Corporations May Prove To Be Unlikely Allies in the Fight for Wage Increases

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Commentary Human Rights

Corporations May Prove To Be Unlikely Allies in the Fight for Wage Increases

s.e. smith

Chipotle may not be the ultimate tipping point, but we could may be inching closer to a moment at which the government will be compelled to act, mandating a higher minimum wage, paid sick leave, and other benefits for workers in the United States.

Earlier this month, Chipotle became the latest in a growing list of companies expanding wages and benefits for their employees in the absence of any government mandates to do so—but under considerable pressure from unions, labor activists, and members of social movements advocating for a better standard of living. While such groups continue to lean on the government for reform, they are also targeting individual corporations’ images and wallets. This, in turn, may be instrumental to creating a culture in which raising the minimum wage is non-optional.

Executives at Chipotle evidently felt that improving conditions for all workers, including part-timers, was the right thing to do, likely from a public-relations perspective rather than out of the goodness of their hearts. Still, the move signals a reason to be at least a bit optimistic about working conditions in the United States, which stands out among industrialized nations for its low wages and limited benefits.

Chipotle may not be the ultimate tipping point, but we could be inching closer to a moment at which the government will be compelled to act, mandating a higher minimum wage, paid sick leave, and other benefits for workers in the United States. As activists jostle corporations, multinationals are facing the opportunity to be proactive to look good for the public, rather than being dragged into the 21st century. That trend could push the government to the breaking point, bringing about critically needed regulatory changes for workers.

Starting on July 1, Chipotle employees will be eligible for paid sick leave, paid vacation time, and tuition credits. There are some caveats to the scheme, but it reflects a step in the right direction. More than a year ago, the firm’s executives indicated that it would be relatively easy to absorb a minimum wage hike, a move that economic pundits felt implied that they were weighing a change in standard compensation for their workers. The statement also slyly suggested that other firms should be capable of the same.

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Notably, evidence suggests that a higher minimum wage actually increases profits for corporations—an argument cited by supporters as they target individual companies with fair pay campaigns. It reduces the costs associated with high turnover and promotes economic growth, which results in more consumers and higher revenue at the cash register. Higher pay, in other words, pays off. Marc Benioff, CEO of Salesforce, just issued his own rousing commentary on the subject, insisting that the country could afford a $15 hourly minimum wage.

He knows from which he speaks. Some of the earliest initiatives to voluntarily increase minimum wage and benefits originated in the tech industry. Earlier this year, Facebook made headlines with its expansion of wages and benefits to contract workers, who now earn $15 an hour. Apple, ahead of the pack, increased wages for its retail personnel by 25 percent in 2012, bringing some associates above $15 and sometimes even higher, depending on position and location. Google just extended better pay and benefits to the workers who pilot the company’s infamous shuttles. In April, the CEO of Gravity Payments, a Seattle-based payments processing company, slashed his own wages to ensure a minimum annual salary of $70,000 for all employees.

In retail, meanwhile, Gap employees will be making $9 an hour this year, with an increase to $10 next year. Ikea, Target, and Walmart have also increased their wages, so that SNØRKL chair will come with an extra side of feel-good social responsibility. The fast-food industry has been following suit, as companies like McDonald’s started raising wages—with a significant catch in the case of the golden arches, as the hike doesn’t apply to franchise locations, and as few as 12 percent of workers will see an actual change in their paychecks.

Not every corporate campaign is equal, however: Highly publicized and heavily touted feel-good measures often come with a bitter aftertaste. Even with very public improvements to company policies, many pay nowhere near $15 hourly wages, the changes don’t come with better benefits, and few have included commitments to reforming practices like on-call scheduling, let alone cultures of sexual harassment and racism, as well as anti-union scheming.

These less-savory moves are a striking illustration of corporate co-optation of social movements—by and large, firms see the writing on the wall and recognize the value of making token changes to appease consumers. The failure to push through true, broad-ranging equity highlights the fact that government regulation will always be needed to force through, and maintain, authentic reforms on a large scale.

This is especially true because corporations, for many reasons, aren’t going to all voluntarily start paying workers more. Numerous conservative-owned companies are unlikely to increase wages on their own—don’t hold your breath for Chick-fil-A’s behind-the-counter workers or those in the aisles at Hobby Lobby—and those that do might quietly drop benefits or change eligibility.

But with conservative politicians stonewalling attempts to push through minimum wage increases at the moment, it will take continued pressure on a number of fronts to enact moves toward improving worker rights. Consumer impact, for example, plays a highly active role in the conversation about wage reform in both corporate and legislative offices. Consumers already choose to vote with their pockets, with ethical consumption becoming another growing trend in the United States: It’s becoming fashionable in some circles to spend money at companies that pledge to behave responsibly. Moreover, consumers are in a position to strike back at Congress, pushing politicians to support minimum-wage increases with their votes as well as their dollars.

Shareholders, perhaps counterintuitively, could become another source of influence on the government, especially for conservatives who argue that minimum wage laws are a fundamental betrayal of capitalist values. Announcements about wage increases tend to be accompanied by a radical jump in stock prices, with responsible investors spurring a feedback loop that benefits everyone. Ethical business practices, it turns out, are also better business practices. With the government concerned about retaining economic momentum, any evidence supporting wage increases as a positive trend for business should be taken seriously—unless, of course, the government doesn’t want to act in the best interests of U.S. businesses.

The Fight for $15 and related activist movements, however, are really the key to any successful push for a minimum wage increase. Workers taking to the streets en masse were the ones to highlight the minimum wage issue and make it a social rallying point in the first place, and they’re the ones likely to drive the lesson home as well. Such public social pressure keeps the issue in the face of companies, politicians, shareholders, and individuals, all of whom are critical to a resolution to the minimum wage problem. Without constant agitation from labor organizers, it’s easy to let the issue slip into the background, far from discussion and scrutiny.

In the face of these growing forces, the government may be driven to act, just as it did with environmental policy related to climate change, such as California’s landmark 2012 cap-and-trade program. In that instance, the state was partially forced to pass the key environmental legislation by angry consumers as well as companies voluntarily engaging in emissions reductions on an individual level, themselves in response to urging from climate advocates and the public.

The fact that advocates are so often forced into the position of lobbying individual companies for social justice rather than Congress is a telling testimony to the hold of conservative politics on the nation. In this case, steadfast anti-fair-pay attitudes make it impossible to have a functional conversation among lawmakers about increasing the minimum wage. Wage reform should be naturally driven by Congress, but many organizers are well aware that they won’t gain traction from that direction unless they can come to the table with the support of activist communities and with illustrative test cases showing that increasing employee pay was not a death knell for major corporations.

For workers across the United States, voluntary minimum wage increases at companies in response to social pressure are a good sign that someday, perhaps in the near future, a very real shift will happen on the federal level when it comes to the issue. The government is most likely to enact a stepped increase to a minimum wage between $10 and $12, not the much-desired $15, but it’s an extremely strong start on an issue of critical importance to the nation. When the country does see that move, corporations are going to deserve at least part of the credit, even though their motivations are almost certainly far from pure. This intersection between private interests, on-the-ground organizing, and potential government action is an illustration of the fact that sometimes it’s necessary to make strange bedfellows to drive social change.