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COMMENTARY | California’s Fast Recovery Act gives low-wage workers a seat at the table with franchisees, corporations and the government to help set industry-wide labor standards, creating a model for others to follow.
On Labor Day, California Gov. Gavin Newsom, a Democrat, signed into law the FAST Recovery Act, one of the most important pro-worker bills in decades. The new law has the potential to transform the fast-food industry—the quintessential low-wage, high-turnover sector—into an industry with decent jobs that pay well and offer good benefits. Perhaps even more importantly, the law develops a model that empowers workers and has the potential to remake low-wage work in industries around the country.
The FAST Recovery Act gives workers a seat at the table with their bosses—both franchisees and brand-name franchisors—as well as with government regulators in a council that will help set workplace standards on issues such as wages, safety and training. This will improve the jobs of hundreds of thousands of fast-food workers in California – a disproportionately female and Hispanic workforce – and create a path for change in other industries.
Improving working conditions in fast-food and many other low-wage industries is very difficult, but the FAST Recovery Act model can overcome these challenges.
In the fast-food industry, large and profitable brands such as McDonald’s or Subway generally operate through small franchisees that have low profit margins and little ability to improve compensation on their own. As law professor Catherine Fisk argues, “[a] franchisee who believes employees should be paid more cannot make a profit under the [franchise] formula if he raises wages.” Other industries are similarly fissured with layers of contracting that drive down standards and divide workers from their lead corporation.
Joining a union could help, but doing so is unnecessarily difficult because of corporate union busting and broken federal labor laws that fail to guarantee basic rights. Half of all workers want to join a union, but just 6% of workers in the private sector are unionized, with lower membership in fast-food and similar industries. And even if workers at a particular franchised workplace successfully joined a union, they would have trouble bargaining without a mechanism to bring the dominant corporation to the table.
Similarly, raising the state or federal minimum wage is not enough. Wage theft is rampant—even in California, which has some of the best government enforcement efforts. Nationwide, nearly 9 in 10 fast-food workers say they have been subject to violations of workplace laws, and frequent violations are common in many other sectors. Wage theft is such a problem in fast-food and similar industries because the franchised structure creates strong incentives to cut labor costs and workers have little power to assert their rights.
Enter the FAST Recovery Act, a viable, effective solution that would help build worker power and bring together the relevant players to set standards for the entire industry. Under the law, engaged and organized fast-food workers can effectively push for and enforce high standards. Setting industry wide standards based on input from workers and employers creates a level playing field so all firms can fairly compete.
The core elements of the FAST Recovery Act—empowering workers, discussing a range of workplace issues with key stakeholders, and setting standards across an entire industry—are the essential ingredients of real change in many industries. They build upon what has proven to work in the United States and around the world to create something that is both familiar and pathbreaking.
In 2015, for example, New York brought together representatives of workers, employers and the public in a related board to raise wages for fast-food workers to $15 per hour well before the state did so for all workers. Since then, a number of cities and states have created similar bodies for other industries such as domestic work.
In Denmark, workers are also involved in discussions that have helped set standards for entire industries. Fast-food workers there earn about $22 per hour, receive six weeks of paid vacation a year, life insurance, paid maternity leave and pensions; and have their schedules set a month in advance.
The term “Mcjobs” is often used to symbolize the low-quality work common in the fast-food sector and in too many other industries. Improvements in these jobs have been few and far between, but the FAST Recovery Act has the potential to transform the fast-food industry. That this bold, new law could dramatically improve job quality for fast-food workers is extraordinary and sets a meaningful precedent for other cities and states to replicate. Providing workers with a viable path forward is sorely needed in an era where workers fed up with the status quo are clamoring for change.
David Madland is the author of Re-Union: How Bold Labor Reforms Can Repair, Revitalize, and Reunite the United States and is a senior fellow at the Center for American Progress.