Photo: RetailWire
Should retail seek a middle path between being pro- or anti-union?
In an open letter last week, McDonald’s USA president Joe Erlinger blasted proposed California legislation related to conditions for fast food workers as stemming “almost entirely at the behest of organized labor’s firm grip on many of the state’s lawmakers.”
Mr. Erlinger argued that the impetus for the bill is that despite “years of work, and hundreds of millions of dollars,” organized labor continues to lose ground. He said that the U.S. unionization rate in 2022 shrunk to 10.1 percent, the lowest on record.
“Simply put, organized labor hasn’t been successful going through the front door — giving everyday workers the ability to choose whether they want a union,” he wrote. “So it asked for a backdoor — pushing Sacramento lawmakers to introduce, pass and sign a bad policy that hurts small businesses, workers and consumers.”
The act, AB257, could raise the minimum wage for fast food workers as high as $22. The bigger change, however, is the planned formation of a 10-member, state-run council to negotiate wages, hours and working conditions for non-union fast food workers in California, potentially setting a precedent across the U.S. for negotiating workplace standards.
Proponents argue that worker challenges during the pandemic demonstrated the need for an independent council.
Following strong opposition from fast food restaurants and business trade groups, California’s secretary of state last week said a petition to stop the law’s implementation had gathered enough signatures to qualify for a vote on the state’s 2024 general election ballot.
Despite stagnant membership growth, unionization has been on the rise at Starbucks, Amazon.com, Apple and elsewhere. A Gallup poll last August found that 71 percent of Americans approve of unions, up seven percent since before the pandemic and the highest rating since 1965.
In a recent Harvard Business Review column, Sharon Block, executive director of the labor and worklife program at Harvard Law School, said that, given the tight labor market and organization efforts, past antagonistic unionization approaches should be reconsidered. She wrote, “An ugly anti-union effort can hurt morale, reputation and increase turnover. Conversely, companies that take steps like voluntary recognition, partnering to create the best conditions for a fair campaign and respecting workers’ decisions can preserve a positive relationship with their employees.”
- California keeps looking for ways to raise prices, drive away more businesses and destroy growth through bad policy and bad politics – McDonald’s USA
- Union membership rate fell by 0.2 percentage point to 10.1 percent in 2022 – BLS
- McDonald’s, In-N-Out, and Chipotle are spending millions to block raises for their workers – CNN
- Californians to vote on overturning a new law that could raise fast-food worker wages – Los Angeles Times
- McDonald’s Exec Slams California Lawmakers for Passing Fast-Food Law – Business Insider
- U.S. Approval of Labor Unions at Highest Point Since 1965 – Gallup
- How to Work with Your Unionizing Employees – Harvard Business Review
- Should retail fear or embrace organized labor’s comeback? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Have public perceptions changed to the point where retailers need to be more open to working with unions? Do you see ways that different approaches to organized labor could result in greater rewards for employers and employees?
Poll
Loading …BrainTrust
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Cathy Hotka
Principal, Cathy Hotka & Associates
I find the California law distasteful and a complete overreach. If people want to belong to a union, that’s fine. However, to legislate that there should be a council to negotiate for all non-union members is a gross interference in business. It is unionization by the back-door with no votes and no consultation with workers, nor with businesses.
Neil, I’m right with you!
Agree! And the best way for retailers to avoid the union issue is to proactively get ahead of the conditions and grievances that open the door to unions in the first place.
We have a major societal problem with gross income inequality, unprecedented in the US. It is grotesque for CEOs who make multiple millions of dollars per month to criticize efforts to raise workers above the poverty line.
Cathy, in principal, I agree with you. However, fixing this inequality in a real way has been (and will continue to be) very difficult if not impossible, and there are more examples than CEO to line worker wage ratios — how about the athlete on the field making multiple millions while a middle income family of four has to spend hundreds of dollars (probably well outside their budget) to watch?
The problem is real. How to fix it has shown itself to be very difficult.
Today and for the last four decades, the balance of power between labor and management to bargain is almost has deteriorated in favor of management. The ability for workers to gain fairer wages or better conditions is essentially nil.
On the other hand, the California law is over-reach beyond my comprehension.
For five years, I ran a U.S. division of a multi-national Dutch company. Labor was not treated as the enemy but as partners in making the manufacturing process better for all. We had labor/management councils in each of our plants that were very effective. They were good for the company, and labor felt ownership.
I would encourage all companies to adopt this model, but I don’t see U.S. management attitudes embracing them.
Retailers should fight this trend with extreme prejudice. The California legislation should be ashamed of this law (they are not), it is anti-growth and ultimately anti-worker.
What happens when minimum wages go up? On a macro level jobs go away and automation increases. You cannot avoid the fact that the costs are ultimately born by the consumer.
You cannot legislate success and you cannot regulate your way to prosperity no matter how you try. Eventually the issue of “what the market will bear” rears its head and makes its presence known.
The issue of whether a worker should get paid more or less is dependent on market conditions for the business, business opportunity and costs, and labor availability. It does not matter whether unions represent employees or not to these business factors. Unions might carry a larger voice due to multiple members as opposed to an individual. However, the way California is trying to solve this with laws does not address any of these issues and should be fought. The market for the company’s products or services will dictate in the long run, the best path for the employees and their wages. If the employees want unions, they are likely to exist. If the employees and the company can work together to create the level of wages both can accept, there will be no unions at the company.
So union membership, and to a large degree influence — Mr. Erlinger’s comments notwithstanding — is at its lowest point since the mid-nineteenth century, and we’re asking if something is going to compel companies to give up their traditional hostility to unions? I can’t imagine a time where it’s less likely to occur. For those thinking the magical power of social media is going to force some kind of epiphany, let me (re)introduce the phrase “a mile wide and an inch deep.”
Retailers must navigate these issues with great care. They need to make decisions for the long game unless they plan on having stores and distribution hubs with little to no associates. Additionally, given the historically high favorability of unions, aggressive companies may jeopardize their brands with consumers.
Retailers cannot ignore the need for a living wage. Relying on competitive pressures to work through market inequities and imbalances is disingenuous at best and cruel and irresponsible at worst. The operational environment is testing CEOs across the board as the incredibly high inflation of the past year has exacerbated the hardships for both employees and businesses.
Great post, Tom. The CA law may be burdensome, but when does the CEO of America’s largest second fast-food franchise give a squat about small business? Frankly, every American CEO should be required to read Upton Sinclair before assuming the role. Unions can be as harmful as they are helpful, but they exist because of the behavior of managers like Mr. Erlinger.