Economy
4:01 am
Thu December 5, 2013

Pressure Mounts On Fast-Food Industry To Pay Workers More

Originally published on Thu December 5, 2013 3:05 pm

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Transcript

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Protests are planned at fast-food chain restaurants 100 American cities today. Unions are staging these protests as part of a campaign to press the industry to pay more than the minimum wage. In fact, organizers are calling for $15 per hour. In some cases, that would double the pay that workers get now, and the industry appears unlikely to do that voluntarily.

But NPR's Chris Arnold takes a look at what might actually happen if they did.

CHRIS ARNOLD, BYLINE: Boosting fast-food workers' pay to $15 an hour might sound unrealistic, but actually, there are a few places where they already make that much.

(SOUNDBITE OF AIRPLANE ENGINE)

ARNOLD: At the Los Angeles International Airport, Ramon Valencia just finished his shift at Burger King where he gets paid...

RAMON VALENCIA: (Spanish spoken)

ARNOLD: That's $17.64 an hour. Some years ago, L.A. passed a living wage ordinance for workers at the airport. It adjusts for inflation, and now it's more than $15 an hour if you don't get health care. So, Valencia earns a lot more than he would at a Burger King just a few miles away.

Douglas Ernesto Marmol also works at a fast food chain at LAX.

DOUGLAS ERNESTO MARMOL: I have my own car, my own apartment, and I wish that other workers can make the same. They deserve it.

ARNOLD: The town around the Seattle Airport just passed a $15-an-hour minimum. And some bigger cities have living wage laws, too. San Francisco has the highest, at close to $11.

Still, a big jump to $15 at fast-food chains all over the country, that'd be uncharted territory.

Lawrence Katz is a labor economist at Harvard University.

LAWRENCE KATZ: It certainly wouldn't drive the industry out of business, but it probably would have a noticeable effect on employment.

ARNOLD: In other words, a lot of people might lose their jobs. That's because the vast majority of McDonald's and Burger Kings are franchises. Most are not making massive profits. So they'd need to adjust.

They could raise prices. And maybe those burgers they're serving are just too cheap. A recent study by a UC Berkeley economist found that half of fast-food workers - even with full-time jobs - still made so little, that they needed public assistance.

At the airport Burger Kings around Los Angeles, a Whopper Meal is about $6, and at the airport, it's $2 more expensive. And that seems to work. But, then again, everything is more expensive at the airport.

KATZ: You know, in airports, you're between two flights. You can't really run, you know, out of the airport, out of security to get something else to eat.

ARNOLD: But elsewhere, people might not buy as many burgers if the prices went up.

Sandeep Malhotra is a fast-food industry consultant with a company called Technomic. He says if all the cost was shifted to the price of the food...

SANDEEP MALHOTRA: On an average item, the price probably has to go up 20 to 25 percent.

ARNOLD: Malhotra says that would hurt business and cost jobs.

On the other hand, though, stores might save money on turnover and training, because workers would be more loyal.

Also, maybe those franchise owners could push back and tell McDonald's that they need to pay lower franchise fees, basically trading higher worker pay for lower corporate profits.

MALHOTRA: If corporate were to agree to making some sort of concession, it would be in the 2 to 3 percent range. You know, beyond that, you're fundamentally changing the underlying business model.

ARNOLD: And corporations don't tend to voluntarily give up a lot of their profits.

There is another thing that franchise owners could do. Malhotra says that they might get more interested in installing automated order-taking machines, so they wouldn't need to hire as many people.

MALHOTRA: McDonald's is experimenting with that technology in select locations.

ARNOLD: So nobody really knows exactly how $15 fast-food wages nationally would play out. But, Lawrence Katz thinks that corporations could absorb a $10-an-hour minimum wage without too much trouble.

Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.