The Herald Bulletin

Morning Update

Nation & World

September 1, 2013

Workers' protests highlight fast-food economics

NEW YORK — American fast-food workers often earn about $7.25 an hour to make the $3 chicken sandwiches and 99-cent tacos that generate billions of dollars in profit each year for McDonald's and other chains.

Thousands of the nation's many millions of fast-food workers and their supporters have been staging protests across the country in the past year to call attention to the struggles of living on or close to the federal minimum wage. The push raises the question of whether the economics of the fast-food industry allow room for a boost in pay for its workers.

The industry is built on a business model that keeps costs — including those for labor — low so companies can make money while satisfying America's love of cheap, fast food. And no group along the food chain, from the customers to the companies, wants to foot the bill for higher wages for workers.

Customers want a deal when they order burgers and fries. But those cheap eats squeeze franchise store owners who say they already survive on slim margins. And the corporations have to grow profits to keep shareholders happy.

"There's no room in the fast-food business model for substantially higher pay levels without raising prices for food," says Richard Adams, a former McDonald's franchisee who now runs a fast-food consulting business.

Caught in that triangle are the workers. The median hourly wage for a fast-food cook last year was $9, up from about $7 a decade ago, according to the Bureau of Labor Statistics. But many workers make the federal minimum wage, which was last raised in 2009. At $7.25 an hour, that's about $15,000 a year, assuming a 40-hour workweek. It's well less than half of the median salary of an American worker.

The protests come as President Obama has called for an increase of the federal minimum wage to $9 an hour, with some members of Congress and economists calling for a hike as well. And the fast-food workers movement is getting financial support as well as training from organizers of the Service Employees International Union, which represents more than 2 million workers.

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