What Can Europe Teach Us About Better Pay, Conditions at McDonald's and Other Fast Food Restaurants?


Toward the end of a morning strike outside the Madison Ave. McDonald's (MCD) last Thursday, a passerby, an older man in an overcoat, asked a young organizer what was going on.

"What's all this?"

"We're protesting McDonald's."

"Yeah, I see that. But why?"

The chipper organizer explained (with perhaps too well-rehearsed a response) that many McDonald's employees only make about $7 or $8 per hour, and face shortened schedules, fines, or suspensions from management when they try to organize. "We think people should be able to earn more when the company they work for makes billions," she said.

[More From Minyanville: Amazon Tries to Hook 'Em Young With New Subscription Service]

The man started walking off before the organizer could finish, muttering, "Yeah, but so do the shareholders."

Cynical, but at least his attitude was articulated, which was more that could be said for the other New Yorkers who passed the picketers without pausing. The fact that McDonald's, Wendy's (WEN), Taco Bell (YUM), and other fast food restaurants have been able to pay hard-working, loyal, and now much older employees wages at or slightly above state-set minimums for years has become, to many, a seemingly unchangeable norm.

To help mobilize the public, organizers behind last week's Fast Food Forward campaign -- spearheaded by New York Communities for Change, along with the Service Employees International Union, UnitedNewYork.org, and the Black Institute -- have given the media dramatic employee stories, tales that would make any feeling person irate. (Read about struggling workers Raymond Lopez and Pamela Waldron in this New York Times piece, or in the same paper, see the stories of two of last week's strikers -- New York and Brooklyn fast food employees, aged 79 and 29, who require food stamps to survive.)

Slowly, more consumers and some business pundits are becoming more vocal about the idea that change, and unionization, may be necessary. Since October, when hourly employees began striking at another major Dow Jones (^DJI) component company, Wal-Mart (WMT), that campaign, called OUR Walmart, has attracted 20,000 Facebook followers. Fast Food Forward has managed to collected 125,000 signatures for its petition (circulating via various platforms) in only a week.

On Thursday, December 6th, the campaigners staged a massive rally in midtown Manhattan. Jonathan Westin, director of the Fast Food Forward campaign, told Minyanville in an email, "This is only the beginning of the movement. Our economy can't grow when workers can't afford to live. That's why workers from the fast food industry are joining with those at car washes, airports, and in retail to demand decent wages and the right to form a union."

[More From Minyanville: The Biggest Risk to Apple's Consumer Products Empire]

According to the Bureau of Labor Statistics, New York's lowest-paid job category is "Combined Food Service and Preparation Workers, Including Fast Food." State Labor Department data shows that the city’s fast food jobs have grown by more than 50% over the past 12 years. The median pay for fast food workers in New York City is about $9 an hour; which would equal pay of less than $20,000 per year for a full-time employee, and far less for part-time staff. In New York, the poverty line is set at $11,500 for a single person and $23,021 for a family of four.

But can the crew members of restaurants like McDonald's or Wendy's expect progress? Is there any place in the world where employees of the mega-chains are treated fairly? In fact, it is marginally better for food service employees in a few developed countries, though conditions are not yet ideal -- from the point of view of workers advocates, anyway -- anywhere.

The highest paid McDonald's employees in the world are in Western Europe, where collective agreements protect workers in the restaurant industry sometimes even when trade unions are not present. A 2012 National Bureau of Economic Research paper by Princeton economist Orley Ashenfelter found that in Western Europe from 2000-2007, the average crew worker at McDonald's earned 1.29x the wages of a US crew employee, the equivalent of $9.44 per hour versus $7.33 in the US. (Ashenfelter’s paper was designed to measure real wages by comparing the number of Big Macs McDonald's employees in various countries could earn with their hourly wages. See coverage in The Atlantic for more.)

Outside big cities, that kind of a pay bump for American employees would be a start, though crew workers in the New York City region are pushing for salaries to be raised to $15 per hour, citing the high cost of living.

Dr Tony Royle, author of Working For McDonald's in Europe: The Unequal Struggle? (Routledge, 2000), and a lecturer at the J.E. Cairnes School of Business & Economics at the National University of Ireland, Galway, says that working conditions and employee treatment in those countries where collective agreements are in place are somewhat better than what’s seen here, and the real value of wages was generally better in Europe than in the USA, with McDonald's workers in the Scandinavian countries doing much better than elsewhere. Nevertheless, many problems remain in Europe even where unions have fought and won collective agreements or where these have been automatically imposed.

Take Sweden. That country has a collective agreement that covers everyone in the sector. Under Swedish law, it's also easier than it is in the USA to establish a union and union membership is still the norm, with 70% of Swedish workers joining unions, Royle explains in a phone interview. "But even in Sweden, where you have a union official sitting in McDonald's head office, you have problems in terms of the union adequately representing workers. You don't have union officials in the stores, and the workers are usually economic migrants and young kids who don't know what their rights are. In many cases, they might not even know that there's an agreement in place," he says. Based on what he's seen in Europe, Royle cautions that union recognition "is only the starting point."

[More From Minyanville: Amarin's Stock Drops on Plan to Sell Heart Drug Vascepa Alone]

He continues, "And history tells us that it's not only difficult to get union recognition in the US context but even more difficult to get a collective agreement because that's when companies start using counter tactics, like firing unionized employees and hiring non-union new staff. In the 1970s, McDonald's was even caught using lie detector tests to weed out union sympathizers. However, the problems don't end there; ensuring that the agreement is properly applied can also be difficult.

"The thing is, labor costs is one of the few areas where McDonald's can save money, so there are quite a few inappropriate practices," he adds.

Royle was recently interviewed for a Swedish SVT documentary investigating life as a burger-flipper for McDonald's in Sweden and the US called McFusk. The documentary also included interviews with US labor lawyers and McDonald's workers. One of the issues covered was time-shaving, where managers delete a bit of time in small increments from an employee's electronic time card, saving a few euros per person in most cases. "Five minutes here, ten minutes there; unless workers carefully record there hours, it's quite likely that workers will not notice," says Royle, "but it really adds up, and the practice was found to be very widespread."

Local managers shave time because they need to meet a specific sales-labor ratio target, Royle explains. When sales go down, they're under pressure to send people home or adjust pay. The practice has been found in Denmark, Sweden, and Germany, "so one can only imagine what happens in countries where workers have no protection at all," says Royle.

A search of the New York Times shows that what appears to be the most recent article on shaving time in the US was published in 2004, and it indicated that experts on compensation felt "the illegal doctoring of hourly employees' time records is far more prevalent than most Americans believe." (Fast Food Forward organizers say they're not looking past issues of pay and the ability to unionize right now, but that the media can expect other issues to be addressed as the campaign gains momentum.)

In Europe, says Royle, "You also have people working off the clock. And health and safety concerns are an issue." In Italy, there were some employees filing complaints this summer because managers were turning off the air conditioning to save on costs. "There have been issues about employers not providing the proper shoes and refusing to wash uniforms -- these are employer responsibilities that are covered under collective agreements."

Employees who find jobs at McDonald's in Western Europe are typically new arrivals fleeing shattered economies elsewhere. In the 1990s, that meant you'd find a lot of Eastern Europeans behind the counter. Now, says Royle, it's men and women from Africa or the Philippines who are taking fast food jobs because they can’t get work anywhere else. "These are not the type of people who are going to speak up -- they just want to keep their jobs," he says.

In the US, the situation is different. Here the median age of fast food workers is over 28. Two-thirds of the industry employees are women for whom the median age is over 32, according to the Bureau of Labor Statistics. The median age of big-box retail workers is over 30. They may be more politically empowered than teenage employees who used to work behind counters after school, but strikers at last week's protests were still accompanied by clergy members and community organizers when they returned to work, a strategy to help prevent any firings or retaliation from chain managers.

For US workers to earn more, corporations would have to accept slightly lower profit margins, says UC Berkeley economist Robert Reich in his recent article connecting the debate over the fiscal cliff to the plight of low-pay workers in the US:

Unlike industrial jobs, these can't be outsourced abroad. Nor are they likely to be replaced by automated machinery and computers. The service these workers provide is personal and direct: Someone has to be on hand to help customers and dole out the burgers.

And any wage gains they receive aren't likely to be passed on to consumers in higher prices because big-box retailers and fast-food chains have to compete intensely for consumers. They have no choice but to keep their prices low.

That means wage gains are likely to come out of profits – which, in turn, would affect the return to shareholders and the total compensation of top executives.

Royle also points out that the wage differential between the majority of part-time fast food workers and senior management is huge -- and if anything, it is increasing.

He says there's a chance that US fast food chains may bow to pressure to pay employees slightly more, but he doesn't see Fast Food Forward's successes as the beginning of the end for the system. "Wages and conditions are always likely to be mediated in different countries and at different times depending on the strength of the union movement, the activism of the workforce, and the nature of the local labor law, but the fast-food system relies mostly on a supply of cheap, low-skilled labor, and given the developments in the global economy in the last 30 years, I can't see any shortage in low-skilled workers in the future and therefore no likelihood of any change in the basic system. We might not like it, but it works. It makes money."


View Comments (13)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Master's Degree in Nursing

    CCNE accredited MS in nursing in as few as 18 months online. Learn more today!

    AdChoicesNorwich UniversitySponsored
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Tired of Living Paycheck to Paycheck?

    New website reveals how to save $1,000's when you're living paycheck to paycheck. See exactly how.

    AdChoices Media ForceSponsored
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • 6 Things Debt Collectors Wish You Knew

    The work debt collectors do is not popular, and has become increasingly derided by those who don’t like what we do or simply don’t know the facts about debt collection. Too often, debt collection is painted with a broad brush to create a portrait that isn’t accurate, and doesn’t properly educate…

  • Masters in Law Degree-Non JD

    Elevate your knowledge. Advance your career. Get Your Masters in Law. Online and Accredited. Graduate in Less Than 2 years. Free Brochure!

    AdChoicesChamplain CollegeSponsored
  • Play

    Tues., Sept. 16: Watch Humana Stock

    Humana, Global X Social Media Index ETF and Majesco Entertainment are among stocks to watch. WSJ's Chris Dieterich discusses the details with Michael Casey. Photo: Humana

    WSJ Live