Should Fast Food Workers Get a Raise?

Students learn about the demographics and experiences of fast food workers and their efforts to raise wages through strikes over the past year, and consider what consequences major wage increases might have on consumers and economy. 

To the Teacher: 

Over the last year, employees at a number of fast food chains—including McDonald's and Burger King—have launched labor strikes in cities across the country. Workers are demanding improved wages, better conditions on the job, and an end to unfair treatment by management. If successful, the movement could mean sweeping changes for workers and for this whole sector of the US economy. The campaign has already succeeded in bringing to public light the real profiles of people who work in fast food restaurants and the difficulties they face. The strikes have also furthered a public discussion about what a fair federal minimum wage should be.

This lesson is divided into two student readings. The first reading looks at the demographics and experiences of those who work at fast food restaurants and examines the rolling strikes by fast food chain workers over the last year. The second reading considers what consequences wage increases for fast food workers might have on consumers and the economy. Questions for discussion follow each reading.

Note: For further exploration, see our earlier lesson on this subject, Fast Food Forward


Student Reading 1
Fast Food Workers: Who Are They and Why Are They Striking?

Over the last year, employees at a number of fast food chains—including McDonald's and Burger King—have launched labor strikes in cities across the country. Workers are demanding improved wages, better working conditions, and an end to unfair treatment by management.

If successful, the movement could mean sweeping changes for workers and for this whole sector of the US economy. Historically, many people have thought of fast food workers as mostly teenagers, taking a temporary low-wage job on their way to something better (college or a better job). The current organizing campaign has already succeeded in bringing to public light the real profiles of people who work in fast food restaurants: While some fast food employees are indeed students working part-time, most aren't. Many fast food employees put in full-time hours; many support family members and themselves solely on their fast food wages.
A first wave of fast food strikes began in November 2012 in several New York City restaurants. Smaller actions took place throughout the following year, leading up to a second wave of strikes that swept the country immediately before Labor Day, 2013. Fast food workers are seeking a significant pay raise as well as the right to organize into unions, as Gary Strauss of USA Today reported on August 30, 2013:

Workers at McDonald's and other fast-food chains conducted strikes and walkouts in nearly 60 cities Thursday, hoping for super-size wage hikes that for many would boost their hourly pay to $15 from the current federal minimum $7.25.
The pre-Labor Day protests, which follow a series of strikes that began last November in New York City, targeted fast-food chains including McDonald's, Burger King, Wendy's and Yum Brands, whose chains include KFC and Taco Bell. Workers are also seeking the right to unionize.
Strike organizers, a loose confederation of local community groups and churches which has received some financial and training support from the Service Employees International Union, say restaurants in Milwaukee, Detroit and St. Louis had to close, at least temporarily, because of employee walkouts...
About 30 workers in Raleigh, N.C., picketed outside a Little Caesars. Julio Wilson said he earned $9 an hour at the pizza restaurant, not enough to support himself and his 5-year-old daughter.
"I know I'm risking my job, but it's my right to fight for what I deserve," Wilson said. "Nine dollars an hour is not enough to make ends meet nowadays."

In response to the protests, fast food industry officials argue that the strikers' demands are unreasonable. They contend that the relatively small number of strikers do not speak for the millions of fast food workers, many of whom are students working part-time. As Chelsea B. Sheasley of the Christian Science Monitor reported on August 29, 2013:

Officials at the National Restaurant Association say only 5 percent of restaurant employees earn the federal minimum wage and that 7 of 10 fast-food workers earning an entry-level wage are under the age of 25. Moreover, the number of strikers is also only a small percentage of the roughly 2.4 million fast-food workers in the United States, opponents say.

Furthermore, industry officials contend that while some workers earn "entry-level" wages, fast food chains offer opportunities for employees to climb the corporate ladder. "This industry is the embodiment of the American dream for many workers," said Justin Winslow, head of government affairs with the Michigan Restaurant Association. "Eighty percent of restaurant owners started at the bottom and 90% of managers started in entry-level jobs. There's an obvious ladder to move up."
Studies reveal that fast food workers are generally older and better educated than the popular perception of them suggests. As John Schmitt and Janelle Jones of the Center for Economic and Policy Research write in an August 2013 report:

One argument frequently made against higher wages for fast-food workers is that the industry is dominated by teenagers and workers with less than a high school degree, who somehow "deserve" the low wages they receive.  An analysis of government data on fast-food workers, however, tells a different story. First of all, only about 30 percent of fast-food workers are teenagers. Another 30 percent are between the ages of 20 and 24. The remaining 40 percent are 25 and older. (All the data we present here are from the government's Current Population Survey, where we have combined data for the years 2010 through 2012 in order to provide a large enough sample for analysis.) Half of fast-food workers are 23 or older. Many teenagers do work in fast-food, but the majority of fast-food workers are not teenagers.
Given the age structure of fast-food workers, it shouldn't be surprising that the same government data show that more than one fourth are raising at least one child. Among those age 20 and older, more than one third are raising children.
Over 70 percent of all fast-food workers have at least a high school degree and more than 30 percent have had at least some college education. If we limit the analysis to the 70 percent of fast-food workers that are not teenagers, the educational outcomes are even better: almost 85 percent have a high school degree or more and over one-third have spent at least sometime in college (including about 6 percent who have earned a college diploma).
Despite the age structure and the educational attainment of fast-food workers, their wages are very low, even by today's depressed standards. If we look at straight wages—that is, excluding overtime, tips, bonuses, and commissions, all of which are rare in the fast-food industry—about 13 percent make at or below 1 the federal minimum wage... About 70 percent of fast-food workers fall in the range between the current $7.25 federal minimum wage and the $10.10 level proposed in legislation sponsored by Senator Tom Harkin and Representative George Miller. Less than 10 percent earn between $10.10 and $12.00 per hour; and fewer than one-in-twelve make more than $12 per hour.
The wage structure for non-teenagers in the industry is almost identical to the overall distribution. Older workers in fast-food have little to show for their additional education, age, and experience.

If fast food workers succeed in their organizing, it could prove a boon not only for millions of fast food workers, but possibly for all of the low-wage employees in the country, as general wage standards rise. Regardless of the campaign's outcome, however, it has already succeeded in raising public awareness of the concerns and struggles of fast food workers.

For Discussion:

  1. Do students have any questions about the reading? How might they be answered?
  2. According to the reading, what are striking fast food workers looking to achieve from the campaign?
  3. What is the popular perception of the people who make up the fast food workforce? How does the research on the industry dispute this perception?
  4. Do you know anyone who works in the fast food industry (or do you)? Does the job provide extra spending money, or is it the primary source of income?
  5. Do you think the strikers speak for a majority of fast food workers? Do you think their demands are legitimate? Why or why not?


Student Reading 2
Would You Pay More for a Big Mac to Support a "Supersized" Pay Raise?

Would you pay more for a Big Mac if it meant that fast food workers would receive better pay?
As the rolling fast food restaurants have gained media attention, the campaign has highlighted questions about the economic impact of a big pay raise for fast food employees. While the current federal minimum wage stands at $7.25 per hour, strikers are calling for an industry-wide standard of at least $15.00 per hour. Such a change could mean higher prices for consumers. However, people disagree about how great the impact would be.
Fast food industry spokespeople claim that a significant wage boost would be extremely disruptive to the industry. As Gary Strauss of USA Today reported on August 30, 2013:

Industry observers and representatives say a $15 hourly wage, which would boost annual salaries to about $31,200, would likely force most restaurants to pass on higher costs to customers, crimping already tepid sales and forcing employers to cut workers.
Industry tracker NPD says restaurants already face a challenging post-Recession environment. Raising wages more than 100% "is not in the realm of feasibility,' NPD analyst Bonnie Riggs says.
"Margins are already squeezed because consumers have been cutting back,'' Riggs says. "The restaurant industry has had to discount heavily just to keep people coming through the door. And there would have to be significant prices increase to absorb the cost of higher wages." 

While supporters of the strikes concede that raises for workers would mean some price increases at fast food restaurants, they argue that these would not be nearly as devastating for the chains as executives claim. An analysis published by the Huffington Post suggests that the price of a Big Mac might go up by $1.28, raising the price of the sandwich from just under $4 to $5.27.:

A doubling of wages at McDonald's would almost certainly involve some layoffs, asserts Dean Baker, co-director of the Center for Economic and Policy Research, on HuffPost.  At the same time, more workers would stay in their jobs longer, Baker added.
Experts generally assume that roughly one-third of the cost of increased wages gets passed on to consumers, with much of the rest of cutting into profits, Baker said. Regardless, McDonald's is so vast and lucrative that it could easily survive a major wage increase, Baker added.
"The idea that it'd put McDonald's out of business, there'd be no way," said Baker.

 A wage increase would also have some benefits for employers, says Sylvia Allegretto, an economist Center on Wage and Employment Dynamics at UC Berkeley. "Constantly having to recruit and retrain new workers is very costly. If they had a higher wage and were more apt to want to stay in their jobs, that would lower those costs. You'd get more productivity gains from a workforce that isn't constantly turning over." 
The debate around fast food wages mirrors the national debate about raising the minimum wage. Historically, employers have argued that minimum wage increases would be devastating for their businesses, and some politicians have claimed that raising the minimum wage kills jobs. However, a 2004 study by the Fiscal Policy Institute that examined the effect of state-level minimum wage increases found instead that wage hikes were beneficial to state economies:

In examining state-level small business job growth, the best government data available permits a comparison of 1998 and 2003... For the 10 states and the District of Columbia that had set their minimum wages above the federal level for most of this period, indicators of economic performance were consistently better than for the other 40 states where the federal minimum wage of $5.15 an hour prevailed.

Given the cost to our society of poverty and growing inequality, advocates for fast food employees argue that it is worth rewarding work with living wages, even if it means paying a little bit more for our fast food.

For Discussion:

  1. Do students have any questions about the reading? How might they be answered?
  2. According to the reading, why do fast food executives contend that an industry-wide pay raise would be harmful to their businesses?
  3. Some economists point to positive impacts for business from paying better wages. What are some of these possible benefits?
  4. Would you be willing to pay more for a Big Mac, for instance, if you knew the people who prepared it were earning a better wage? Explain your reasoning.


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