September 9, 2013
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Editors note:This is the third in a series of
reader-supported—i.e. crowdfunded —articles about the powerful National
Restaurant Association and the plight of low-wage workers who are being
screwed at every turn by industry lobbying tactics and
misleading propaganda. An amazing 387 AlterNet readers contributed more
than $5,500 to support this ongoing investigative project. Many of the
donors are listed at the end of the article. Read part 1&2 of the
series here and here.
The
more you look at what it means to work in America’s
restaurants—especially at the corporate-run chains—the less you will
want to eat out.
The ongoing
protests
by fast-food workers for higher wages and paid sick days underscore the
most visible problems. There’s also wage theft. There’s gender and
racial harassment. There’s discrimination in pay and promotions. There’s
slick public relations efforts that paper over this exploitation, with
corporate lobbyists repeatedly telling politicians that they can’t pay
wokers more—while other executives tell Wall St. analysts about using
their profits for stock-buybacks, expansion plans and shareholder
dividends.
The nationwide fast food worker walkouts are
highlighting and rejecting a predatory low-wage, low-benefit business
model that’s all too common in service sector jobs. Ironically, some of
the nation’s top business school professors say the restaurant
industry’s scorched employee policies aren’t even the best way to build
companies.
“If paying more is considered part of a bigger strategy, then yes, I think companies can afford to pay more,” said
Zeynep Ton, a MIT Sloan School of Management professor and author of the
forthcoming The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits.
“The only way to pay more (as well as invest in training, offer more
stable schedules, etc.) without hurting business is if employees are
more productive and more part of the company’s success.”
But
Ton’s prescriptions of investing in workers and empowering them are
all-but absent in the restaurant industry, especially at the corporate
chains. Instead, millions of the U.S. industry’s 12.2 million employees
are all-too-often treated like robots and abused like serfs. And Ton and
labor activists say that will not change until the public demands it.
“When we care, companies might start caring as well,” she said.
What
follows are profiles of three trend-setting chains illustrating the
issues that separate terrible employers from somewhat better ones. The
fast food strikers want raises to $15 a hour and paid sick leave, as
most are adults with families and not teenagers in first jobs. But they
face other issues, too, such as gender and racial discrimination and
harassment, segregated workplaces, and few opportunities for
advancement.
Racing To The Bottom: McDonald’s.
McDonald’s is
across-the-board
terrible. They require employees to work at Christmas and Thanksgiving,
but don’t pay overtime. They pay as close to minimum wage as possible.
Their marketing to kids is
predatory and creepy. Some salads have
more calories than burgers. They use “
pink slime” for chicken entrees. They
encourage employees to get food stamps to offset low pay. And they’re everywhere.
This spring,
USAToday and 24/7WallSt.com
said
that McDonald’s—more than any fast-food chain—was one of “eight
companies that most owe workers a raise.” McDonald’s can afford to pay
the vast majority of its 800,000-plus U.S. employees more, the paper
reported, citing the firm’s own financial reports. Its stock was up 6.9
percent over last year, and up 68.2 percent over the past five years.
Most
companies don’t make payroll data public, unlike their earnings
reports. But there are websites that post jobs, average salaries and
employee comments. Glassdoor.com lists hundreds of entries for
McDonald’s. Almost all of its wages hover near legal minimums. For
cashiers, the hourly average is $7.74. For crew member, it’s $7.70/hour.
For a crew trainer, it’s $8.14. For drive through cashier, it’s $7.73.
For grill cook, it’s $7.72. For fry cook, it’s $8.20. For swing manager,
it’s $9.33. For general manager, its $43,862 a year, or $21.08 hourly.
For assistant store manager, it’s $29,574 annually or $14.22/hour.
These
are not living wages for adults or families. The federal mimimum wage
is $7.25 an hour, although nearly two-thirds of the states have raised
it a dollar or more. The striking fast-food workers are seeking $15 an
hour, plus paid sick time. As
USAToday noted,
in late 2012, McDonald’s announced that it planned to return $5.5
billion to shareholders via increased dividends and stock buy-backs. It
has paid dividends every year since 1976, the paper noted. Meanwhile,
its senior executives have sent memos to franchise owners conveying
customer complaints about poor service.
This big picture—chiseling
employee wages and funneling profits to investors—is the reason for
customer complaints, MIT’s Ton said. But it’s also part of a corporate
culture that demeans workers.
Writing of last Thanksgiving’s mandatory work and no overtime in the
Harvard Business Review, she said, “employees are once again reminded of how little their companies care about their lives and well being.”
McDonalds’s
can afford to pay its employees more, but, critically, it chooses not
to. And that’s not the only thing that trouble employees. Its
website,
of course, boasts of careers and benefits. But employee share of paying
for benefits is unaffordable, workers said on Glassdoor.com. And then
there are other dimensions of restaurent and kitchen work that are
abusive—and accepted as part of the work culture.
“Low pay, no
insurance, top managers waste time on cell phones and… get involved in
personal relationships with subordinates that caused preferential
treatment,” a Newton, Mississippi, employee wrote on September 2.
There’s little chance for advancement, an ex-assistant manager in
Aurora, Colorado, wrote. “Rather hire in than train up.” There’s
unreliable schedules. “Franchise stores focuses their hours around
labor. Labor must be an overall 19 percent at the end of each month,” an
Atlanta employee wrote this month. “So if store labor is 24 percent… be
ready to have your hours cut.”
There’s also sexual harassment and
a trail of lawsuits from it. The pro-worker advocacy group, Restaurant
Opportunities Center United (
ROC), issued a
report
last year about gender inequities—starting with lower pay for women in
the same jobs as men—that also discussed sexual harassment. Its review
of the previous four years of suits by the federal Equal Employment
Opportunity Commission found that “McDonalds was named in 16 percent of
the cases, including possibly the most egregious one, where an
18-year-old employee strip-searches and assaulted for several hours by
staff and management at the behest of a caller impersonaing a police
officer.”
Across the country, polls regularly find that 80 percent
of the public supports minimum wage increases. But most people staring
at pictures of the fast food protesters, most of who are women, have
little idea what it’s like to work in these kitchens. A former
McDonald’s cook from Wyoming, Pennsylvania, summed it up this month on
Glassdoor.com, using their format of first describing the pros and then
the cons.
“I worked at McDonald’s fulltime for more than three
years,” he said, then list the pros. “If you already worked in the
restaurant business, this job is a cakewalk. High volume, yes, but the
work is easy and not very physically demanding… You don’t have to worry
about over- or under-cooking food. You don’t have to do tons of prep
work. You don’t even need to have a solid grasp of health and safety
standards until you move up to management.”
And then the
negatives. “If you never worked in a restaurant before, you’ll think
this job is terrible. You’re on your feet all day, performing what feels
like intense cardio exercise during peak hours. After your shift, you
will be coated in a layer of grease and filth, and you will smell like
cooking oil… You will make close to the minimum wage the entire time you
work there, even when you’re promoted to low-level management.”
Jim Crow Jobs: The Capital Grille
There are more dimensions to poor working conditions than just wages. The restaurant industry is America’s
largest employer
of people of color and it is rife with segregation. Servers are
predominantly white. Kitchens are predominantly people of color. And
even though some chains have non-white CEOs, the culture and abuses are
not very different from what’s depicted in the new movie,
The Butler, profiling a self-educated African-American man who was a longtime butler at the White House.
Capital
Grille is the high-price, fine-dining chain run by Darden Restaurants,
the world’s largest full-service—meaning sit down—restaurant
corporation. Darden also
owns
Olive Garden, Red Lobster, Longhorn Steakhouse, Bahama Breeze, Eddie
V’s, Seasons 52 and Yard House. “We own and operate 2,100 restaurants,
employ more than 200,000 people, and serve more than 425 million meals a
year,” its
website says. “At the Capital Grille, it’s guests enjoying a personalized dining experience reminscent of being in a private club.” It
says that more than 80 percent of workers like Darden and their job.
Darden
boasts
that its values include “sustainability,” from reducing energy to
treating employees well. But in late 2011, ROC and Capital Grille
employees in five states sued Darden for wage theft and racial
discrimination. The lawsuits are ongoing. This spring, ROC issued a
report,
Darden’s Decision,
as part of a campaign to pressure the Florida-based corporation into
treating workers better. “If it lived up to these values, Darden could
serve as a model for the entire restaurant industry,” ROC said.
“Unfortunately, there is a gap between Darden’s stated values and their
actual practice.”
The Capital Grille
is the chain’s flagship. It has dark wood-paneled dining rooms, a menu
emphasizing meat, fish and wine, and formally attired servers. There are
49 grills around the country, with annual sales at each restaurant
averaging $7 million, it
told
investors in June, estimating that sales would grow 4.5 percent this
year. It pays a few dollars an hour more than for the same job at
Darden’s other chains, according to Glassdoor.com. A host at Olive
Garden averaged $8.99/hour, versus $11.38/hour at Capital Grille. An
Olive Garden’s server averaged $10.99/hour, versus $12.62/hour at
Capital Grille.
As a chain, Darden pays low wages and lacks paid sick days, ROC said, even though its
website
says “you will receive excellent benefits including health insurance,
401(k), paid vacations and advancement opportunities.” ROC Research
Director Teófilo Reyes said that benefits are for the full-time
employees—and many don’t get those hours, and, as is the case at
McDonald’s, “you do have to pay in. It’s a pretty significant cost.”
But
ROC’s biggest complaints about Capital Grille have to do with
intentionally stealing wages from its employees of color, and
discriminating against them in promotions. Some “claim that their
restaurant hired employees of color in the rush to open and replaced
them with white workers once the restaurant was established,” ROC said
in its
Darden’s Decision report, which, in part, recounted claims from its lawsuits. A Darden company spokesmen has repeatedly
called these allegations baseless.
“We
know what happens in the industry.We know that there is segregation,”
Reyes said. “The question is, ‘Is it conscious and are restaurants
discriminating against individuals?’ You are less likely to be hired
into a better-paying job if you are a person of color.”
Capital
Grille employee comments at Glassdoor.com re-enforce ROC’s claims, but
they are not quite as edgy. An ex-host from Troy, Michigan, said, you
“must have ‘game face’ on 24/7,” and that he faced a “very stuffy work
environment, have to use ‘Capital Grille’ vocabulary, [and] I was never
offered a raise in the two years employed.” An ex-maitre’d from Palm
Beach, Florida, said, “no career advancement… they want you to wear very
pricey dresses, but not suits, at your own expense.”
The picture
that ROC paints is more severe, particularly with employees of color who
are segregated to the kitchens. There are many ways that workers can be
treated poorly, ROC said. They can be denied sick days. “I called in
sick once because of throat problems,” said Ignacia Villegas, a Capital
Grille pantry station employee. “My manager told me, ‘If you don’t come,
you already know what could happen. You could get fired.’”
They
cannot be paid for all their hours worked—which is wage theft. Franz, a
Haitian immigrant and dishwasher from Miami, said that he was routinely
being “clocked out” by the sous-chef before he was finished cleaning.
Elose Arestil, another Haitian dishwasher, complained about the same
thing and was fired. But the vengeful treatment didn’t stop there, she
said, because her managers stopped her from receiving unemployment
checks. “My boss had told them [state officials] that I had quit when I
was actually fired.”
Other ex-employees talked of “haves and
have-nots,” ROC said, referring to the chain’s bias against non-white
servers. “The Capital Grille’s regional manager told the General Manager
that he wanted certain servers gone because they ‘didn’t fit the
company image,’ Keith [Jones, an ex-Memphis, Tennessee, server] noted.
Upper management wanted to remove black servers and used corporate image
as an excuse.”
“Darden positions itself as being so conscientious,” Reyes said. “We find that’s not the truth of the matter.”
Taking The High-Road: In-N-Out Burger
The
striking fast food workers have been calling for better working
conditions, starting with higher hourly wages and paid sick time. They,
and advocates like ROC United, and academics such as MIT business school
professor Zeynep Ton, all say that paying more will not just improve
job performance, employee morale and customer service, but it will save
money in the long run that’s lost when new workers have to be hired and
trained.
ROC’s founder and executive director,
Saru Jayaraman, singed out one fast-food chain,
In-N-Out Burger,
which is privately owned and was started by a family with Christian
values, as a chain that paid better than most and offered opportunities
for advancement. In-n-Out, as its name notes, is a classic hamburger
chain whose wrappers and cups cite biblical quotes. Bloomberg
reports
that the chain has almost 280 units in five western states, $625
million in 2012 sales, and a five-year growth rate of 4.6 percent.
What
does it do that McDonald’s and Capital Grille does not? Compared to
McDonald’s, they start by paying all workers, including new hires,
several dollars above the minimum wage. They have been doing that for
years, according to Harvard Business School Professor
Youngme Moon, who chairs its MBA program. In a
Harvard Business Review article
a decade ago, she wrote, “In 2003, new employees were paid $8.25 to
$9.25 per hour, almost $1.50 to $2.50 more than California’s minimum
wage, and they received benefits that included paid vacations, a 401(k)
retirement plan with matching company contributions, and discounted
medical, dental, and vision coverage… As a result of this treatment,
employee turnover at In-N-Out was low.”
Today, the chain still
pays several dollars above minimun wage. Where Glassdoor.com lists most
McDonald’s salaries at below $8 an hour, the lowest-paid jobs at
In-N-Out average above $10/hour, with some non-management jobs paying
more than $13/hour. Their assistant managers average $51,200 annually,
which is $24.61/hour. Employee comments on Glassdoor.com notice this
difference. “Great compensation for industry,” said a level 5
($11.58/hour) employee from Chico, Califonia. “This place starts you off
with more than the minimum wage hourly. You get one free meal per
shift,” a former associate said, adding. “They are very strict on your
conduct. But it’s understandable being they are the only fast-food place
that pays well.” Another wrote, “Starting pay is $10.50 in most areas.”
An older employee commented, “Good for students, but pay is still low,
but better than other food places.”
Compared to Capitol Grille,
In-N-Out’s employees did not talk about discrimination or a lack of
opportunities for advancement. An associate level 4, averaging
$10.78/hour, from Las Vegas said, “Fast-paced, lots of room for growth,
once you’re in, you’re pretty much in. Extensive hiring process, but all
that means is they are selective in taking the best.” A Davis,
Califronia, associate said, “This is a good paying job for the
background required… good opportunities for advancement if you work
hard.” But one employee from Palmdale, California, complained, “you can
never get full-time hours and benefits once you’re hired. Lucky at some
store[s] if you get more than 25 hours a week.”
As ROC’s Reyes
notes, it’s important to keep In-N-Out’s pay and benefits in
perspective, at least compared to what the striking fast-food workers
are seeking. “The bar is set pretty low,” he said, referring to the
restaurant industry’s pay and benefit standards. “They don’t pay $15 an
hour, which is what the fast food workers are looking for.”
Where Can Progressives Eat Anymore?
The
closer you look at America’s restaurant industry—especially the fast
food and dining chains—the more you’re likely to pause before eating
there. The reality of what goes on behind the practiced smiles of
servers and kitchen doors does not inspire confidence.
The fast
food worker protests are attempts to shame their employers into boosting
wages, especially because the National Restaurant Association, the
industry’s lobbyists, have a
record of stopping or delaying minimum wage increases and paid sick day laws. (Similar walkout are
planned for 15 Walmart stores this Thursday). ROC has created a
guide
for consumers that grades restaurants across the country, including
those paying living wages and offering opportunities for a advancement.
The guide contains postcards that can be left behind for management to
consider and contact the group.
These activists don’t just want
the public to pause before eating out; they want the public to gently
push restaurant owners and managers to treat their staff better, just as
they have demanded fresher ingredients in the menus. MIT’s Ton has
reached the same conclusion, although she knows that the management
mindset can be very inflexible.
“I imagine that executives are
noticing [the fast food protests] but I don’t know if they’ll do
anything to change,” she said. “What I really hope is that consumers are
noticing. We as customers can choose where to eat and where to shop and
we can start choosing businesses that treat their employees better.
When we care, companies might start caring.”
***
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