While Pay Holds Steady For Most, Low-Wage Workers Get A Boost

Apr 3, 2015
Originally published on April 6, 2015 2:50 pm

The vast majority of U.S. workers haven't seen any real wage gains since the recession. But that's starting to change, at least for low-income workers.

This week, fast-food giant McDonald's announced it will pay workers $1 more than the local minimum wage.

It joins some of the nation's other largest employers, including Wal-Mart, Target and TJX, the parent company of Marshalls and TJ Maxx. All say they will be boosting pay to at least $9 per hour this year, and some will go to $10 next year.

For Wal-Mart alone, that's a pay raise for half a million Americans.

Tom Perez, the U.S. secretary of labor, told NPR Friday that he considers all these moves "a step in the right direction."

"I applaud what Wal-Mart has done, and TJ Maxx, and most recently McDonald's — who also added five days' paid sick leave for full-time people, and a pro rata share for part-time people," Perez said.

Still, the McDonald's pay hike covers only the company-owned stores, not the franchises that make up 90 percent of the company's locations.

Perez says there's something Congress could do to reach a lot more workers: raise the minimum wage.

"Because there's still too many people working a full-time job and living in poverty, and that's just not who we are as a nation," he says.

Even with the $1-an-hour pay raise announced by McDonald's, some workers are still less than enthusiastic.

"For me, it really doesn't mean much. And it's not enough," says Jemere Calhoun, who works at a McDonald's in Los Angeles.

As a shift manager, he already makes $9.35 an hour. Calhoun, married and with a young child, says he and his wife have to scrape money together any way they can.

"That runs the gamut of family, friends, public assistance, temp jobs, helping people move, those types of things," he says.

Of course, it's been hard to survive on fast-food wages for a long time, so why are these companies boosting pay right now? In the case of McDonald's, the fast-food industry has been under fire, with workers protesting for months.

John Gordon, founder of Pacific Management Consulting Group, tracks chain restaurants. He says McDonald's is in part worried about its image.

That's not just because of worker protests, he says. He also points to a scandal over the meat being used at restaurants across China and Japan. "The problems have been horrendous," he says. "A longtime McDonald's provider was using bad beef. Expired beef."

But image problems aside, Gordon says the biggest factor in the wage increase is probably just basic economics.

"They are doing it because the economy has picked up and the restaurants I cover — all of them, even the Cheesecake Factory — have noted increased labor costs," he says. "Because turnover has ratcheted up, and they are generally paying people more so they don't lose them."

That sounds like a good thing: more job options and better pay for workers. But right now, when adjusting for inflation, the only workers seeing any real wage gains are at the very bottom and the very top of the pay scale.

Larry Katz, a labor economist at Harvard, says he thinks eventually there will be pay gains for the middle class, too — "but it's going to be slow," he says. That's because there are still a lot of people looking for work in middle-income jobs, so there's not the same pressure on employers to raise wages as there is for low-wage jobs.

Katz says new overtime rules could boost pay for some people more quickly. The current rules are outdated, he says. For example, if your company pays you just $25,000 a year but calls you a "manager," it's not required to pay you overtime.

A new federal rule to fix that will be announced this spring.

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MELISSA BLOCK, HOST:

Underwhelming news from the Labor Department today. The U.S. economy gained 126,000 jobs last month. That's just about half of the job gains analysts had expected. On a better note, hourly wages actually went up a bit. Since the recession, the vast majority of workers haven't seen any real wage increases, so this starting to change, at least for low-income workers. McDonald's announced just this week it will pay workers a dollar more than the local minimum wage. NPR's Chris Arnold has more.

CHRIS ARNOLD, BYLINE: All of a sudden, some of the biggest employers in the U.S. are giving their low-wage workers a raise. Wal-Mart, Target, the parent company of Marshalls and T.J. Maxx, they all now say they're boosting pay to at least $9 an hour this year. Some will go to $10 next year. For Wal-Mart alone, that's a pay raise for half a million Americans. U.S. Labor Secretary Tom Perez told NPR today he thinks all this is a good sign.

TOM PEREZ: I applaud what Wal-Mart has done and TJX and most recently McDonald's, who also added five days of paid sick leave for full-time people and a pro-rata share for part-time people. That's a step in the right direction.

ARNOLD: Still the McDonald's pay hike covers the company-owned stores, not the 90 percent of locations that are franchises. Perez says, of course, there is something that Congress could do to reach a lot more workers - raise the minimum wage.

PEREZ: Because there are still too many people working a full-time job and living in poverty, and that's just not who we are as a nation.

ARNOLD: And actually, even with the $1 an hour pay raise announcement by McDonald's, some workers are still less than enthusiastic.

JAHMEER CALHOUN: For me, it's really - doesn't mean much, and it's not enough.

ARNOLD: That's Jahmeer Calhoun, who works at a McDonalds in Los Angeles as a shift manager. He already makes $9.35 an hour. Calhoun is married and has a young child, and he says he and his wife have to scrape money together any way they can.

CALHOUN: That runs the gamut of family, friends, public assistance, temp jobs, helping people move; those types of things.

ARNOLD: It's been hard to survive, though, on fast food wages for a long time, so why are these companies boosting pay right now? In McDonalds' case, the fast food industry's been under fire from worker protests.

(SOUNDBITE OF PROTEST)

UNIDENTIFIED PEOPLE: Hold the burger. Hold the fries. Make our wages supersized.

ARNOLD: Those were workers outside a McDonalds in Milwaukee yesterday. John Gordon is the founder of Pacific Management Consulting Group. He tracks chain restaurants, and he says in part McDonald's is worried about its image. He says it's not just the worker protests. There was a scandal over the meats being used at restaurants across China and Japan.

JOHN GORDON: The problems have been horrendous. A longtime McDonalds provider was using bad beef, expired beef.

ARNOLD: But image problems aside, Gordon says the biggest factor is probably just basic economics.

GORDON: They are doing it because the economy has picked up and the restaurants that I cover, all of them, even Cheesecake Factory, you know, has noted increased labor costs because turnover has ratcheted up. And they are generally paying people more so they don't lose them.

ARNOLD: That sounds like a good thing - more job options and better pay for workers. But actually, so far in this recession when you adjust for inflation, the only workers seeing any real wage gains are at the very bottom and the very top of the pay scale. Larry Katz is a labor economist at Harvard. We asked him does all this mean that we're going to start to see better pay for the middle class too?

LARRY KATZ: Yes, I think we will, but it's going to be slow.

ARNOLD: Katz says, though, one thing that could boost pay for some people more quickly - new overtime rules. Katz says the federal rules are outdated. If your company pays you just $25,000 a year but calls you a manager, it's not required to pay you overtime. A new federal rule to fix that will be announced this spring. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.