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Organizing McDonalds and Walmart, and Why Austerity Economics Hurts Low-Wage Workers the Most

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McDonald's -- bellwether for the fast-food industry -- posted strong results during the recession by attracting cash-strapped customers, and its sales have continued to rise.

Its CEO, Jim Skinner, got $8.8 million last year. In addition to annual bonuses, McDonald's also gives its executives a long-term bonus once every three years; Skinner received an $8.3 million long-term bonus in 2009 and is due for another this year. The value of Skinner's other perks -- including personal use of the company aircraft, physical exams and security -- rose 19% to $752,000.

Yum! Brands, which operates and licenses Taco Bell, KFC, and Pizza Hut, has also done wonderfully well. Its CEO, David Novak, received $29.67 million in total compensation last year, placing him number 23 on Forbes' list of highest paid chief executives. 

Walmart -- the trendsetter for big-box retailers -- is also doing well. And it pays its executives handsomely.  The total compensation for Walmart's CEO, Michael Duke, was $18.7 million last year -- putting him number 82 on Forbes' list.

The wealth of the Walton family -- which still owns the lion's share of Walmart stock -- now exceeds the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.

Last week, Walmart announced that the next Wal-Mart dividend will be issued December 27 instead of January 2, after the Bush tax cut for dividends expires -- thereby saving the Walmart family as much as $180 million. (According to the online weekly "Too Much," this $180 million would be enough to give 72,000 Wal-Mart workers now  making $8 an hour  a 20 percent annual pay hike. That hike would still leave those workers making under the poverty line for a family of three.)

America is becoming more unequal by the day. So wouldn't it be sensible to encourage unionization at fast-food and big-box retailers?

Yes, but here's the problem.

The unemployment rate among people with just a high school degree -- which describes most (but not all) fast-food and big-box retail workers -- is still in the stratosphere. The Bureau of Labor Statistics puts it at 12.2 percent, and that's conservative estimate. It was 7.7 percent at the start of 2008.

High unemployment makes it much harder to organize a union because workers are even more fearful than usual of losing their jobs. Eight dollars an hour is better than no dollars an hour. And employers at big-box and fast-food chains have not been reluctant to give the boot to employees associated with attempts to organize for higher wages.

Meanwhile, only half of the people who lose their jobs qualify for unemployment insurance these days. Retail workers in big-boxes and fast-food chains rarely qualify because they haven't been on the job long enough or are there only part-time. This makes the risk of job loss even greater.

Which brings us back to what's happening in Washington.

Washington's obsession with deficit reduction makes it all the more likely these workers will face continuing high unemployment -- even higher if the nation succumbs to deficit hysteria. That's because cutting government spending reduces overall demand, which hits low-wage workers hardest. They and their families are the biggest casualties of austerity economics.

And if the spending cuts Washington is contemplating fall on low-wage workers whose families are under the poverty line -- reducing not only the availability of unemployment insurance but also food stamps, housing assistance, infant and child nutrition, child health care, and Medicaid -- it will be even worse. (It's worth recalling, in this regard, that 62 percent of the cuts in the Republican budget engineered by Paul Ryan fell on America's poor.)

By contrast, low levels of unemployment invite wage gains and make it easier to organize unions. The last time America's low-wage workers got a real raise (apart from the last hike in the minimum wage) was the late 1990s when unemployment dropped to 4 percent nationally -- compelling employers to raise wages in order to recruit and retain them, and prompting a round of labor organizing.

That's one reason why job growth must be the nation's number one priority. Not deficit reduction.

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http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

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If you almost double the wages of service workers,... by Doc McCoy on Sunday, Dec 2, 2012 at 2:02:17 AM
You're all for laying down and dying quietly. ... by Sister Begonia on Sunday, Dec 2, 2012 at 7:16:33 PM
With a quote from Hunkpapa Sioux leader Sitting Bu... by Richard Girard on Monday, Dec 3, 2012 at 3:57:14 PM
I just can't help but wonder how many of those emp... by Sister Begonia on Sunday, Dec 2, 2012 at 7:14:17 PM
...they put a cap on what CEOs and other corporate... by Ginger McClemons on Tuesday, Dec 4, 2012 at 1:19:05 PM
drive both companies and investors out of America.... by Doc McCoy on Tuesday, Dec 4, 2012 at 6:47:40 PM
they won't get the tax breaks in other countries t... by Ginger McClemons on Tuesday, Dec 4, 2012 at 7:33:20 PM
Most fast food chains are franchisees that will pa... by Ted Rosa on Saturday, Dec 8, 2012 at 10:23:33 AM