Let's start with this Bramhall cartoon from the New York Daily News:
Your editor started the week reading this fascinating oral history of Chipotle in Bloomberg that details the company's eight-year relationship with McDonald's. As the piece notes, following the split, Chipolte's fortunes rose while McD's performance has been less than stellar:
It's kind of funny when you look at the position that McDonald's is in today vs. what Chipotle is in, with so much upside and McDonald's struggling both from a stock price and consumer sentiment perspective. I still think that had McDonald's maybe just altered its course a slight hair in terms of offering and service model, that it could have potentially decimated the fast-casual industry before it ever got started. I can’t think of a single thing that transferred from Chipotle to McDonald’s. They both serve Coca-Cola I guess.
I wish McDonald's had hung on to Chipotle, because Chipotle has maintained their simple and efficient operation and McDonald's has gone on to let their menu become huge and bloated — the restaurants are very inefficient. Maybe they could have learned something from Chipotle, or maybe they could have screwed it up.
Meanwhile McDonald's continues to be a source of labor controversy, most recently for its "McLovin" campaign unveiled last week at the Superbowl, reports the New York Times. The campaign allows customers to pay by showing some kind of love in the run up to Valentine's day. The Nation's Bryce Covert had this to say about why it is an issue for low-wage workers:
This is a pretty blatant example of emotional labor: the requirement that a low-wage employee not just show up to work and adequately perform her duties, but that she put on a veneer of happiness and cheer for the customer to elicit an emotional response in him. For example, in 2013 Pret A Manger put up on its website (and then subsequently took down) expected “behaviours” its employees were supposed to exhibit, like creating a “sense of fun” and appearing “genuinely friendly.” The ones it wouldn’t allow, on the other hand, were bad moods and acting like they were “just here for the money.” Because ordering a sandwich is now supposed to be a delightful experience, and of course a low-wage clerk is at work for something other than a paycheck. This is what’s pernicious about emotional labor: it requires poorly paid people to slather a smile onto their face and cover up the real conditions under which they labor. McDonald’s has been one of the fast-food companies hit by massive, repeated waves of labor unrest by striking workers demanding better pay, the ability to form a union and an end to retaliation for their actions. Workers have been vocal about the fact that they and their families can’t survive on the money they make. But the company instead wants its customers to see employees who are genuinely delighted that a mother hugged her son in front of them.
Over at MarketWatch, the Manhattan Institute's Diana Furchtgott-Roth says what is really ailing the company is the National Labor Relation's Board ruling that McD's is a joint employer with its franchises. Meanwhile Chipotle has has some labor problems of its own including a short walkout at one location and some undocumented workers issues at others according to reports. However, according to a 2013 Forbes report, Chipotle's work culture and that of companies like Starbucks seems to be paying off for investors:
Starbucks and Chipotle are famous for jobs that pay real career wages, rather than the welfare-eligible pay most fast food workers earn. Starbucks CEO Howard Schultz is a fan of raising the minimum wage, an issue that’s heated up nationally recently with strikes and protests by fast food workers. Starbucks already starts out workers at about $11.50 an hour, well above the $7.25 an hour wage required by federal law. Chipotle is renowned for quickly moving workers from starting pay levels into higher paying management jobs. Starting pay for “crew,” the people who make the burritos, averages about $10.50 an hour ($21,000 a year) with benefits, according to some reports; $8.50 an hour by others. The company says 98% of its managers, some of whom earn six-digits, start as crew. It’s not unheard of to find a 20-something who was on the line five years ago to be working as a Chipotle “restaurateur,” a position with an average annual pay of about $99,000.
Is fair pay making a comeback? The New Yorker's James Surowiecki has this to say:
[I]t was big news when, last month, Aetna’s C.E.O., Mark Bertolini, announced that the company’s lowest-paid workers would get a substantial raise—from twelve to sixteen dollars an hour, in some cases—as well as improved medical coverage. Bertolini didn’t stop there. He said that it was not “fair” for employees of a Fortune 50 company to be struggling to make ends meet. He explicitly linked the decision to the broader debate about inequality, mentioning that he had given copies of Thomas Piketty’s “Capital in the Twenty-first Century” to all his top executives. “Companies are not just money-making machines,” he told me last week. “For the good of the social order, these are the kinds of investments we should be willing to make.” Such rhetoric harks back to an earlier era in U.S. labor relations. These days, most of the benefits of economic growth go to people at the top of the income ladder. But in the postwar era, in particular, the wage-setting process was shaped by norms of fairness and internal equity. These norms were bolstered by the strength of the U.S. labor movement, which emphasized the idea of the “living” or “family” wage—that someone doing a full day’s work should be paid enough to live on. But they were embraced by many in the business class, too. Economists are typically skeptical that these kinds of norms play any role in setting wages. If you want to know why wages grew fast in the nineteen-fifties, they would say, look to the economic boom and an American workforce that didn’t have to compete with foreign workers. But this is too narrow a view: the fact that the benefits of economic growth in the postwar era were widely shared had a lot to do with the assumption that companies were responsible not only to their shareholders but also to their workers.
Is college a waste of time? In Al Jazeera, Sarah Kendzior says rather than a promise for economic mobility, all college now promises for many is a life less bad than if they declined to go:
The promotion of college as a requirement for a middle-class life in an era of shrinking middle-class jobs has resulted in an increase in workers whose jobs do not require the degree - 15 percent of taxi cab drivers, 18 percent of firefighters. More perniciously, it has resulted in the exclusion of the non-college educated from professions of public influence... A college graduate will earn more than a high school graduate. But the real problem is that today both groups earn less and sacrifice more - in time, money, and personal freedom. College does not offer a better future, but a less worse one. College is not a cure for economic insecurity, but a symptom of the broader plague of credentialism.
The Center for American Progress has a new report looking at the state of the U.S. labor market, check out this chart:
Over at Vox, Matthew Yglesias says a new study shows that U.S. labor unions are doing a lot worse than people think, listing three major findings:
Most of the research that's out there on the economic impact of unionization simply compares unionized workplaces to non-union ones. Given the long-term decline in private sector union membership, this actually doesn't tell us much about what newly organized companies would be like. What Frandsen did was specifically look at the outcomes of close unionization elections...He found three big things:
- Recently unionized firms employ fewer people
- Recently unionized firms pay lower average wages
- Recently unionized firms are more likely to go out of business
The idea that a successful unionization drive would reduce wages and salaries seems paradoxical. Delve deeper into the numbers and the solution emerges. It's not that unionization leads to wage cuts. It's that unionization leads to a change in the composition of the workforce. Older and better-paid staff are disproportionately likely to leave a newly unionized shop, which brings average pay levels down even without anyone actually having their wages cut.
A new Stanford report looks at poverty and income inequality by state. Here are some of the findings:
The Economic Policy Institute also has a new report out looking at unequal growth by state:
Between 1928 and 1979, the share of income held by the top 1 percent declined in every state except Alaska (where the top 1 percent held a relatively low share of income throughout the period). This earlier era was characterized by a rising minimum wage, low levels of unemployment after the 1930s, widespread collective bargaining in private industries (manufacturing, transportation [trucking, airlines, and railroads], telecommunications, and construction), and a cultural and political environment in which it was unthinkable for executives to receive outsized bonuses while laying off workers. Today, unionization and collective bargaining levels are at historic lows not seen since before 1928 (Freeman 1997).
The Children Defense Fund's Marian Wright Eldelman calls for an end to child poverty in the United States:
There are more poor children in America than the combined residents in six of our largest U.S. cities: Los Angeles, Chicago, Houston, Philadelphia, Phoenix, and San Antonio with a combined total population of 14.6 million residents. There are more children living in extreme poverty in the United States (6.5 million) than there are total residents in 33 individual states and the District of Columbia...
America’s poor children did not ask to be born; did not choose their parents, country, state, neighborhood, race, color, or faith. In fact if they had been born in 33 other industrialized countries they would be less likely to be poor. Among these 35 countries, America ranks 34th in relative child poverty – ahead only of Romania whose economy is 99 percent smaller than ours.
Citylab looks at what they believe is a successful Chicago program to relocate poor black families--who long suffered form segregation--to the suburbs and discusses why other cities haven't followed suit.
This Yes! Magazine pieces looks at how one neighborhood used a community land trust to halt gentrification:
Through its governance structure, the land trust balances the varying interests of homeowners and the broader community in the land. Hernandez serves on the Dudley land trust board along with several leaseholders, other community members, and representatives of various elected officials. Ultimately, Hernandez sees the impact of the land trust as “not just on the leaseholders, but also the folks who have market value homes and the ma-and-pa stores.”
Meanwhile Alliance Magazine's Caroline Hartnell, interviews Ridgway White the new president of the Mott Foundation, which has a focus on redeveloping Flint, Mich. via a public private partnership. You also may be interested in a new report from REDF evaluating "the impact of social enterprise for people facing barriers to work and its benefits for society":
In the Conversation, Graham Brown discusses the Gates Foundation annual letter and the debate about the politics of poverty:
In 2013, the Gates Foundation disbursed US$3.6 billion in grants. The vast majority went to global development and health projects. Only ten countries (including Australia) spent more on official development assistance than the Gates Foundation – much of this in the form of concessionary loans rather than grants. For critical scholars like Michael Moran, the influence of philanthropic foundations is more than just financial. They are reshaping the whole architecture of development assistance along precisely those lines that Green and Easterly worry about: away from a central concern with rights and legitimacy towards an illegitimate, technocratic “authoritarian development”... The challenge is not to reduce the impact of philanthropic foundations on international development. It is, instead, to get them to engage more critically with the system that they are part of. They need to recognise the inherently political dimension of their activities in the communities where they work and at the national and international policy level.