Human Resources | August 2013 | By Christine Blank

Paid In Full?

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Fast food restaurant employees across the country are protesting wages.
courtesy / Photo by Christopher Dilts

After quick-serve workers walked off the job in this spring’s strikes in Chicago and other cities, some franchisees did agree to raise their starting wage. Jennifer Epps-Addison, economic justice director of Citizens Action of Wisconsin, which has organized some fast-food worker strikes, says there were some instances in which franchisees raised wages for employees by 25–50 cents an hour.

While the worker strikes—which also targeted Wendy’s, Subway, Burger King, Taco Bell, Dunkin’ Donuts, and a few retail brands—were not “devastating” to the corporations, they served as a wake-up call, Epps-Addison says. “We have a lot of people in this country who work in the low-paying service-sector industries who are the working poor,” she says.

About one-third of all jobs in Chicago, for example, are now considered low-wage jobs, according to the Workers Organizing Committee of Chicago. Further, six out of 10 of the fastest-growing U.S. jobs by 2020 are projected to be in low-wage occupations, including retail and the “food preparation and serving” sector, according to the U.S. Bureau of Labor Statistics.

“We have to make sure that these are decent jobs,” Gebreselassie says. “If we don’t, more workers will be relying on public assistance and will be able to spend less, which impacts our economy.”

Because the national minimum wage does not increase annually—it was last raised in 2009—it has not kept in line with inflation, proponents of higher wages argue. Gebreselassie says the minimum wage should be much higher than $7.25 per hour because that adds up to $14,500 a year on a 40-hour work week, and most fast-food workers aren’t given full-time hours. The low wage forces quick-service workers to find other part-time jobs or to seek public assistance to support themselves, the proponents say.

However, only about 5 percent of restaurant industry workers are at the federal minimum wage level—the rest are earning above that—and a little more than 50 percent are teenagers, DeFife says, citing the U.S. Bureau of Labor Statistics. “In many cases, minimum wage is a starting wage and high performers are moved up quickly. Eighty percent of managers and owners started at entry-level jobs; the industry is really an industry of opportunity,” he says.

While some suggest the $7.25-per-hour minimum wage is sufficient in the fast-food industry because many employees are students or just out of high school or college, the reality is that more quick-service workers are older and are using the jobs as a way to support themselves and their families, Gebreselassie says. The U.S. Bureau of Labor Statistics reports that the median age for a fast-food worker is 28, while the median age for female fast-food workers is 32.

In certain states and cities, a wage that is “much higher” than the national minimum wage is necessary in order for workers to survive, Westin says.

“Looking at rents in New York, it is very clear that incremental increases aren’t going to get us there,” he says. “Workers believe in what they are demanding: $15 per hour is what they need to live off of.”

While several operators either keep to a minimum-wage model or let their franchisees determine wage rates, many quick-service and fast-casual companies are finding that higher wages are developing a strong company culture. Take Boston-based Boloco, a 21-store fast-casual burrito chain, as an example. None of its employees make less than $9 per hour, and some earn as much as $17 per hour. The average wage for all employees is $11.50 per hour.

“Our objective is to build a successful, profitable business model and pay people as much as possible. We are trying to increase wages,” says John Pepper, CEO and cofounder of Boloco.

The company has always paid higher than the national minimum wage, Pepper says, because he believes it is the right thing to do and because it results in happier, more reliable employees. “If we are asking for all these things from our employees—real hospitality, really taking care of guests, and being loyal to the brand—you have an obligation to give them a fighting chance,” he says. “If you don’t give people a path to move beyond the wages they are at now, they are going to lose faith in the system. Once they lose faith, it is hard to restore it.”

One of the reasons employee theft is so high in the restaurant industry is that many operators do not pay their employees enough, Pepper says. “Why not try to get ahead of that? Our philosophy is, let’s set a standard so high that it pays for the better benefits that we are paying,” he says.

Boloco’s wage and benefits structure is modeled after successful restaurant operators such as Starbucks, which provides its employees with better wages and health benefits. Pepper says Starbucks CEO Howard Schultz’s keynote address at this year’s National Restaurant Association Restaurant, Hotel-Motel Show inspired him with a message about the “softer side” of building a business.

To that end, Boloco pays higher-than-average wages, has a robust health plan for employees, and offers a four-week sabbatical to all employees. As a result of this pay structure, Boloco’s turnover for team members is 64 percent, compared with the national restaurant industry average of 113 percent.

As Boloco looks to grow its company, Pepper wants to prove to potential investors that restaurant operators can be profitable while paying higher wages.

“Higher wages lead to hard-working people who add value to shareholders,” he says. “We have found that there are a lot more questions from investors and capital equity firms in recent years on the value that the company brings to the picture. The value has to do with your food and sourcing, your impact on the environment, and how you are treating people in all ways.”

Investors aren’t the only ones who want employees to be treated well. A recent survey from Restaurant DemandTracker found that 48 percent of consumers prefer to visit restaurants that treat their employees well.

Firehouse Subs’ Fox says he knows the way workers are treated is extremely important. But in his chain’s survey of more than 1,700 employees, most said their job satisfaction was dependent upon their relationship with the store’s general manager—not their wages. “They are much more likely to be dissatisfied and leave their job because of that [relationship],” Fox says. As a result of Firehouse’s strong emphasis on the employee-manager relationship and other employee initiatives, the brand’s turnover rate is 80 percent.

Still, Fox says, restaurant industry leaders can do a better job of inspiring workers to achieve more in their jobs. “Those companies that inspire leadership to in turn motivate their staffs are great companies,” he says. “We are an industry of maximum opportunity as long as they [employees] have the drive, talent, and ambition.”



Everyone should get paid what they are worth AND what the market can bear.The person who runs items over a scanner can only be worth a certain amount; even if a college grad.Fast food work has a similar value due to repetition.However, the PACE is significantly faster, and as such, more demanding.What fast food hasn't figured out is that it is LESS EXPENSIVE to KEEP good workers by paying them a bit more.Get rid of workers early who will not work out."Overpay" great workers, and you'll never pay to advertise, interview, train, and manage people who love their job and show up on time, everyday.

How is paying minimum wage the same as paying "competitive wages" as McDonalds claims? If your sports team has the worst record in the league, it is not "competitive."

Shooting at the established fast food and quick serves is tough. They all run 1960's business models. It is not their fault. Things are different now. You can't take a Wendy's and start paying $15 an hour as their model is set up for $8-$9.I don't blame anyone for being unhappy with $8.75 an hour. You would need to live either with your parents or on welfare. Again, the business model can't afford a higher rate. I love the unions..."McDonald's made $5.5B last year." What the heck does that have to do with anything? Study their annual report. A fast food unit in Manhattan does 5 times the volume of a suburban unit. They could probably handle the increase, but, the suburban unit is not set up for that kind of pay.When Henry Ford started up Ford Motors he designed the company to pay the highest wages in the world. A fast food unit is NOT designed to pay high wages. I will throw this out, if you are "starting up" a new QSR concept and are relying on a business model that pays $9/hr? Our new transparent society is going to yell at you. "Sustainability" isn't just about your paper goods anymore, it is about the community impact of low wages.

So many states get away with a pittance for a minimum wage. For instance, if you live in Idaho (Florida, Texas, or any other number of states), they have written a law that permanently defines state minimum wage as $3.25. But because federal law is $7+ right now, your "tips" can be counted as part of your wages to make it up to the federal minimum wage.If you live in a small town, or a town whose population is made up of a primarily temporary population (university), tips rarely add up to federal minimum wage, let alone more than that. So you will always be stuck at federal minimum wage.If you are single, you might BARELY be able to squeeze by on that. If you have children, there is no way to make ends meet without food stamps, state paid medical benefits, and subsidized housing, and subsidized childcare. If they are available.Yet, there are politicians who are trying their hardest to discontinue all of this. They propose that all of these programs are being taken advantage of by people who are lazy and don't pay their fair share. How can they pay their fair share when they can barely keep food on the table and a roof over their heads?Politicians are making sure that they break the system and then keep it broken so that people will feel the need to get rid of government. We need government. What we don't need is for our government to be bought by the highest bidder.

Higher wages=higher prices, period. Remember "spiraling inflation" in the 1970's and 1980's? High union wages led to higher prices. Someone has to pay for the increases. As a restaurant owner, I have held prices for 5 years. My food costs, labor, and all other expenses have increased. My profit margins are lower. The only way we make up for the increases is higher volume.

$15 per hour for flipping burgers = $10 burgers.$10 burgers = No more customers.No more customers = No more burger joints.No more burger joints = You just lost your job, you idiot!

It doesn't matter if the minimum wage goes up as high as $30-$50 per hour. The owner will never lose the bottom line profit because of an idiot worker. Minimum wage goes up? You will lose hours to make up for that. You actually think you can picket and get the minimum wage raised and then keep the same hours you have now? Lol There is no law that states you have to have certain hours. None. Once you get your $15, you will only get 10-15 hours per week, and most likely less. The owners can also fire half the staff to make up for it and make the remaining half work twice as hard. Dont like it? Quit.You will NEVER get ahead this way. Never. All business owners will compensate for the increase and the employee will always be on the losing end. Watch. they'll all stare at their boss with shocked faces when they lose all their hours or get fired. I got a raise and never got called for an assignment again. The good news? I qualified for unemployment AND disability and got to stay home while getting paid for two years. Life goes on. Take advantage of the system. It will never work in your benefit people. Don't be fooled.


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