Subsidizing Our Food Supply on the Backs of the Working Class

The fast-food workers’ protests for higher wages last month triggered a national debate about workers’ compensation, price of food, and the role of the statutory minimum wage. Thousands of fast-food workers have been holding one-day strikes from New York to several Midwestern cities, demanding $15 an hour – more than twice the federal minimum wage. The federal minimum wage rate has been in effect since 1938 and is part of the Fair Labor Standard Act (“FLSA”), which, among other things, also set the 40-hour workweek and overtime pay. Beginning at a rate of $0.25 in 1938, the minimum wage standard has been raised more than 20 times to reflect cost of living increases. The last time Congress visited this issue was as part of the Fair Minimum Wage Act of 2007, which amended FLSA to gradually raise the minimum wage from $5.15 per hour to its current rate of $7.25. Prior to that, the minimum wage rate had not been adjusted since 1997. These numbers do not reflect the full story. Those making minimum wage have less buying power than their peers did in the mid-1950s. Although the federal minimum wage generally kept pace with increases in the cost of living, it began to fall behind during the 1980s. In fact, according to a recent report, the “effective minimum wage,” which is the local minimum wage rate adjusted for the cost of living, is actually $6.07 in Los Angeles and $6.27 in San Francisco. Based on the Department of Housing and Urban Development estimates of fair market rents for housing, even ignoring taxes, a minimum wage worker in Los Angeles must work 34.5 hours per week just to pay rent. Minimum wage workers in San Francisco need to work 33.75 hours to pay rent. Based on the federal minimum wage standards, a full time worker earns approximately $13,920 per year. The poverty income threshold in the United States is just over $23,000 for a family of four. In other words, a minimum wage worker holding a full time job is guaranteed to live well below the poverty line, which itself has been kept artificially low. Some argue that minimum wage positions are filled with teenagers, who need not concern themselves with such “real life” affairs as paying rent or providing for children. However, this position simply ignores the reality of minimum wage worker demographics today. The median age of fast-food workers is over 28, with many trying to support their families. Many, if not most, minimum wage workers are compelled to work multiple jobs to make ends meet. Indeed, McDonald’s financial planning guidelines for its low-pay workforce anticipates a second, nearly full-time job as part of its “sample monthly budget” for its low wage employees. Meanwhile, the food prices, especially in the fast-food industry, remain fairly low and fast-food companies continue to post healthy profits. The McDonald’s Corporation, for instance, reported approximately $5.5 billion in profits in 2012. It paid its CEO $27.7 million in compensation during the same year. With the public benefiting from a relatively cheap food supply and the corporations enjoying profits equal to small countries’ gross domestic product, it is time to ask ourselves how long are we willing to allow minimum wage workers to subsidize our food supply by working more than 70 hours per week while struggling with poverty so that our food prices remain where they are and corporate profits continue to rise. For more information on joining the fight to help raise the minimum wage, click here.