Foolish Fast-Food Strikes

by Jillian Kay Melchior
When wages increase, jobs decrease — is that what unions and restaurant workers really want?

Thousands of urban fast-food workers across America walked off the job last week to stage protests for higher wages. They want a minimum of $15, or about twice the current minimum wage, and a whopping $6 higher than President Obama’s suggested $9.

Unions and their allies are marketing their efforts as a grassroots push to secure a living wage, but such ongoing one-day strikes are backed by Big Labor, which has an ulterior motive. With union membership dramatically on the decline nationwide, labor leaders are seeking new members wherever they can. Fast-food workers aren’t unionized, partially because the high turnover rate makes unionization difficult. But Big Labor is getting desperate enough to make a serious effort to gain support among this group.

The strike in Detroit was particularly notable. Late last year, Michigan, long a bastion of organized labor, became a right-to-work state, a development met with much rage from the unions. Michigan’s organized-labor movement is fighting for its life, and its influence in last Wednesday’s strike was obvious. Fast-food workers used well-worn union slogans — “hey, hey, ho, ho, [fill in the blank] has got to go” — and were joined in their picketing by members of Detroit unions.

Earning minimum wage at a restaurant does make for a miserable subsistence. When I was in college, I worked for a while as a hostess at a Chili’s, putting in long hours to pay for my car, insurance, and gas. I lived with my parents and didn’t have to worry about rent or food, but money was still tight. The job was boring, I left reeking of fajitas, and my feet and legs ached from hours of standing.

But as difficult as that work is, and as unrewarding the pay, Detroit’s fast-food workers are playing a risky game. True, they know they won’t get the $15 minimum wage they’re requesting — that’s merely their opening salvo — but even more modest wage hikes would have devastating consequences for Detroit’s restaurant workers.

Already, Detroit has an unemployment rate of 16 percent, more than double the national rate of 7.4 percent. A bleak Washington Post article recently reported that the job-placement agency Michigan Works! was able to find jobs for a mere 2,300 workers in 2012, “a tiny fraction of those who walked through its doors seeking help.”

Part of the problem is that many of Detroit’s job applicants are very low-skilled. The city has a functional-illiteracy rate of around 47 percent, and almost all jobs require basic reading proficiency. And the new generation’s prospects don’t look much better: Last year, the Detroit Public Schools graduation rate was only 64 percent, which was an improvement over the previous year. Simply put, a lot of Detroiters don’t have the skills they need to find better, more remunerative work.

In that context, the fast-food industry begins to look like a bright spot in the Motor City’s employment portfolio. A 2010 survey by the Physicians Committee for Responsible Medicine found that Detroit has 73 fast-food restaurants, more per square mile than many cities with comparable populations. The Huffington Post reported in May that fast-food jobs outnumber automotive jobs in Detroit by nearly two to one.

Fast food is a labor-intensive industry, the jobs don’t require advanced skills, and the number of available jobs is on the rise. The Bureau of Labor Statistics has projected that employment within the food-and-beverage industry will grow 12 percent between 2010 and 2020.

But it’s a well-documented fact that when wages increase, employment decreases. The Employment Policies Institute has found that labor already costs the typical fast-food restaurant about a third of its income. If those labor expenses increase further, it will put Detroit’s much-needed fast-food jobs in jeopardy.

A Ball State University study, for example, found that when the federal minimum wage increased by 40 percent between 2007 and 2009, it cost 550,000 part-time jobs. And the Employment Policies Institute has reported that when the minimum wage increases by 10 percent, small businesses cut teen employment by between 4.6 percent and 9 percent. And minority youths suffer the most from such cuts.

Big Labor has marketed the fast-food strikes as a chance to fight for the well-being of Detroit’s poorest residents. And protesters are right: A minimum-wage fast-food job is hardly ideal. But having no job at all is even worse.

— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity.