Sep 1, 2022 - Economy

California fast-food bill marks pivotal moment for low-wage workers

Illustration of a metallic french fry basket pouring out a pile of cash.

Illustration: Aïda Amer/Axios

The California Senate this week passed a bill that could raise wages for fast food workers to as high as $22 per hour — and has the potential to revitalize the U.S. labor movement. Business groups are mounting fierce opposition.

Why it matters: The Fast Food Accountability and Standards Recovery Act signals a re-emergence of "sectoral bargaining," a once-popular and powerful union tactic in which workers from different companies in the same industry negotiate for pay together.

  • The strategy, still used in a few corners in the U.S., like for TV writers, is re-emerging in Europe, Australia and New Zealand.
  • The key difference in the new bill is that government also gets a seat at the negotiating table — labor advocates are calling it "groundbreaking."

State of play: If signed by Democratic governor Gavin Newsom — and industry is pushing him hard not to — the legislation could become a model for other states; already activists are looking to replicate it in New York and Illinois, the WSJ reports.

  • Nail salon workers in New York are currently seeking similar legislation for their industry.

Details: The bill would create a 10-person council, comprised of business, labor and government representatives, to establish an industry-wide minimum wage, as well as health and safety standards.

  • Pay could go as as high as $22 per hour, with annual raises of either 3.5% or the rate of inflation, whichever is less.
  • The bill would cover as many as 550,000 fast food workers in the state. They're already among the highest-paid in the country at $15.61 per hour on average (a little more than the state's minimum wage), per 2021 government data.

Zoom out: The council established by the bill is different from a worker union — it would bring together four representatives from the ranks of workers and four from business. Any decisions will require at least six votes.

  • "In theory, it will be equally representative of both sides," says Matt Haller, president of trade group International Franchise Association (IFA).

Advocates have tried to organize fast food workers for years — mostly unsuccessfully in an industry with high turnover and workers spread out at individual stores.

  • So, the government's role here is pivotal, says David Madland, a senior fellow at the Center for American Progress. "The workers could never force the employers to the table without the government bringing them there."

How it happened: The bill, which was pushed by union activists in the state, reads as a harsh rebuke to the fast food industry and highlights how the pandemic made these long simmering issues more apparent.

  • The "pandemic has illustrated the implications for workers and the public when a disempowered workforce faces a crisis in a sector with a poor history of compliance with workplace health and safety regulations."

The other side: Singling out the fast food sector is "totally arbitrary," the IFA's Haller tells Axios.

  • IFA argues that the bill could have devastating consequences for individual franchise owners — effectively small business owners — and set a dangerous precedent for other states.
  • The industry was able to get some provisions removed ahead of passage — including those that would have let the council establish sick leave standards or hold big brands accountable for health and safety in their franchises (a long simmering point of contention).

Labor advocates cheered the legislation: "It's a groundbreaking bill, likely to lead to more empowered workers," says Madland, author of a book about labor reform called "Reunion."

  • "Workers have won a seat at the table," said Mary Kay Henry, the president of the Service Employees International Union, which pushed for the legislation, on a call earlier this week.

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