“You should be thankful you’ve got a job.” It’s an all-too-common sentiment lurking among managers and—let’s be honest—many of the talking heads who go on television to argue against raising the minimum wage or to oppose new regulations to protect workers. And in the case of Eric, whom we met in Chapter 1, it’s exactly what his supervisor said to him when he dared to challenge the working conditions in the warehouse.
That kind of managerial attitude in response to any complaint about poor working conditions or low wages is not only condescending but the product of a no-holds-barred thirty-year assault on the working class. You see, when workers lack any mechanism to bargain for better wages and treatment, managers—from front-line supervisors all the way up the food chain to CEO—begin operating under a kind of warped sense of noblesse oblige, as if these working-class jobs are a form of charity given to people who would otherwise go begging for food, shelter, and clothing. In my interviews with dozens of wage-earners, I asked what they like most about their job and what they like least. Most people derived real satisfaction from their work and stressed the importance of the role they play in making their employers successful and their customers happy. But their pride in their work and their commitment to doing a good job stood in stark contrast to the way they felt they were treated on the job, especially by management. The most common desire for change in their workplace was simple: more respect. Eric, the general laborer at Coca-Cola, put it this way: “We’re making them billions of dollars. Why are we being treated like something you step on in the grass? I don’t understand it. I will never understand it.”
The lack of respect isn’t just reflected in condescending remarks made by managers, although one retail associate spoke at length about how her manager talks down to the salespeople as if they were children. Most home health aides regularly deal with family members who expect them to provide maid service while they’re in the house caring for their relatives. Disrespect seems to be baked into today’s working-class jobs, and not just in the relations between management and staff. It’s also reflected in a slew of common practices based on the very pervasive idea that controlling the cost of labor—workers’ hours and wages—is the best way to cut overall costs and boost profits. Low pay, unpaid overtime, unpredictable schedules, and too few hours are all widespread in the bargain-basement economy. These practices strip workers of their humanity, making them feel “invisible” or “disrespected” or “unappreciated”—words frequently used by members of the new working class to describe how they’re treated on the job.
The operating paradigm in the bargain-basement economy is that workers are costs to be minimized rather than assets to be maximized. And companies engage in a number of cost-cutting measures that flagrantly skirt the law, including failing to pay overtime and skimping on basic health and safety precautions.
In the drive to lower labor costs, it has become all too common for employers to cheat their workers out of pay they are legally due. In fact, some of the nation’s and the world’s most recognizable brands just so happen to be some of the nation’s biggest wage criminals. McDonald’s, Subway, Domino’s, and many other megabrands have repeatedly been found to violate bedrock wage and hour laws by failing to provide overtime, by forcing employees to work off the clock without pay, and by failing to provide meal breaks or regular breaks.1 Wage theft—the practice of not paying workers for all the time they’ve worked—is ubiquitous in the restaurant industry. In fact, the restaurant industry has repeatedly had the highest number of legal cases brought for wage theft among all low-paid industries, and owed the largest amount of back wages as a result of investigations by the Wage and Hour Division (WHD) of the Department of Labor.2 A national poll found that nine out of ten fast-food workers experienced some type of wage theft.3 In 2014 alone, the Department of Labor investigated over five thousand cases of wage theft in restaurants, resulting in nearly $35 million in back pay for workers, trends that have varied little since 2011.4 In an analysis conducted by CNN Money of the cases brought against fast-food companies between 2000 and 2013, the biggest violators were Subway chains, who were the focus of nearly eleven hundred investigations during that time, mostly for failing to pay overtime.5 As a result, Subway franchises had to pay over $3.8 million in back pay to its workers. While Subway captured the gold for breaking the law, McDonald’s and Dunkin’ Donuts rounded out the winners, respectively bringing home the silver and bronze medals. Ripping off the working class isn’t confined to the titans of the fast-food industry; some of the bigger full-service restaurant chains are also looting wages from their workers.
Since 2000, the Department of Labor found at least 150 cases of wage theft at IHOP, the syrupy denizen of the family restaurant sector.6 While IHOP’s commercials position it as the place to go for big family breakfasts, its pay practices are anything but wholesome. According to data analyzed by CNN Money, two IHOP locations in Kansas underpaid thirty-five employees, including bus persons, cooks, dishwashers, and servers, resulting in $64,000 in back wages, roughly $1,800 per worker.7
There’s really no industry in the bargain-basement economy that’s innocent of wage and hour violations. Violations are prevalent in day-care facilities, hotels and motels, restaurants, retail businesses, and janitorial services. Unfortunately, there are more lawbreaking companies than the regulators can catch, or than workers will file complaints against. The deck is overwhelmingly stacked in the lawbreakers’ favor, because the Wage and Hour Division isn’t exactly the kind of operation our business-friendly Congress likes to fund. Back when the Fair Labor Standards Act was signed into law in 1938, there was one WHD investigator for every 11,000 workers; today there is one investigator for every 164,000 covered employees.8 Despite the needle-in-a-haystack odds, in 2012 alone, $993 million was recovered in stolen wages thanks to the combined efforts of federal investigators, state departments of labor, state attorneys general, and private lawyers.9 As the Economic Policy Institute points out in a study, that’s nearly three times the amount of money stolen during robberies in the same year. But unlike individual robbers, companies and managers that break the law by stealing their workers’ wages don’t face jail time, just a paltry fine. The maximum civil monetary penalty that a company will be fined for failing to pay the minimum wage or overtime is just $1,100 per violation. Compare that to the substantial savings businesses accumulate by siphoning wages from their workers, and it’s obviously a risk worth taking. The $993 million in wages recovered is likely just a small fraction of the amount stolen each year from hourly workers, in part because many of these theft cases go unreported, since it is incumbent on the worker to file a complaint.
A comprehensive survey of hourly workers in three major cities finds that the total loss in wages is at least three times greater than what is officially recovered through investigations and court actions. The survey of 4,300 hourly workers in New York, Chicago, and Los Angeles found that one in four was paid below the minimum wage in a given workweek, three-quarters of those who worked overtime were not paid the required time-and-a-half, and seven out of ten workers who came in early or stayed late were not paid for the time spent working outside of their scheduled shift. As a result of these lawbreaking practices, workers in these three cities alone lost $3 billion in wages in just one year.10
There’s some important context to consider when judging these wage violations committed by some of the most recognizable brands in the country. By and large, the employees of these establishments are some of the lowest-paid workers in the nation—and that’s even if they were appropriately paid for all hours worked. Additionally, today’s working class faces a level of flagrant violations of their labor rights that the largely unionized, mostly white blue-collar worker never experienced. In many ways the struggles of these workers to secure better wages and fair treatment more closely resemble the status and frustration of early industrialized wage-earners, who fought for a minimum wage, a forty-hour workweek, and an end to child labor.
Wage theft is disturbingly common in the bargain-basement economy, with companies stealing pay from workers who are usually making just a dollar or two above the minimum wage. It’s a key move in the personnel playbook of managers, who are often under intense pressure from corporate higher-ups to lower labor costs.
In 2012 the Department of Labor announced that it had recovered nearly $5 million in back wages for over 4,500 Walmart employees as a result of its investigations into the retailer’s violations of laws regarding overtime pay. Walmart had misclassified some of its managers as being exempt from overtime laws, when in fact the scope of their job responsibilities was clearly nonmanagerial, despite their title, and as a result they were eligible for overtime pay. In the department’s press release, then secretary of labor Hilda Solis said, “Let this be a signal to other companies that when violations are found, the Labor Department will take appropriate action to ensure that workers receive the wages they have earned.”11 But the same practices continue across the bargain-basement economy, from home health care to janitorial services to warehouse workers to port truckers.
Unfortunately, violating wage and hour laws is not the only kind of lawbreaking committed by companies. Far too many employers of the working class are flagrant violators of health and safety standards designed to protect workers.
At the national level, the employer watchdog is the Occupational Safety and Health Administration, commonly referred to as OSHA. In 2013, 4,405 workers died on the job—an average of 12 people per day. While that represents a substantial decline in worker fatalities from 14,000 in 1970, the year OSHA was created, it is still far too many individuals dying at the workplace, often through no fault of their own. And millions more workers—around 4 million—are injured on the job every year. Of course, not all of these accidents are caused by employers who flagrantly ignore the safety rules. But just about every day OSHA issues a new release citing some of our most recognizable companies for serious or willful violations. A serious violation occurs when there is substantial probability that death or serious physical harm could result from a hazard that the employer knew or should have known about. The most egregious rule-breaking is labeled a willful violation, one that is committed with intentional knowledge of the dangers or voluntary disregard for the law’s requirements, or with plain indifference to workers’ safety and health—also known as flagrant disregard for the lives and safety of employees. But it’s important to keep in mind that OSHA can’t file criminal charges against bosses or CEOs who bend or ignore health and safety rules. The most it can do is issue fines, and despite the seriousness of the violations, the fines can often seem skimpy relative to the harm and suffering experienced by workers. The most OSHA can fine a company is $7,000 for each serious violation and $70,000 for a repeated or willful violation.12 In an unusual showing of bipartisan support, the maximum penalties will increase to $12,500 and $125,000 respectively—the first increase since 1990. The new penalty amounts will take effect by August 2016.
Health and safety violations aren’t just restricted to jobs that require physical labor, such as climbing telephone poles, painting bridges, and washing office windows. In fact, in 2014 Dollar Tree, a chain of bargain stores, racked up more OSHA violations than almost any other company in America.13 All told, OSHA fined Dollar Tree $866,000 between October 2013 and October 2014 for multiple willful violations, with a total of forty-eight violations in its stores across the country. At one store near Dallas, Texas, inspectors found teetering cartons of stock piled twelve to fifteen feet high, gas tanks that weren’t properly stored, and electrical panels blocked with merchandise. A Wall Street Journal article about the violations quoted a former Dollar Tree employee who said that she quit after a box of cans fell on her head, explaining, “Things are tumbling on you because the space in the storage room is so small. We were always complaining to the manager, but she doesn’t do anything.” To keep labor costs low, Dollar Tree often has only one or two employees working any given shift in the store—a major reason for boxes of bargain-priced goods to pile up, as no one has the time to shelve the merchandise. The risks of an accident to a customer or an employee caused by falling boxes is apparently one the company is willing to take. This is a company whose CEO was compensated a total of $7.8 million in 2014, and its other top four executives received a total of $10.7 million.14
Safety violations are all too common in the telecommunications industry, particularly in the construction and maintenance of cell phone towers. In 2013 thirteen deaths occurred in the communication tower industry, and nine months into 2014, eleven deaths had occurred.15 Wireless Horizon, a company based in Missouri, apparently provided workers with “safety” equipment in poor condition and failed to conduct an engineering survey and plan—all basic safety measures for a job demolishing a cell phone tower. OSHA fined the company $134,400 for two willful and four serious violations—a pittance considering the intentional disregard for its workers’ safety that ultimately led to the deaths of two men.
Companies across all the bargain-basement sectors are all too often cheating workers out of their pay or putting their physical well-being in jeopardy, often deliberately. These are workers who earn wages at the very bottom of the pay scale. They don’t have the backing of a union to help ensure a safe workplace and therefore are quite simply at the mercy of their employers, relying on their morality, diligence, and good faith to keep them safe and pay them fairly. Because most workplace investigations are prompted when a worker files a complaint (75 percent of all wage and hour investigations are initiated by worker complaint),16 it’s realistic to assume that most violations go unreported. And with good reason. Workers in restaurant, retail, janitorial, construction, home care, material moving, and other bargain-basement jobs function at the very bottom rung of our labor market—a precarious position, to say the least. Workers rightly fear that they will be retaliated against by their employer if they file a complaint, by being fired or by being punished with reduced hours or a demotion. This fear is especially intense for undocumented immigrant workers, who worry about being reported to immigration authorities and ultimately deported in retaliation for their complaint.17
Wage theft and health and safety violations are often fueled by the now widespread use of outsourcing, in which a company sheds production or services that aren’t core to its company brand. It can take many forms: franchising, multiple layers of contracting, staffing or temp agencies, or misclassification of workers as independent contractors. No matter the form of outsourcing, the result is often downward pressure on wages and workplace safety standards the further down a worker falls in the human supply chain.
Unlike the largely industrialized working-class jobs of a bygone era, where it was clear who workers actually worked for, many of today’s working-class jobs lie at the end of a Rube Goldberg–like system of contracts, subcontracts, and sub-subcontracts, where one project, often for a major company, is staffed by several smaller companies, including temporary placement agencies. Fast-food workers’ paychecks come not from the recognizable brand embroidered on their uniform but from the franchise operating the store. And then there’s the new practice of classifying workers as “independent contractors” to avoid the pesky costs of having actual employees. All these practices result in a web of employment relationships in which accountability is hidden, making it easy for employers to flout regulations and cut corners, with workers paying the price. This “fissured workplace,” the title of David Weil’s illuminating book on the subject, puts pressure on each successive contractor in the chain to trim costs, whether by paying workers less than they’re legally entitled to or by saving money on vital safety equipment and practices—including hiring temporary workers for some of the most dangerous jobs, which should require safety training.18
The splintering of employee-employer relationships is now a ubiquitous part of the bargain-basement economy. From hotel workers to fast-food workers to warehouse workers, it is often unclear which company is ultimately responsible for ensuring that wage and safety laws are followed, and as a result these laws are often overlooked—sometimes innocently, often flagrantly.
Subcontracting is one of the most common ways for lead companies to farm out work that isn’t core to their brand, such as janitorial services, warehousing, and customer relations. Just a decade or so ago, a warehouse worker for a major national company like Hershey would have been an actual employee of Hershey, enjoying the same perks—high wages, health and retirement benefits, vacation and sick days—as the company’s white-collar professionals who work in marketing and product development.19 Today that’s no longer the case. A few years ago Hershey became the center of a national firestorm when its overly layered subcontracting system resulted in a bruising and highly publicized story of labor violations and outright abuse at one of its distribution centers.
Illustrative of the winding, complex loop-de-loops of today’s subcontracting practices, the story of what happened at a Hershey warehouse began with a plea for help to the U.S. State Department.20 Yes, the State Department, the governmental agency responsible for maintaining our relationships with countries around the globe. Why did a worker at a Hershey distribution center contact the State Department for help? It turns out that the worker was actually a foreign exchange student, here on a long-standing J-1 Visa program designed to give international students a chance to experience American culture. The program is run by a nonprofit organization, the Council for Educational Travel, USA, known commonly by its acronym, CETUSA. In this case, CETUSA managed the visit of four hundred students from more than a dozen countries, finding them jobs, booking their travel, and arranging for housing.
The jobs CETUSA found for the students were the last link in a chain of subcontractor relationships, all leading back to Hershey. In the early 2000s, Hershey began the process of shedding operations that its managers felt weren’t core to its brand, including, startlingly, the actual production of chocolate as well as the packaging and distribution of its products. The company did retain ownership of one distribution center, in Palmyra, Pennsylvania. But Hershey didn’t want to be distracted with managing the center, so it contracted with Exel, a logistics company that operates more than three hundred sites in the United States.21 Exel then contracted with a temporary staffing agency, SHS OnSite Solutions, to hire and manage the workers at the center. SHS OnSite Solutions, itself part of a larger company called SHS Group LP, contracted with CETUSA to provide four hundred international students to work at the center. For the students, all of whom rationally thought they were going to work for the very American chocolate company Hershey, their paychecks alerted them to the fact that they were not Hershey employees.
When the students’ complaints to the State Department about their working conditions went unanswered, they protested and walked out on the job. That grabbed the State Department’s attention, and that of the Labor Department’s Wage and Hour Division. The students working in the Hershey facility, each of whom paid $3,500 to experience American culture, were being paid $8.35 per hour and often had rent taken directly out of their paychecks. They worked the night shift, from eleven p.m. to the morning, manually lifting and hauling around fifty-pound boxes of Hershey’s Kisses for eight hours. With little money left after they were paid, experiencing any culture-enriching activities was out of the question.
After investigations conducted by OSHA, Exel was cited for health and safety violations and fined $283,000, and the State Department banned CETUSA from participating in its guest worker visa program.22 Hershey, SHS OnSite Solutions, and CETUSA all publicly ducked responsibility, pointing the finger at one another and claiming they weren’t directly responsible for, or aware of, the conditions at the facility.
These four hundred students came to our shores to experience American culture, which they certainly didn’t define as backbreaking work at low wages in unsafe conditions. Ironically, what they experienced is indeed a quintessential feature of American culture: the exploitation of low-wage workers.
One of the most common tactics used to distance companies’ responsibility for their workforce is to misclassify many of their workers as “independent contractors,” which exempts the company from having to provide benefits, pay payroll taxes, and comply with federal and state labor laws, such as the minimum wage and overtime rules. As a result of misclassifying workers in this way, states and the federal government lose billions of dollars in tax revenue each year that supports unemployment insurance, worker’s compensation, and Social Security and Medicare, not to mention state and federal income taxes. Employers often underreport how much they pay independent contractors or pay them off the books to avoid paying taxes. Meanwhile, the workers also lose, because as independent contractors they don’t qualify for most safety-net programs when they are out of work, and they fall through the cracks of most labor and employment laws.23
So who exactly should be classified as an independent contractor? The key term here is the word “independent.” According to the IRS, what makes someone an independent contractor is that the firm paying for his or her work has direct control only over the result of the service or work provided, not over what work will be done and how it will be done.24 True independent contractors, such as realtors and freelance graphic designers, are self-employed, responsible for finding clients on their own.
The misclassification of workers as independent contractors has jumped the fence from professional occupations to include some of the lowest-paid jobs in America, including home care, janitorial work, and trucking. Today, for instance, almost all heavy-truck drivers are “independent contractors.”
Rhonda, a thirty-six-year-old white woman, has driven trucks for over nine years. She’s currently a truck driver in the Port of Savannah, Georgia, where she’s “leased to” C&K Trucking. As a port trucker, Rhonda moves (or “pulls,” in trucking lingo) the giant shipping containers from the port to a nearby warehouse or distribution center. She owns her truck but not the chassis or other equipment needed to pull containers; that is leased to her by C&K Trucking, and under her contract she can only haul C&K Trucking’s freight. Because she’s classified as an independent contractor, she must pay for all expenses associated with keeping the truck running—fuel, insurance, tires—and the costs of repairs to parts she doesn’t even own, like the chassis. There is nothing “independent” about Rhonda’s relationship to C&K. In fact, like most port truckers in the United States, hers is a classic example of companies classifying their workers as independent contractors to avoid the costs and responsibilities of having employees. This misclassification is rampant in port trucking and has fueled ongoing strikes at major ports in the country as truckers fight to be considered employees and gain the right to join a union.
“They get to do us how they want, without any discipline—they don’t have to worry about being regulated, there’s no one out there governing them,” Rhonda told me. “They basically treat us like sharecroppers on wheels, because we can’t stop them and we can’t fight them. We show up every day and are given assignments—I’m not sure how much more of a definition of an ‘employee’ they need to treat us like one. It’s hard when you work all week, and after a week you can’t afford to pay your bills, let alone take care of the truck. The joke of it is that they consider us small-business owners, yet we only take home about $500 week. What kind of business owner would make it if they only brought home $500 a week?” Rhonda gets paid by the container, earning $40 per container she moves for C&K. Last year her gross income pulling containers was $60,000. But after all the expenses to maintain and operate the truck, she filed just $19,000 in taxable income.
Rhonda’s real independence as a contractor is largely fictitious. She must show up each morning, and if she isn’t going in, she must let C&K know, as if she were an actual employee. “They discipline you if you don’t call in like an employee. If you don’t let them know you’re not coming in, they won’t work you the next day or so when you do come in,” she said. Because Rhonda isn’t considered an official employee, she doesn’t get health insurance from her job. She applied for health insurance through the new exchanges created by the Affordable Care Act and found out she didn’t earn enough money to qualify and needed to apply for Medicaid. She’s still waiting on a return phone call after applying. For now, her whole family is uninsured and must rely on clinics for care, “praying to God” that nothing serious happens.
Because Rhonda and her husband can’t afford after-school programs or summer camp, their twelve-year-old son stays home by himself when school is out. They both work in the trucking industry, and being close to home was the chief reason Rhonda bought a house so close to the Port of Savannah, less than a mile away. It gives her peace of mind to know that she’s less than five minutes away if her son needs her. She could make more money driving the roads, but the expenses and maintenance are higher and the hours are longer. She chose port trucking so she could always be close to her son.
Port truckers are the backbone of our logistics industry: They are the first line in a complex web of moving goods that we literally depend on for the shirts on our backs. My conversation with Rhonda turned emotional when we started talking about politics. Fighting back tears, she talked about the indifference of elected officials who never had to struggle and don’t know what it is to struggle. “If they walked a day in our shoes, this industry would change,” she said. “And I would let each and every one of them ride in my truck, right up to the president, just so they could see it for themselves.”
When you drive down any major thoroughfare in any town in any state, at some point the vista will be taken over by the blanketed sameness provided by our nation’s most recognizable fast-food and hotel chains. Weary travelers or stressed-out parents know they can pull in for a quick bite to eat or to rest their head for the night, knowing exactly what they’re getting before they even walk in the front door. The Olive Garden and Holiday Inn Express off the turnpike in Ohio will offer the same menu choices and service standards as those establishments in Chula Vista, California. That’s the beauty, or banality, depending on your viewpoint, of the franchise.
Buying a franchise is less risky than conceiving and operating an independent small business. Big national chains offer a practically built-in customer base, no matter where you open up shop. But purchasing and running your own McDonald’s or Holiday Inn Express is quite a different experience from owning and operating something that is truly all yours. In the case of fast food, when you purchase a franchise, you’ll be agreeing to operating standards and procedures that are minute in their detail. You’ll also be agreeing to pay an up-front royalty and then a percentage of all sales to the company, which are typically 6 percent, but for McDonald’s, the leader of the pack, are 12 percent of all sales.25 It all sounds innocent enough, and indeed, unlike other arrangements that siphon operations away from the lead company, it is a legitimate way to expand a brand’s footprint.
But in an era when worker power is weak to nonexistent and labor regulators are woefully understaffed, the franchise model has devolved into a tale of big brands squeezing more profits from their franchisees under draconian operating procedures, with franchisees in turn squeezing out their profits by cheating workers out of pay.
Dion, a thirty-four-year-old African American father of six, is all too familiar with the tactics of fast-food companies. He works as a shift manager at Rally’s, a burger chain in the Midwest and Southeast, and as a cook at Lee’s Famous Recipe Chicken, a fried chicken chain concentrated in the Midwest, with a sprinkling of locations in the South. Juggling the two jobs is made slightly easier for him because the two outlets are across the street from each other. He’s worked in fast food for the past ten years, and to help make ends meet and support his children, who live with their mother, Dion is currently living with his own mother. I talked with him the day he was written up at work for moving too slowly during his training to become a manager at Rally’s, where he had started just three weeks before. Speed is the name of the game in fast food. From the time the customer pulls up to the drive-through menu, the timer starts going and employees have two minutes to take the order, collect the money, make the sandwiches and drinks, and get the customer on the way. Dion thinks this is unrealistic and leads to bad customer service, not to mention demoralizing the staff, who are watched like hawks as the timer begins the two-minute countdown. Part of Dion’s training as a manager at Rally’s involved instructing him to make sure that none of the employees met with representatives from Fight for $15, the union-backed movement of fast-food workers who are demanding higher wages and a union, even if they were off the clock.
Over at Lee’s Famous Recipe, where Dion has worked for ten years, getting scheduled enough hours is a challenge. During the first year, most employees are given only fifteen hours a week, and after that most get scheduled for less than thirty hours. There’s a reason for this: By keeping workers under forty hours, companies can lower their labor costs by avoiding paying for benefits such as vacation days and health insurance. Neither of Dion’s jobs provides paid sick days, so coming down with the flu means losing pay. At Lee’s, workers can earn a week of paid vacation after their first year if they’ve averaged thirty hours per week over the year—which means most workers don’t qualify. Neither of Dion’s jobs provides him with any kind of security for dealing with life’s worst situations. And Dion has definitely been through the worst.
Dion’s daughter was born with left-side heart syndrome, meaning that the left side of her heart was underdeveloped. When she was an infant, she had surgery to repair her heart, and as a result of complications from the surgery, she had damage to her kidney and lungs. Just before her third birthday, she passed away because of kidney failure. Because his daughter’s illness was so grave, Dion stopped working for two years, racking up medical bills and debt. When he returned to Lee’s after his leave of absence, he wasn’t given his managerial position back, so he is now working as a cook. He took the job at Rally’s to help him climb out of debt. At Lee’s he makes $9 an hour, even though he has worked there for ten years. When he started he made $5.95, so he’s had a $3.05 raise over ten years. Rally’s pays him $10 an hour, a $1-an-hour boost for being a manager. He works at Lee’s for thirty hours a week and at Rally’s for twenty hours a week. “I work seven days,” he explained. “I don’t get any off days. I work days, nights, overnights. I work whenever they may need me or whatever I see on the schedule.” The schedules are posted a week in advance.
Dion’s days start early. Rising at five a.m. to catch the bus to either job, he typically works until about six or seven p.m. Because he doesn’t own a car, he drives to work only when his mom is off and he can use her car. When he gets home, he washes his uniform for the next day, gets some sleep, and starts the process all over again the next morning. Juggling two jobs has come with a price that Dion wishes he didn’t have to pay: a lack of time spent with his kids. He just had a new baby girl, and he regrets not getting to spend time with her. But he needs the two paychecks to get out of debt and support his family. It’s a trade-off many parents in the bargain-basement economy find themselves forced to make because they work in jobs with low pay and unpredictable schedules.
Compared to the big fast-food companies, like McDonald’s and Taco Bell, Rally’s and Lee’s Famous Recipe seem like mom-and-pop outlets. But they share the same basic franchisor-franchisee structure. It’s possible to measure the effect of franchising on fast-food working conditions because many of the major companies still own and operate some of their own outlets instead of franchising them. A study comparing the likelihood of violations of wage and hour laws between company-owned outlets and franchise-owned outlets for the top twenty fast-food companies found that franchised outlets were 25 percent more likely to be in violation, and the back wages owed to workers were 60 percent higher per investigation.26 As the researchers explain, franchise owners are less concerned with maintaining the image of the corporate brand than they are with making a profit for their individual store. Why might this be the case? The researchers suggest that franchisors are much less disposed to do anything that might damage the brand, because they profit from all sales, so they are more likely to play by the rules and avoid any negative attention that comes with a federal investigation. In contrast, franchisees profit only from the sales at their specific outlets, making their core concern protecting their profit, which leads to squeezing labor costs, often in ways that violate the law.
For too long the major fast-food companies could shield themselves from any liability over the labor practices of their franchise operators by claiming they were not the actual employer, since the franchisee controlled the hiring, firing, and wage-setting. Basically, corporate McDonald’s takes the stance that workers at franchised McDonald’s aren’t actually employed by McDonald’s. For decades the conservative-controlled National Labor Relations Board (NLRB), which is the first stop to settle these kinds of disputes, agreed with this spurious logic. That is, until July 2014.
As fast-food workers began to organize in 2012, they held a series of one-day strikes, and many were illegally fired, threatened, or otherwise penalized for their pro-labor activities. These workers filed official complaints with the NLRB, and out of the 181 complaints filed, the General Counsel of the NLRB found merit in 43 cases and said that he would include McDonald’s as a joint employer in those cases.27 The cases will now go to administrative judges; if McDonald’s loses and is found liable, the company will probably appeal to the NLRB. And depending on how that goes, this seemingly commonsense ruling could wind up before the Supreme Court. Upon the initial ruling, a spokesperson for McDonald’s issued the following statement: “McDonald’s serves its 3,000 independent franchisees’ interests by protecting and promoting the McDonald’s brand and by providing access to resources related to food quality, customer service, and restaurant management, among other things, that help them run successful businesses. This relationship does not establish a joint employer relationship under the law…This decision to allow unfair labor practice complaints to allege that McDonald’s is a joint employer with its franchisees is wrong. McDonald’s will contest this allegation in the appropriate forum.”28 The stakes are high for McDonald’s, so it’s certain that a white-shoe law firm is on retainer and the best public relations firm is too. The company will spare no expense to shield itself from accountability for the working conditions of its (non-) employees.
Nancy, a fifty-four-year-old white woman, has worked for Walmart for over nine years. She’s currently a customer-service manager in Baker, Louisiana. Despite the “manager” title, her position is not a salaried management position; it’s hourly, and those hours are subject to change on a weekly basis. Nancy took a circuitous employment route to Walmart. She and her then husband (they are now divorced) owned a video store in the early to mid-1990s. They did well until Blockbuster came along and could afford multiple copies of hot titles, making it easier to rack up rentals. But the final death knell came when Walmart entered the VHS business. Once Walmart got into the business, studios invented the idea of “sale-thrus”—selling videos at retail stores. Within two years sale-thrus took off and the wholesale prices charged to video rental stores increased significantly. In order to break even on a title, they had to rent a video at least twenty-five times, a hurdle Nancy’s mom-and-pop store couldn’t clear. “I’m different from most associates at Walmart,” she told me, “because I’ve been on both sides of the coin. I’ve been a small-business owner who was put out of business by Walmart, and now I work there.”
When Nancy started working at Walmart in 2005, she was “shocked by how it was the best job I’d ever had. These people respect you—my gosh, it was amazing. I told everybody to go to work at Walmart.” But that all changed in late 2006. The managers called the associates in to talk to them about a series of changes they were rolling out in their stores. Over a period of six to eight weeks, associates were gathered in the break room to learn of a new change, such as shifting to optimized scheduling (aka “just-in-time” scheduling) or cuts to benefits. As Nancy said, “Ever since that first day, Walmart has been horrendous to work for. If I had not had the time that it was wonderful, I just could not believe the change. It was just amazing.”
Nancy started talking to her coworkers about the need to stand together. The cutting of hours and optimized scheduling (optimized for Walmart, that is) resulted in workers being scheduled all around the clock. At first Nancy’s coworkers thought it was just something their particular store was implementing, but Nancy suspected it was a change being directed by the home office and put in place in all the stores. Her hunch was confirmed when she learned about OUR Walmart on Facebook. OUR Walmart, which stands for Organization United for Respect, is a group of Walmart associates supported by the United Food and Commercial Workers (UFCW) who are working to improve the working conditions at Walmart. Nancy’s father and older brother were in a union, and she had learned that solidarity among workers can produce real change. In 2010 she got the chance to stand up and speak up on behalf of herself and her coworkers at Walmart’s annual shareholders meeting. Walmart sends one associate from each store to the meeting, and Nancy was selected. Associates are given a tour of the home office, vendors set up booths to offer free products, and two concerts are held before the actual meeting. The big meeting always features major stars as emcees; Céline Dion, Tom Cruise, and Hugh Jackman are just some of the celebrities who’ve lent their name to the company. The year Nancy attended, Jamie Foxx, the actor, was the emcee.
As part of the show, Bill Simon, then CEO of Walmart, opened the floor up to associates to ask questions. When one associate received a condescending response to his complaint about how hot the stores were in the summer, it was the last straw for Nancy. She felt she had to get in the line to speak, but she was overcome by anxiety. She prayed for the Lord to give her a sign that she should speak up, which she got when Bill Simon pointed to her and said she’d get the last question. So she began talking about the changes in working conditions, focusing particularly on the new scheduling practices. As she spoke, the three thousand-plus associates began clapping in support, and when she finished, they gave her a standing ovation. Bill Simon was not too happy, quipping, “I guess we’re having fun now” when Nancy finished speaking.
Four years after fighting for change, Nancy admits she was naive. When she first got involved, she truly believed that if the CEO and Rob Walton (chairman of the Walmart board from 1992 to 2015 and son of Walmart founder Sam Walton) were aware of how the new policies were negatively affecting workers’ lives, not to mention the quality of the shopping experience for customers, they would make changes. She reached out to OUR Walmart looking for a bridge to the home office in the hope of improving Walmart, not in order to destroy it. She examined the company’s financial statements and was just left wondering, “Why are they cutting everything when they’re making such a high profit?”
Nancy and the rest of the OUR Walmart members have made a difference. In April 2015 the company raised its minimum wage to $9 an hour, and it is scheduled to raise to $10 an hour by February 2016. In July 2015 the company announced additional raises for managers in service-oriented departments, such as electronics and auto care.29
Nonetheless, the havoc wreaked by “just in time” (JIT) scheduling remains a major problem at Walmart and across the retail and food-service industries. Basically, JIT is typically done using advanced software that allows managers to calibrate workers’ hours with consumer demand. So when the mall is empty and store traffic is lighter than anticipated, managers send workers home before their scheduled shift is over, essentially cutting their pay. Managers are often under pressure to meet targets for payroll as a percentage of sales, and since they can’t easily drum up more customer traffic, their only real tool is to cut workers during slow times. But the scheduling issues, a major source of frustration and insecurity for the new working class, aren’t just about being sent home early without pay. Just-in-time scheduling also means that workers’ schedules are rarely shared more than a week in advance, and their hours may vary from week to week. Workers may be scheduled fifteen hours one week, thirty hours the next week, twenty-two hours the next week—and those schedules may be posted just days before each workweek. According to the Economic Policy Institute, 17 percent of the workforce has an unstable work schedule, which wreaks havoc not only on their budgets but on their lives more broadly. For parents, unpredictable scheduling makes child-care arrangements nearly impossible to nail down, leaving them few options for good and stable care. The pervasiveness of on-call scheduling in retail and fast food illustrates the kind of stance toward employees that makes them feel disrespected by their employers, as if they were little more than machines to be turned off and on to meet demand.
The issue of just-in-time scheduling got a major profile boost thanks to an in-depth article in the New York Times.30 The article chronicled the troubles these scheduling practices visit on families, upending child-care arrangements and making budgeting nearly impossible. One of the workers in the story was a barista at Starbucks, where she often wouldn’t get her weekly schedule until three days before. She also endured what workers call “clopening”—closing down the store and returning only hours later for the opening shift. Just a few days after the article ran in the paper, Starbucks announced that it was committed to providing stable schedules for its workers, which the company defined as posting schedules at least one week in advance.31
Whether it’s wage theft, skimping on safety equipment, or misclassifying workers as independent contractors, the thread connecting all of these practices is unbridled corporate power and a punitive workplace culture that places the blame for bad working conditions squarely on the worker. After all, these workers should be able to “just get another job” or “go back to school.” And the new working class is all too aware that their labor is deemed disposable and rather unremarkable in its skill. It’s manifest in every nook and cranny of the bargain-basement economy. To a person, workers experience a painful desire for respect and dignity on the job that remains unfulfilled. The Fight for $15, which now includes retail, fast-food, and airport workers, adjunct faculty members, and home care workers, isn’t just about a pay raise. It’s about bringing basic decency and humanity back to the workplace.
As the Sleeping Giant stretches its arms to the sky, waving placards demanding a better wage, workers appear to be winning this burgeoning battle in the court of public opinion. Whether the fight will change our politics and shift the ground on which national and state candidates run for office will be proved in the long months of the hotly contested 2016 presidential race. Can the needs of the working class punch through our money-drenched, elite-driven political campaigns? And what would a politically potent working class demand? The answer is different than you might assume. It turns out that much of the conventional wisdom about working-class politics is just plain wrong.