Shortly before the company’s annual shareholder meeting last week, more than 100 cooks and cashiers rallied in the rain outside McDonald’s new headquarters in Chicago’s West Loop to demand higher wages. In recent years, the meeting has attracted demonstrations organized by the union-backed Fight for 15 movement. But in 2018, a new grievance appeared on the roster of complaints against one of the world’s largest fast-food chains: sexual harassment. With the help of Fight for 15, ten current and former female McDonald’s employees in nine different cities have taken legal action against the company over alleged instances of harassment by employees and managers.
Most shareholders appeared largely indifferent to the unrest. The topics of pay and harassment did not appear on the group’s agenda, which included elections to the board of directors, approval of new executive compensation packages, and votes on other shareholder proposals.
But Alexa Kaczmarski, national campaign organizer for the nonprofit group Corporate Accountability, eventually brought up the sexual harassment charges and called for more responsiveness from the company. “It is tone-deaf and wrong for the corporation to try to avoid accountability on these and other issues,” Kaczmarski said.
The subject of pay did not come up until Reverend Jesse Jackson, the civil rights activist, raised the issue during a brief question-and-answer session at the end of the meeting. “Profits are going up on the inside, discontent [is] rising on the outside,” said Jackson, according to a transcript of the meeting by Seeking Alpha. “These issues of workers' wages and sex harassment are not going [anywhere]. There must be some arbitrated plan to resolve these.”
President and CEO Steve Easterbrook quickly responded that McDonald’s takes sexual harassment and discrimination very seriously, echoing the statements that the company released earlier in the week. He expressed confidence that franchisees felt the same way, but he did not specify how the company planned to respond to the allegations.
Regarding wages, Easterbrook merely highlighted the company’s recent initiatives. McDonald’s has committed $150 million over the next five years to expand employee education benefits, including college tuition assistance, through its “Archways to Opportunity” program. The Archways program has invested $21 million so far in tuition assistance for about 24,000 U.S. workers.
According to Easterbrook, the Republican tax cuts made the new commitments possible.
As has been the case with many other corporations, the tax cuts have stopped short of bringing about real pay raises. McDonald’s stands to reel in an estimated annual tax cut of $900 million, according to Americans for Tax Fairness. In the first quarter of 2018 alone, the company’s stock hit an all-time high and it returned $2.5 billion to shareholders, with plans of returning $16 billion more in the next two years.
For his part, Easterbrook received a 42 percent raise in 2017. The CEO makes $21.7 million a year, 3,101 times more than median salary of a McDonald’s employee.
For many employees, tuition assistance isn’t enough to make up for paltry wages. In 2015, the corporation responded to the threat of major employee strikes with a promise that it would pay employees at least one dollar more than local minimum wages. But that promise appears to have been a one-time show of generosity.
In April, Fight for 15 released pay stubs for 16 McDonald’s employees in multiple cities. They revealed pay rates that were far short of the company’s one-dollar-above promise. Moreover, only workers at corporate-owned locations received the raise, and just 10 percent of the 14,000 U.S. McDonald’s locations are owned by the corporation.
Franchisees, which were not required to offer that raise, come with their own set of problems for workers. The ten women who lodged complaints against McDonald’s last week all worked at franchise locations. Fight for 15 named McDonald’s Corp. in the complaints along with the individual franchisees, hoping to hold the parent company accountable.
Some corporations use franchises as a way to escape labor-violation lawsuits and to dodge wage disputes with employees. In 2015, the Democratic-controlled National Labor Relations Board (NLRB) created new regulations that specified when a company like McDonald’s could be held responsible for workers at its franchises.This measure gave employees significant leverage when dealing with companies. Unsurprisingly, corporate America didn’t take to it kindly.
In December, the NLRB, with its new Republican majority, voted in a 3–2 decision to overturn the rule. McDonald’s has been the target of a string of labor-law violation lawsuits over the past year from employees at its franchises. The NLRB’s reversal makes it unlikely that the company will be held liable for damages in any of those cases.
To make matters worse, in a 5–4 decision this month, the Supreme Court upheld employers’ ability to bar employees from joining class-action lawsuits. Thanks to the ruling, millions of workers will now be unable to band together to challenge their bosses on discrimination issues, wage disputes, and sexual harassment allegations—like the ones that McDonald’s faces.
Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.