Labor Movement Spends Millions to Boost Wages for Workers Who Don't Yet Pay Dues

By Eric Morath Features Dow Jones Newswires

The union movement is placing a pricey bet as it racks up victories in a national push to raise minimum wages for fast-food workers: It's spending tens of millions of dollars in support of workers who can't collectively bargain and don't pay a penny in dues.

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Those workers, who marched in the rain Tuesday evening, filling more than two blocks of downtown Chicago's Michigan Avenue ahead of a McDonald's Corp. shareholders meeting, have become the new face of the labor movement as they push for a $15-an-hour minimum wage.

The question is whether they'll become the new face of union membership.

Labor organizations' "Fight for $15" strategy, led by the Service Employees International Union, primarily benefits low-wage workers rather than traditional union members, such as manufacturing laborers, public-school teachers and nurses.

"The SEIU is groping towards a new model -- trying to come up with other ways of helping workers beyond their own narrow membership," said Harry Holzer, a Georgetown University public-policy professor who worked in the Labor Department during the Bill Clinton administration. The Fight for $15 "helps raise the union's profile and their political clout. It also raises the question of: How are they going to pay for it?"

Dwindling union membership and tight budgets for organized labor could make it difficult to support an effort that yields little benefit to most union workers, who typically earn well more than $15 an hour. The median weekly earnings for a full-time union worker last year was $1,004, or about $25 an hour, according to Labor Department data. Median earnings of nonunion workers was $802 a week.

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The Fight for $15, which emerged in late 2012 from a New York gathering of fast-food workers and SEIU organizers, has been successful. Two of the most populous states, California and New York, are on the path to reach a $15-an-hour minimum, as are more than a dozen cities, including Seattle and Washington, D.C. And employers including Aetna Inc. and Wal-Mart Stores Inc. have pledged to lift starting pay for workers -- all while the federal pay floor has remained $7.25 an hour since 2009.

Protesters finalized their plans in the basement of a Chicago pizzeria in the hours before Tuesday's protest. Bettie Douglas, 59 years old, asked fellow fast-food workers half her age to excuse her language before she uttered, "I'm very angry -- I'm pissed off."

The St. Louis McDonald's worker said she is upset that state lawmakers may soon strip her of a minimum-wage increase enacted just weeks ago in the city. She said fast-food workers need a union to give them a better voice with politicians and corporations.

"You can't live on $7.90 an hour," Ms. Douglas said. "They can afford to do better by us."

The SEIU sent more than $16 million last year to about a dozen regional organizing committees and a related public-relations firm to run Fight for $15 activities, according to filings with the Labor Department. It has spent similar amounts each year since 2013, a sizable portion of its roughly $300 million annual budget. And those amounts don't include millions more spent on everything from legal fees to international organizing efforts that may also benefit the Fight for $15 campaign.

The stated goal of Fight for $15 protesters is "$15 and a union." They've had far more success with $15. The movement has yet to yield any new dues-paying members in the fast-food industry.

When Fight for $15 launched in November 2012 with worker protests in New York, a $15 minimum wage was far from mainstream. Even in initial meetings, some fast-food workers argued a $10 hourly wage was more realistic. President Barack Obama called for just a $9-an-hour federal minimum in February 2013.

"These workers were told they were crazy," said Kendall Fells, the Fight for $15 organizing director who is on loan to the campaign from the SEIU. Now a $15 minimum wage is part of the Democratic platform.

But the Fight for $15 has mostly stayed away from candidates. It didn't mobilize to back Hillary Clinton last year, instead keeping its focus on wages.

And there lies one paradox of the fight. Mrs. Clinton's failure to win the presidency could be a blow to the ability of franchise employees to bargain directly with big companies -- the mechanism that would allow for fast-food workers to unionize.

During the Obama administration, rulings from the National Labor Relations Board opened the door for national brands to potentially be considered jointly responsible for employees at franchised operations. That is a critical step to entering collective bargaining with a company like McDonald's.

That still-untested pathway is likely to close. President Donald Trump is expected to appoint regulators who will favor businesses over union organizers.

The Fight for $15 may not stay on the political sidelines next time, Mr. Fells said. Fast-food workers and allies marched in red Fight for $15 ponchos and purple SEIU jackets past Trump International Hotel & Tower in Chicago to a landmark McDonald's restaurant Tuesday, an attempt to tie Mr. Trump to the plight of low-wage workers. That helped attract Black Lives Matter and Women's March protesters to join the march.

A White House spokesman said the president is committed to supporting policies that help low-wage workers achieve increased success and economic prosperity.

A McDonald's spokeswoman didn't directly address the planned protests but said Monday that the company is committed to providing jobs and training to thousands of Americans, many of whom are entering the labor force for the first time.

In 2015, the company raised starting pay for workers at its company-owned stores, a fraction of all McDonald's locations, to at least a dollar above the local minimum wage. Earlier this month, McDonald's said it would provide assistance to franchisees to pay for self-order kiosks and table-locator technology that make employees more efficient at serving customers.

The SEIU expects that the wage movement will eventually lead to unionized workers.

It sees organization of the low-wage food-service industry as the way to reverse the trend of declining union membership. Employment at fast-food restaurants grew twice as fast as overall payrolls last year. Union membership, meanwhile, has declined as a share of the workforce for three decades.

"The problem for the union is when dues collected from collective bargaining is your only revenue source, a social movement like Fight for $15 transfers money from your members to a broad-based fight," said Andy Stern, the former SEIU president who left the union in 2010. "You need a different business model."

SEIU President Mary Kay Henry said Fight for $15 remains a high priority for the union, and it will cut costs elsewhere to ensure it is funded. Setting $15 as a national benchmark helped SEIU-represented nursing home workers in Chicago and hospital workers in Baltimore bargain to lift their starting wages to $15 as well, she said in an interview.

The Fight for $15 makes "the labor movement understand that you can make a bold demand," she said. "Demands that actually are going to change people's lives."

Write to Eric Morath at eric.morath@wsj.com

(END) Dow Jones Newswires

May 23, 2017 19:04 ET (23:04 GMT)