’s are holding back workers and communities across the country. 

Workers zeroed-in on McDonald’s because the world’s second-largest employer and the industry leader in the fast food and service economies is driving a race to the bottom that is undercutting wages across the economy and resulting in nearly 64 million workers being paid less than $15.   

“We need $15 too,” said Nashua worker Rob Mercier, who walked off the job and is paid just $9.25 after 4 years on the job. “Workers in New York and California and Pennsylvania showed that we can win $15 if we stick together, we will win in New Hampshire and every other part of the country too.” 

New Hampshire workers will join thousands of other underpaid workers in Boston for the moment of silence in remembrance of Jeffrey Pendleton, a Manchester, NH Burger King worker and Fight for $15 member who died in police custody in March after he was arrested for a minor offense and could not afford a $100 bail. Each protest will hold a moment of silence for Jeffrey. The Fight for $15 is dedicating the April 14 strike to Pendleton, a vocal proponent for higher pay and union rights, who participated in the first-ever fast-food strike in New Hampshire last month. 

Fast-food, home care, child care, university, airport, retail, building service, and other workers are demanding that McDonald’s change its business model and use its massive economic power to lift up working families across the globe instead of dragging them down.

Nationwide, the Fight for $15 strikes spread beyond the fast-food industry, as hospital workers at the University of Pittsburgh Medical Center (UPMC) and nursing home workers across Florida walked off their jobs. A strike by 40,000 Verizon workers entered its second day Thursday, and walkouts also spilled overseas, as cooks and cashiers at Europe’s second largest McDonald’s, at Disneyland Paris, shut down the store early Thursday morning to demand higher pay and a union. Protests are taking place Thursday in 40 countries spanning six continents. 

Across New York, California and at UPMC, workers who have already won life-changing raises to $15/hour walked off the job Thursday to stress their demand that companies respect their right to join a union without retaliation, and to show support for other underpaid workers across the country who are still fighting for $15/hour. In New York, striking workers prepared for an evening march from the Times Square McDonald’s—where the Fight for $15 began in 2012—across town to a $1,000-a-plate GOP gala featuring Donald Trump, Ted Cruz and John Kasich, all of whom oppose raising wages. In Cleveland, fast-food, home care, and other underpaid workers announced a November ballot initiative to raise the city’s minimum wage to $15/hour.

A ‘Hot Political Issue’

The strike comes as workers have made $15 and union rights a “hot political issue” in the race for the White House, according to the Associated Press.

Everywhere candidates go this primary season, workers in the Fight for $15 have followed closely behind, forcing White House hopefuls to address the demands of the nearly 64 million Americans paid less than $15/hour. Ahead of debates in cities like Milwaukee, Detroit, Flint, Miami, Houston, and Charleston, fast-food workers went on strike for $15 and union rights and marched on the debates, calling on candidates to “come get our vote.” On four occasions in the debates, candidates were pressed by moderators to respond to workers in the Fight for $15, including in November, when the first question directed at GOP candidates asked them to respond to the demands of fast-food workers outside the Milwaukee Theatre demanding $15/hour and union rights. 

The Democratic Party adopted a $15/hour platform, the Democratic candidates for president have lined up in support of the workers in the Fight for $15, and elected leaders like Nancy Pelosi and Kristen Gillibrand back a $15/hour federal minimum wage. It’s a far cry from the situation when the campaign started—when discourse on the economy was limited to talk of debt and deficits and two lone Democrats in Congress (former Sen. Tom Harkin and former U.S. Rep. George Miller) were the only ones brave enough to even call for $10.10/hour. 

$15/Hour: A New Benchmark

The Fight for $15 has built a growing awareness that $15/hour is the minimum wage level American workers in every part of the country need to survive and pay for the necessities to support their families. In addition to statewide increases to $15/hour in New York and California, cities including Seattle, San Francisco, and Los Angeles have raised their minimum wage to $15/hour. And home care workers in Massachusetts and Oregon won $15/hour statewide minimum wages. Companies including Facebook, Aetna, Amalgamated Bank, and Nationwide Insurance have raised pay to $15/hour or higher; workers in nursing homes, public schools and hospitals have won $15/hour via collective bargaining; and fast-food workers have ratcheted up pressure on companies like McDonald’s to raise pay to $15/hour. 

Slate, among others, has credited the Fight for $15 with completely rewiring “how the public and politicians think about wages.” MSNBC said the Fight for $15, “entirely changed the politics of the country, and Fortune said the Fight for $15 “transformed labor organizing from a process often centered on nickel-and-dime negotiations with a single employer into a social justice movement that transcends industry and geographic boundaries.”

McDonald’s Under Fire on Both Sides of the Atlantic

The movement is also gaining momentum overseas, as workers across the globe are increasingly joining together to hold McDonald’s accountable. On Thursday, workers in 40 countries on six continents protested at McDonald’s restaurants, with marches in cities ranging from Sao Paolo to Seoul and London to Lagos. 

The global protests come as McDonald’s is facing scrutiny by federal regulators from South America to Europe. Late last year, the European Commission opened an investigation into McDonald’s following allegations by trade unions and NGOs that the company has dodged more than one billion euros in taxes since 2009. In January, Italian consumer groups filed an antitrust complaint with the European Commission, alleging exorbitant rents and onerous contracts thrust upon franchisees give the company an unfair advantage.

In March, Brazilian prosecutors said they were investigating alleged “fiscal and economic crimes” committed by McDonald’s, including suspected tax avoidance and violations of Brazil’s franchise and competition laws. Meanwhile, in the U.S., the federal government continues to prosecute its case against the company for violating federal labor laws, charging both McDonald’s and its franchisees with illegally threatening, intimidating, firing and otherwise retaliating against workers who had joined together in the Fight for $15.

Fast-food workers went on strike Thursday in over 300 cities across the country.

Big Banks: Paying Billions (of Borrowed Money) to Stockholders

NASDAQ Watch Photo by Kowloonese used under CreativeCommons license via Wikimedia Commons

Photo by Kowloonese; used by CreativeCommons license via Wikimedia Commons


The “new economy” in a nutshell:
full-time employees need government assistance because their wages are so low. Businesses are shrinking, not growing. And corporations are borrowing money to pay it out to stockholders… because, well, that’s what the system is designed to reward.

The more I look, the more I see it. The same pattern, almost everywhere. It’s not limited to just a few rogue companies. It’s not limited to just a few industries.

And it’s not getting any better.

Here’s the view, from the financial sector.

Remember that study showing that almost one-third of bank tellers receive food stamps, Medicaid or other public assistance? The authors calculated that taxpayers pick up the tab for almost $900 million in government aid – just to bank tellers – each year. That study didn’t break those costs out by particular employer, but…

— — — —

Bank Teller Counting Money for Customer --- Image by © Duncan Smith/Corbis via Flickr

© Duncan Smith/Corbis via Flickr. Used under CreativeCommons license.

According to Glassdoor, Bank of America tellers receive an average wage of $12 per hour – or, just about poverty-line wages for a hypothetical full-time employee supporting a family of four.

And the corporation just announced another set of layoffs, bringing the total to

  • about 14,300 jobs eliminated in the past year
  • about 69,000 jobs eliminated in the past five years.

But owners of the bank’s common stock are doing OK. So far this year, the corporation has distributed $3.1 billion to shareholders, through dividends and stock buybacks. And there will be even more money going to stockholders in December.

Can’t help noticing, though… Bank of America has issued a lot of bonds this year – more than $25 billion. Which means the corporation now has more than $270 billion in long-term debt that it has to pay off between now and 2047.

Yes, Bank of America is borrowing money at the same time it’s paying money out to stockholders.

(Which, yes, is sort of like running up your credit card to buy Christmas presents for people who already have everything.)

Wondering how stock prices are affected by the amount of money paid to shareholders?  Last year, Bank of America announced it would increase dividends and start buybacks – but then discovered an accounting mistake and had to withdraw those plans. And stock prices fell by 6.3%.

Want to know why corporate executives care so very much about short-term stock prices?  Look at the way Bank of America compensates its CEO. On the 13th of every month, Brian Moynihan receives the cash equivalent of 17,747 shares of common stock. In August, the per-share price was $17.62; for 17,747 shares, that works out to a payment of $312,702. In September, the per-share price was $16.04; that works out to $284,662. In October, the per-share price was only $15.52; that works out to $275,433. Don’t you think CEO Moynihan notices, when his monthly payment drops by ten or twenty thousand dollars?

But there’s good news for him: this month – after that latest set of layoffs was announced – the per-share price is back up above $17.  (Even though the Bank is $270 billion in debt and its credit ratings are, ahem, less-than-stellar… and it borrowed almost another $3 billion since CEO Moynihan’s October payment.)

— — — —

bankerAccording to Glassdoor, J.P. Morgan bank tellers also receive an average wage of $12 per hour… which is still, yes, about the poverty line for a hypothetical full-time employee trying to support a family of four.

And the corporation is, ahem, “cutting costs” by eliminating another 5,000 jobs. (Last year, they cut 7,900 jobs.)

But… stockholders are doing OK. The corporation just raised its dividend and is buying back $6.4 billion worth of its own stock. (That’s in addition to almost $18 billion in buybacks between 2010 and 2013.)

And CEO Jamie Dimon just got tagged as “the Best Big Bank CEO, Measured by Shareholder Returns.” Between buybacks and stock dividends, Dimon has “generated a total shareholder return of 119.5%” in the last decade.

Even though… can’t help noticing… J.P. Morgan had, at last report, $434.4 billion in long-term debt (which was an increase of $8.3 billion from the previous quarter). And it will be paying off debt through 2049.

I’m sure somebody at JP Morgan can explain why it makes sense to pay billions out to stockholders at the same time the corporation is borrowing billions. (And I’m sure somebody at the Federal Reserve Bank can explain why regulators approved this plan.)

And yes, folks high up the corporate ladder are doing OK, too. Their compensation includes mechanisms like restricted stock units and stock appreciation rights, which ensure they’re paying attention to share prices.  For instance, Managing Director Mary Erdoes just received stock appreciation rights equal to 200,000 shares of JP Morgan stock… on a day when the stock closed at $67.39 a share.   (Yep, some people get paid according to how high the stock price goes.)

Meanwhile… 5,000 JP Morgan employees will be looking for new jobs… and employees who still have their jobs get poverty wages and need government benefits to make ends meet.

— — — —

US states by poverty rate

States by 2013 poverty rate

And I’m betting that if I looked, most of the other Big Banks would show this same paying-low-wages-to-employees while cutting-rather-than-expanding-the-business while borrowing-against-future-revenues so they can pay-more-money-to-stockholders pattern.

It’s not just a few employers.

It’s not just a few industries.

Borrowing money in order to pay it to shareholders is the same basic thing Bain Capital was doing, back before journalists started writing about it, when Mitt Romney ran for President.

Only, this is on a bigger scale.

These are corporations that employ hundreds of thousands of people. And they’re borrowing against future revenue, in order to pay stockholders today.

While their executives rake in millions in compensation.

And their employees need government assistance just to get by.

— — — —

Read my last post, “McDonalds: Paying Billions (of Borrowed Money) to Stockholders” here.

Read my series about Verizon as a case study of what’s wrong with the economy, starting here.

 

McDonald’s: Paying Billions (of Borrowed Money) to Stockholders

Photo by Annette Bernhardt via Flickr

Photo by Annette Bernhardt via Flickr

Right there, in the USNWR story “Why McDonald’s stock is blowing the competition away,” was the clearest example yet of how our economy doesn’t work for anybody but the folks at the very, very top.

The company will cut $500 million [in costs] by 2018… it has a goal of having 4,000 stores refranchised in three years… it’s returning $30 billion to shareholders, an increase from $20 billion, through dividends and share buybacks and funded by taking on more debt.

And because of this strategy…

The famed restaurant chain has seen its stock jump by 17 percent since September.

Yes, McDonald’s. The corporation that costs taxpayers an estimated $1.2 billion a year in public assistance, because so many of its workers need government help to make ends meet. One of the employers who provoked the Fight for 15.

Yes, McDonald’s. The corporation whose per-share book value has dropped by 20% over the past decade … while its financial leverage (debt level) has more than doubled. The corporation that just saw its credit rating downgraded again, because Moody’s is concerned about “the company’s recent announcement that it intends to increase its returns to shareholders, the vast majority of which will be funded with additional debt.”

The corporation that has only $5.7 billion in net tangible assets (roughly $6.24 per share).

Yet the stock price hit $114 per share this week.

Because McDonald’s will be distributing an additional $10 billion to shareholders, “the vast majority of which will be funded with additional debt.”

(Even while its employees need $1.2 billion a year in food stamps and other assistance.)

— — — —

Image by Rose Lincoln, 1199SEIU

Image by Rose Lincoln, 1199SEIU

McDonald’s long-term debt will, as Moody’s noted, “limit its financial flexibility” for decades to come. Remember, the corporation eventually has to pay all that debt back, plus interest.  So basically, the corporation is using future revenues to pay stockholders now.

Moody’s expects the corporation to borrow even more as it increases its payments to stockholders.  At the same time, McDonald’s is selling off its assets, by “refranchising” 4,000 stores.

And Wall Street rewarded this strategy.  The stock price hit a record high this week… because McDonald’s will be distributing $30 billion, rather than only $20 billion, to shareholders.

And some McDonald’s executives took advantage of that record highChief Administrative Officer Peter Bensen reportedly exercised stock options to buy 15,870 shares – and then sold them the same day – making what I calculate to be a $1.2 million personal profit. Executive Vice President Richard Floersch exercised stock options to buy 23,910 shares, and then sold them – making a profit that I calculate at more than $1.3 million.  Executive Vice President Kevin Ozan also exercised stock options, buying 3,463 shares and then selling them at what I calculate to be almost $268,000 in profit.

And Executive Vice President David Fairhurst sold every share of McDonald’s stock he owned, that day of the record high.

Meanwhile… McDonald’s employees are receiving $1.2 billion in annual government assistance, because their wages are so low they can’t make ends meet.

And the financial press is trumpeting the fact that McDonald’s will be “cutting costs” – usually a euphemism for employee layoffs or wage reductions – by half a billion dollars.

— — — —

And no, I’m not the only one who thinks that our economy is being ruined by this fixation on short-term payouts to stockholders.

— — — —

Read “What Mitt Romney taught us about America’s Economy” here.

Read my series about Verizon as a case study of what’s wrong with the economy, starting here.

Dear Candidate Clinton: Disclosure isn’t enough

SOLD flagKudos to Hillary Clinton for making stock buybacks into an issue in the 2016 presidential campaign.  Most Americans don’t realize just how much money corporations spend buying back their own stock, rather than creating jobs.  It’s probably the biggest, ugliest secret of our troubled economy.

But Candidate Clinton doesn’t go far enough.

Her speech yesterday called for more-timely disclosure of buybacks. But just like with #MoneyInPolitics, public disclosure isn’t going to fix the problem.  We need to restore the laws that used to protect us, back when we had a Middle Class.

Disclosure hasn’t solved the problem of our politicians being bought by corporations and the ultra-wealthy.  Everybody knows that the Koch Brothers plan to spend almost a billion dollars buying themselves a president in 2016.  They announced it in the press.  They’re proud of it.  Disclosure isn’t stopping them.  Ever since they made the announcement, they’ve had a steady stream of sycophantic candidates “interviewing” with them, seeking their support.

Anyone who’s watching Big Oil knows that the industry has been busy buying politicians.  Starting with the Chairman of the Senate Committee on the Environment, Jim Inhofe.  Disclosure hasn’t made a difference.  He’s proud of the money he gets from Big Oil: “Whenever the media asked me how much I have received in campaign contributions from the fossil fuel industry, my unapologetic answer was ‘not enough’.”

Disclosure hasn’t fixed the problem of #MoneyInPolitics.  And it’s not going to fix the problem of stock buybacks, either.

WWYD_707_billionBefore the Securities and Exchange Commission created its “Safe Harbor Rule” in 1982, stock buybacks were almost unheard-of.  Now, they’re one of the top priorities of corporate executives.  Last year, corporations spent more than $556 billion buying back their own stock.  This year, they’re expected to spend $707 billion.

The ugly secret of our “trickle-down” economy: corporations are spending enormous amounts of money consolidating their ownership.   Rather than, say, expanding their businesses, hiring new employees or even paying existing employees a living wage.

(Can’t help but notice the trend of corporations focused on stock buybacks, while their employees need public assistance programs to make ends meet.  Walmart.  McDonalds.  Big Banks.)

Disclosure isn’t going to solve this.  Corporations are proud of their buyback programs.  They announce buybacks in press releases.

Just like the Koch Brothers used the press to announce their intention to buy a president.

Somebody needs to tell Secretary Clinton: the SEC’s 1982 “Safe Harbor Rule” is the regulatory equivalent of the Supreme Court’s Citizens United decision.  It enables corporations to do things that are really, really bad for our country.

But unlike Citizens United, the “Safe Harbor Rule” is an administrative regulation. It can be changed or repealed by the administrative agency.

And SEC members are appointed by the President.

Clinton could be pledging to only appoint SEC Commissioners who will repeal the rule.  Instead, she’s just looking for more disclosure.

Clinton deserves a whole lot of credit for raising the issue, and for talking about the impact that stock buybacks are having on our economy.

But it would be even better if she would go one step further, and talk about a solution that would actually fix the problem.

—–

Read more NHLN coverage of stock buybacks here.

Read Marketwatch, “Wall Street’s new drug is the stock buyback” here.

Leo W Gerard: The High Cost Of Fighting For $15

2014 Fast Food Strike NYC (FLIKR Annette Bernhardt)

2014 Fast Food Strike NYC (FLIKR Annette Bernhardt)

This is no plea for pity for corporate kingpins like Walmart and McDonald’s inundated by workers’ demands for living wages.

Raises would, of course, cost these billion-dollar corporations something. More costly, though, is the price paid by minimum-wage workers who have not received a raise in six years.  Even more dear is what these workers have paid for their campaign to get raises. Managers have harassed, threatened and fired them.

Despite all that, low-wage workers will return to picket lines and demonstrations Wednesday in a National Day of Action in the fight for $15 an hour. The date is 4 – 15. These are workers who live paycheck to paycheck, barely able to pay their bills, and certainly unable to cope with an emergency. They know the risk they’re taking by participating in strikes for pay hikes. They’ve seen bosses punish co-workers for demonstrating for raises. To lose a job, even one that pays poverty wages, during a time of high unemployment is terrifying. Still, thousands will participate Wednesday. That is valor.

2015-04-12-1428857661-6865200-Fightfor15graphic.jpg

Kip Hedges exhibited that courage. He’s a 61-year-old with 26 years of service as a baggage handler for Delta at the Minneapolis-St. Paul Airport. He wanted better wages for young workers and a union. He said so in a video, noting that “probably close to half make under $15 an hour.”

Delta fired him. The airline said he’d disparaged the company. Apparently Delta believes it has been disparaged if the flying public learns the truth about the way Delta treats workers.

Clearly, Delta planned to shut Hedges up and intimidate other workers. The message to his co-workers was clear: “You wanna talk about the paltry wages you get? Well, let’s talk about this pink slip.”

But when Delta messed with Hedges, it messed up big time. The firing failed to silence him. He continued to protest low wages. His co-workers rallied round him. The media covered his firing and his appeal. He looked like a low-wage worker hero. Delta looked like a vindictive heel.

Unlike Hedges, Shanna Tippen was no activist before she got fired from her minimum-wage job in Pine Bluff, Ark. She was just trying to get by, and falling short by about $200 a month. Her boss at the Days Inn where she worked as a night shift jack-of-all-trades asked her to talk to a Washington Post reporter who had dropped by the hotel to discuss the state’s newly instituted 25-cent increase to the federal minimum wage of $7.25.

Fast Food Strike 2014 (FLIKR Annette Bernhardt)

Fast Food Strike 2014 (FLIKR Annette Bernhardt)

Tippen told the reporter, Chico Harlan, that she hoped the little bit of extra money would help her pay for her grandson’s diapers.

After the Post published the story, the manager of the Days Inn, Herry Patel, telephoned Harlan to complain about being quoted in it. Then he fired Tippen. She recounted it to Harlan:

“He said I was stupid and dumb for talking to [The Post].”  Even though, of course, Patel had told Tippen to talk to the reporter. Tippen continued: “He cussed me and asked me why you wrote the article. I said, ‘Because he’s a reporter; that’s what he does.’”

Patel told Harlan that Arkansas voters, who approved the pay increase in a referendum by 66 percent, should not have done it. “Everybody wants free money in Pine Bluff,” Harlan quoted him as saying.

Patel apparently did not understand that Tippen performed work that kept the hotel running every night, which means she earned the money. The truth is that Patel, like so many other employers, believes that employees should work for free.

The Post and other papers wrote about Tippen’s firing, making her an icon for ill-treated, low-wage workers and Patel the personification of miserly bosses.

 

Worker-exploiting employers like McDonald’s, Chipotle and Walmart have shown themselves to be craven in the face of courageous workers’ wage protests as well.

Over the past few months, the National Labor Relations Board (NLRB) has filed charges against McDonald’s and Walmart alleging they violated workers’ rights, including threatening retribution against those who participated in strikes.

In December, the NLRB in California ruled that Walmart illegally punished workers for striking and seeking to unionize. The judge determined that Walmart managers illegally intimidated workers by, for example, telling one, who had tied a rope around his waist to pull a heavy load, “If it was up to me, I would put that rope around your neck.”

In the Chipotle case, the NLRB ruled that a manager in St. Louis illegally fired worker Patrick Leeper for participating in Fight for $15 demonstrations and for talking about wages at work. After the decision, a company spokesperson told the news website Think Progress: “Generally speaking, it is always a top priority for us to remain compliant with all local and federal labor laws.”

“Generally,” Chipotle tries. Generally. Not in this particular case involving low-wage workers demonstrating for better pay. But, you know, generally Chipotle tries to obey the law.

In the original Washington Post story about the tiny increase in the minimum wage in Arkansas, Dominic Flis, whose company owns 18 Burger Kings in central Arkansas, said raising the minimum wage pushes up pay for other workers too. Here’s what he said:

“If somebody was already making $7.50, and minimum wage goes to $7.50, they’ll have some expectation of a raise as well,” Flis said. “And I have to maintain my workforce.”

The Brookings Institute calls this the ripple effect. The pay increase at the bottom ripples all the way up the pay scale.

Hedges, the fired Delta worker, put it another way: “a lot of the better paid workers also understand that the bottom has to be raised otherwise the top is going to fall as well.”

If for no other reason than self-interest, join the gutsy minimum-wage workers at a Fight for $15 event Wednesday.

McDonald’s Workers File OSHA Complaint After 79% Report Being Burn On The Job

Mcdonalds ‘Put mayonnaise on it, you’ll be good’ 

McDonald’s Workers Nationwide File OSHA Complaints Alleging Hazardous Work Conditions

Understaffing and pressure to work too fast lead to serious injuries;
Workers call on DOL to investigate

Faced with widespread hazards on the job, including bubbling hot oil, white hot grills, and greasy, slippery floors, McDonald’s workers who have suffered severe burns announced Monday that they have filed 28 health and safety complaints against the fast-food giant in 19 cities.

They allege that understaffing and pressure to work too fast – hazardous conditions often created by the company’s computer system that dictates staffing levels and the pace of work – are the main drivers responsible for the injuries. The complaints further reveal that many McDonald’s stores lack basic first aid or protective gear necessary to ensure workers’ safety, and that managers often tell workers to treat burns with condiments like mustard rather than burn cream.

“My managers kept pushing me to work faster, and while trying to meet their demands I slipped on a wet floor, catching my arm on a hot grill,” said Brittney Berry, who has worked at McDonald’s in Chicago, Ill., since 2011, and who suffered a severe burn on her forearm and nerve damage from the accident. “The managers told me to put mustard on it, but I ended up having to get rushed to the hospital in an ambulance. This is exactly why workers at McDonald’s need union rights, so we have a voice to make the company take responsibility for the dangers it creates in its stores.”

The complaints, filed with the U.S. Occupational Safety and Health Administration as well as state safety and health authorities, point to a wide range of serious dangers at the workplace, including: pressure to clean and filter the fryer while the oil is hot; lack of proper protective equipment; floors that are greasy or wet; and missing or empty first aid kits. Complaints were filed at both corporate and franchised locations.

“One of my coworkers and I have to empty the grease trap without protective gear, and since we were never given the proper equipment or training, we just dump the hot grease into a plastic bag in a box of ice,” said Martisse Campbell, who works at McDonald’s in Philadelphia, Penn., whose hand was severely burned by boiling grease from a fryer. “Once, my coworker got badly burned, and our manager told him ‘put mayonnaise on it, you’ll be good.’ McDonald’s needs to be held accountable, and that’s why workers around the country are joining together.”

Burns have been reported as a widespread problem since fast-food workers started organizing in New York City more than two years ago: “In our first meeting, there were 50 workers in a room in New York City who held up their arms covered in burns and said ‘this is what it means to be a fast-food worker,’” said Kendall Fells,Organizing Director of the Fight for $15. “As this campaign has spread to cities across the country, it’s become painfully clear that unsafe conditions go hand in hand with the industry’s low wages.”

McDonald’s sets minimal health and safety standards for all franchisees, but even these modest measures are not properly enforced. The company watches like a hawk nearly every aspect of its franchisees’ business operations via regular inspections, but it too often ignores health and safety problems. Moreover, workers in corporate-owned stores report the same health and safety hazards as workers in franchised restaurants.

“It’s a problem that only McDonald’s can fix, and the time to fix it is now,” Mr. Fells added.

The announcement comes as a new national survey finds that a staggering share of fast-food workers have been burned on the job: 79% of fast-food workers in the U.S. have been burned in the past year, most repeatedly, according to a survey conducted by Hart Research Associates and released Monday by the National Council for Occupational Safety and Health. Workers cited understaffing and pressure to work too fast as the top reasons they are getting burned on the job.

The survey found that 36% of workers report that first aid kits are missing, inaccessible, or empty, and one-third of fast-food workers in the U.S. had been told to treat burns with condiments like mustard or mayonnaise rather than burn cream.

The Fight for $15 announced Monday the launch of a petition calling on the U.S. Department of Labor to investigate widespread health and safety hazards in the fast-food industry. And it launched a video and website, burnedbyfastfood.org, to call attention to the prevalence of severe burns in the industry.

Workers announced that they would be holding protests at McDonald’s stores across the country Tuesday to demand that the company be held accountable for the widespread dangers at its stores.

The 19 cities where complaints were filed include Kansas City, Mo., Miramar, Fla., Nanuet, N.Y., New York, N.Y., New Orleans, La., and Philadelphia, Penn. The announcement comes as McDonald’s faces mounting challenges domestically and abroad over working conditions, tax avoidance, and racial discrimination.

NLRB Lays Down The Law On McDonalds Franchisees

Mcdonalds Who’s the Boss? McDonald’s is, Feds Determine 

Contrary to Company’s Repeated Claims, Move by NLRB Shows Fast-Food Giant is An Employer

Labor Board says McDonald’s plays critical role in employment decisions at its restaurants; Company can’t hide behind franchisees any longer

New York, NY—Despite McDonald’s repeated assertions that it does not control employment decisions at its franchised restaurants, the federal government Tuesday said that the $5.6 billion company is indeed an employer that exerts substantial power over its employees’ working conditions.

In a determination that carries widespread implications for the fast-food industry, the National Labor Relations Board’s general counsel found that McDonald’s wields such extensive influence over the business operations of its franchisees that individual franchise operators have little autonomy in setting or controlling workplace conditions. McDonald’s, for all intents and purposes, is the employer.

The general counsel’s office Tuesday informed regional directors of the NLRB in offices around the country that McDonald’s should be treated as an employer. There are dozens of charges alleging illegal conduct by the fast-food giant pending in at least 17 cities that could now be adjudicated using the government’s new directive.

“McDonald’s can try to hide behind its franchisees, but today’s determination by the NLRB shows there’s no two ways about it: The Golden Arches is an employer, plain and simple,” said Micah Wissinger, an attorney at Levy Ratner who brought the case on behalf of McDonald’s workers in New York City. “The reality is that McDonald’s requires franchisees to adhere to such regimented rules and regulations that there’s no doubt who’s really in charge.”

For nearly two years, McDonald’s and other fast-food workers across the country have been joining together and going on strike, calling for $15 and the right to form a union without retaliation. But time and time again, the company and other industry players have tried to sidestep workers’ calls, inventing a make-believe world in which responsibility for wages and working conditions falls squarely on the shoulder of franchisees.

“Now that the government has recognized what us workers have always known— that McDonald’s is the boss—maybe the company will stop making excuses for why we’re treated so poorly and pay us a wage we can live on,” said Richard Eiker, who has worked for the same Kansas City McDonald’s franchisee for 18 years.

“As the federal governments determination shows, McDonald’s clearly uses its vast powers to control franchisees in just about every way possible,” said Kendall Fells, organizing director of Fast Food Forward. “It’s time the company put those same powers to work to do something about the fact that its workers are living in poverty.”

The government’s determination is the latest challenge to the fast-food industry’s low-wage business model, in which franchisors reap rewards of a profitable industry, while forcing franchisees to shoulder all the risk. In March, McDonald’s workers in three states filed class-action lawsuits against the company, alleging widespread wage theft. The New York Times wrote that the suits, “argue that both the corporate parent and the independently owned franchises where many of the plaintiffs work are jointly responsible for illegal pay practices carried out by the franchises…That strikes at the heart of the low-wage fast-food business model.”

One ‘Modest Proposal’? Or the other?

cloverI couldn’t help it.  This year, on Saint Patrick’s Day, I didn’t feel much like partying.

I couldn’t stop thinking about Ireland’s Great Famine — and hearing echoes across the centuries, right here in the United States, as the working class endures Year Seven of their Great Recession (while the elite are taking home more money than ever).

Apparently, I wasn’t the only one thinking along those lines.  If you can take three minutes to read “Paul Ryan’s Irish Amnesia” you’ll see what I mean.

[In the 1840s] A great debate raged in London: Would it be wrong to feed the starving Irish with free food, thereby setting up a “culture of dependency”? Certainly England’s man in charge of easing the famine, Sir Charles Trevelyan, thought so. “Dependence on charity,” he declared, “is not to be made an agreeable mode of life.”

That Great Famine, of course, wasn’t the first time Ireland’s poor had been ravaged by economic conditions.

In 1729, Irish author Jonathan Swift (writing anonymously) tried to call attention to the plight of the poor — and the heartless attitudes of the rich — through his classic satire, “A Modest Proposal.”

The plight of the poor… versus the attitudes of the rich.  Some things don’t ever seem to change.

I found an interesting chart on the website of the Federal Reserve Bank of St. Louis. It compares the amount of federal taxes paid by corporations (red line) with the amount of profit that corporations pay out to their stockholders as dividends (blue line).

And it looks like during all those decades when the American Middle Class was thriving, corporations were paying about the same amount in taxes to the federal government as they were paying in dividends to their stockholders.

  • Corporate taxes help the federal government fund the various infrastructures that businesses need to thrive, including transportation (highways, bridges, ports); the court system (contract enforcement); public safety and law enforcement.  These days, large employers like WalMart, McDonalds and the country’s biggest banks also depend on safety-net programs such as Medicaid and Food Stamps to supplement their workers’ low wages.
  • Dividends represent the payout of corporate revenues which were not spent on wages/benefits or invested in expansion (new factories, new equipment, new product development, new employees).  To the stockholders, they are “passive earnings” — similar to the bank interest most of us used to earn on money in our savings accounts — money that you get simply because you already have money.

All the way up until Ronald Reagan signed “The Tax Reform Act of 1986”, it looks like those two amounts were pretty much equal: what corporations paid as taxes, and what they paid out as dividends.

So I’d like to make a “Modest Proposal” of my own: let’s go back to that tradition.

From the chart, it looks like that single change would add about $380 billion a year in federal revenues: enough to fund the Food Stamp program four times over (and still have billions to spend other things).

Restore corporate tax levels.

MY “Modest Proposal” isn’t intended as a satire. And it would be a lot easier to swallow than Jonathan Swift’s.

Just sayin’.

Philadelphia Low Wage and Fast Food Workers Hungry for a $15 Minimum Wage

mcpoverty-cover-620x264

Guest Column by Sean Kitchen of the Raging Chicken Press (PA)

The low-wage worker campaign that has swept across the country since November 2012 is primed to make its Philadelphia debut.  The Fight for 15 movement began in November 2012 when 200 fast food restaurant workers across New York City went on a one day strike for the living wage of fifteen an hour.  Since then, the movement has spread to hundreds of cities across the United Stateschanged the national conversation on increasing the minimum wage and had a number of political victories.  In Philadelphia, a coalition is forming between the Service International Employees Union and local grassroots organizations and the Socialist Alternative, who had a successful minimum wage campaign in Seattle, Washington.

I Support Fight for 15 The labor coalition met in Northeast Philadelphia on Friday February 21 to discuss strategy and tactics and to fight for reforms to the the Commonwealth’s minimum wage and tipped minimum wage laws and several other policies affecting low wage workers. One person in attendance was State Senator and 13th District candidate Daylin Leach.  In an email exchange with the House candidate, Leach described the minimum wage fights as “among our most noble fights” and that “every worker has a right to expect, and to fight for, a fair day’s pay for a fair day’s work, and a wage that enables people who work hard full time not to live in poverty.”  Senator Leach believes that $10.10 is too low and supports a minimum wage of $12.00, pegged to inflation, because it “would lift people above the poverty level.”  One of the biggest issues Leach has is with the tipped minimum wage.  He stated:

The tipped minimum wage is one of the most evil policies on the books at either the state or federal level, and we must address it at any and every level we can. At the federal level, the $2.13 tipped minimum wage has not been raised in 23 years. Many workers make far less than minimum wage on average, but their employers report them at minimum wage so the poorest workers pay taxes on money they aren’t even seeing.
Plus, employers are allowed to use tipped workers for non-tippable purposes (for example, cleaning out the freezer) for 20% of the work day. In other words, they get to pay their workers $2.13 for work they will never see a tip for.

On Saturday, February 15, the Philadelphia branch of Socialist Alternativeheld a meeting with speakers from New York and Boston and over 40 low wage workers from the Philadelphia area.  This effort is part of a nationwide effort by Socialist Alternative.  The organization had  major victories in Seattle last fall with their 15 Now campaign by electing socialist candidate Kshama Sawant to city council and forcing the Seattle mayor to take action on the issue.  Since being sworn in, Sawant has taken a hardline stance on “McPoverty Wages.” Justin Harrison, a union worker and Socialist Alternative member, stated “Philadelphia is one of the poorest major American cities, but our society has the resources to easily provide every worker a decent living. In Seattle, $15/hr is not a marginal issue anymore; it’s central to the city’s political debates. Today we join workers across the country to bring that fight to Philadelphia.”  Their first Philadelphia actions will be held March 8th and May 1st.

In November 2012, a couple hundred fast food and low wage workers launched a movement that flies in the face of the conventional wisdom surrounding our minimum wage laws.  The Fight for $15 is probably one of the most radical ideas to come out of the labor movement in decades and it has already changed the minimum wage debate.  The Fight for $15 forced the president to support a $10.10 federal  minimum wage, while others in Congress want a higher minimum wage, and has had victories in states and cities across the country.  In an age of social media and instant gratification, the resurgence of the progressive movement since  the Wisconsin Uprising and the formation and dismantling of Occupy Wall Street has scored major victories over the past three years.  It came out in full force when its backs were up against the wall in Madison, it unmasked the 1% and sparked a debate on income inequality and now it has put paid sick leave on the agenda and completely changed the way we think about the minimum wage.  The only remaining question is what comes next?

Photo credit Rising Tide.

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