Fighting Back Against Wretched Wages

New York Times, July 27, 2013

By Steven Greenhouse

Often relegated to the background, America’s low-wage workers have been making considerable noise lately by deploying an unusual weapon — one-day strikes — to make their message heard: they’re sick and tired of earning just $8, $9, $10 an hour.

Their anger has been stoked by what they see as a glaring disconnect: their wages have flatlined, while median pay for chief executives at the nation’s top corporations jumped 16 percent last year, averaging a princely $15.1 million, according to Equilar, an executive compensation analysis firm.

In recent weeks, workers from McDonald’s, Taco Bell and other fast-food restaurants — many of them part-time employees — have staged one-day walkouts in New York, Chicago, Detroit and Seattle to protest their earnings, typically just $150 to $350 a week, often too little to support themselves and their families. More walkouts are expected at fast-food restaurants in seven cities on Monday. Earlier this month hundreds of low-wage employees working for federal contractors in Washington walked out and picketed along Pennsylvania Avenue to urge President Obama to press their employers to raise wages.

Ana Salvador, who earns $10 an hour after 10 years working at the McDonald’s inside the National Air and Space Museum, wrote Mr. Obama to say that she did not earn enough to support her four children, adding that her family relied on food stamps and Medicaid. Another striker, Karla Quezada, who has worked at the Subway inside the Ronald Reagan Building for 11 years, said that while her employer made “lots of money off of my work, I still only make $9.50 an hour.” This is higher than the $7.25-an-hour federal minimum wage as well as the District of Columbia’s $8.25 minimum — many states have minimums above the federal level — but it isn’t much after more than a decade on the job. In a speech in Galesburg, Ill., last Wednesday aimed at bolstering the middle class, Mr. Obama called for raising the minimum wage.

Many low-paid workers feel their employers have put an invisible ceiling on their wages, with little prospect of ever making more than $10 or $11 an hour, as corporations have focused on keeping wages competitive and maximizing profits to benefit shareholders. The richest Americans have benefited mightily from corporate America’s record profits and the stock market’s repeated highs.

“Long-term trends have not been kind to low-wage workers,” said Lawrence F. Katz, an economics professor at Harvard University. “They’ve been hurt by technological change” — scanners, for instance, have reduced the demand for supermarket cashiers — “and by the decline in institutions like labor unions and the minimum wage,” which has not kept up with inflation in recent decades. “Then on top of that is an extremely weak labor market.”

The bottom 20 percent of American workers by income — 28 million workers — earn less than $9.89 an hour, according to the Economic Policy Institute, a liberal research group. That translates to $20,570 a year for a full-time employee. Their income fell 5 percent between 2006 and 2012. Wages for workers at the 50th percentile — their median pay is $16.30 an hour — have also dipped, falling 3.4 percent, while pay for the top 10 percent rose 3 percent.

Lorraine Riley James makes $9.35 an hour at the Macy’s on North Michigan Avenue in Chicago and has received just $1.35 in raises since starting there six years ago. “I have so much experience that I don’t feel what they’re paying me is fair,” she said. “I generated a quarter of a million in sales for them last year.”

Jim Sluzewski, Macy’s senior vice president for corporate communications, said, “We seek to pay competitive wages and benefits based on performance and experience,” adding that the company has increased wages every year. “Remaining a stable employer requires that we remain a financially strong company,” he said.

Corporate America has embraced many strategies to slice labor costs. Many Walmart stores — as part of a new strategy to save on wages and benefits — are hiring only temps to fill job openings. Scores of companies are relying increasingly on part-timers, who typically get paid several dollars less per hour than full-timers.

Caterpillar has pioneered two-tier wage systems, in which workers hired after a certain date are consigned to a significantly lower wage scale than others, and it recently pressed its longer-term employees into accepting a six-year wage freeze. Many Caterpillar workers ask why the company insisted on a pay freeze when it reported repeated record profits — $5.7 billion last year, amounting to $45,000 per Caterpillar employee.

Caterpillar’s chief executive, Douglas Oberhelman (whose compensation has increased more than 80 percent over the last two years), says the freeze was vital to keep wages competitive with rival companies. “I always try to communicate to our people that we can never make enough money,” he recently told Bloomberg Businessweek. “We can never make enough profit.”

Nick Hanauer, a Seattle-based entrepreneur whose company produces comforters and pillows, said: “Employers pay their work force as much as they are forced to and no more. There’s no compelling reason to give raises” with the unemployment rate as high as it is. He said he supported a higher minimum wage so workers earn enough to live on. Mr. Katz sees only limited ways to end wage stagnation for low-paid workers. More education and training can lift pay for individual workers, but considering that 20 of America’s 25 fastest-growing jobs — like nursing home aide and retail clerk — do not require a college education, low-wage jobs won’t disappear anytime soon.

Mr. Katz said a good way to push up wages would be to reduce the jobless rate to 5 percent or less. That happened in the late 1990s — the only time since the 1970s when wages for the bottom half of workers rose strongly. Employers had to bid up wages to attract workers or keep employees from jumping ship.

It remains unclear what the wave of one-day strikes is seeking to achieve. One objective is to push the issue of low-wage work onto the nation’s political agenda. Some one-day strikers are calling for a $15-an-hour minimum wage, but Scott DeFife, executive vice president of the National Restaurant Association, scoffed at the idea, saying a $15 minimum would cause restaurants to hire fewer people. He said restaurants provide valuable experience for many entry-level workers, noting that “80 percent of restaurant owners and operators say they started out as hourly workers in the industry.”

Some strategists behind the one-day strikes hope to create a political environment in which some cities might embrace measures similar to ones in Washington and Long Beach, Calif. Washington’s City Council has approved a $12.50 minimum wage at big-box stores — a move that has Walmart threatening to cancel plans to open three more stores in the city. And in Long Beach, labor unions persuaded residents to approve a $13-an-hour minimum wage for the city’s hotel workers in a referendum last November.

Heidi Shierholz, an economist at the Economic Policy Institute, argues that wage increases would give a boost to the economy.

“The real reason businesses aren’t hiring is they’re not seeing consumer demand for their goods and services increase,” she said. “We need greater demand for goods and services. It is clearly true that if people receive higher incomes, that will help the economy.”

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Steven Greenhouse is a reporter on labor and workplace issues for The New York Times, and the author of “The Big Squeeze: Tough Times for the American Worker.”

© 2013 New York Times