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The rise of the low-wage restaurant industrial complex

By keeping millions of its American workers in poverty, the restaurant industry is setting up the U.S. economy to fail.
A man works inside a McDonald's fast food restaurant on Aug. 23, 2013 in the Brooklyn borough of New York, N.Y.
A man works inside a McDonald's fast food restaurant on Aug. 23, 2013 in the Brooklyn borough of New York, N.Y.

Last week, hundreds of fast food workers across the country went on strike, demanding better wages and working conditions. It’s not hard to see why: nearly half of all restaurant workers—including fast food workers—live in or near poverty. As Terrence Wise, a fast food worker who joined the strike in Kansas City, put it, “our children watch us go to work each day, only to come home to eviction notices, shut-off notices, and bare cupboards.”

"Our children watch us go to work each day, only to come home to eviction notices, shut-off notices, and bare cupboards."'

While these conditions are disturbing enough in and of themselves, they actually have larger consequences for the American economy. For far too many in the United States, work that once provided a clear path to the middle class now swells the ranks of America’s “working poor.”

With more than 10 million employees, the restaurant industry is one of the fastest growing sectors of the American economy. But in reality, that growth is little more than smoke and mirrors, disguising the reduced hours and stagnant wages of workers inflating the bottom lines of corporate restaurant executives. Record profits reported by the industry aren’t translating to workers, who face scant benefits, little to no job security, unpredictable pay, and increasingly unreliable work schedules.

The lack of basic labor standards in the restaurant industry makes the sector’s growth both deceiving and unsustainable. Hiding behind misleading numbers and clinging to a desperate claim that growth isn’t possible otherwise, the restaurant industry is contributing to the erosion of the middle class, keeping millions of workers in poverty and putting our economy—and future economic growth—in a precarious position. Historically, American economic growth has been directly linked to a strong middle class, but by keeping millions of its workers in poverty, the restaurant industry is setting our economy up to fail.

Just a day after last week’s strikes, new job numbers from the Bureau of Labor Statistics showed that a significant portion of the 142,000 jobs added last month (a disappointingly and unexpectedly low number, overall) were in the restaurant industry.

In the name of protecting that growth, the restaurant industry’s corporate lobby group, the National Restaurant Association, has led the charge to enshrine a sub-minimum wage for tipped workers. At the federal level, the tipped minimum wage has been frozen at $2.13 since 1991, and remains lower than the regular minimum wage in 43 states. Although employers are legally required to “top off” a tipped worker’s pay when tips don’t add up to at least the minimum wage, enforcement is so lax and disorganized that wage theft has reached epidemic levels. The result is a two-tiered wage system where customers, not employers, are forced to pay the bulk of a tipped worker’s wages.

Because of this, restaurant servers—70% of whom are women—live predominantly off tips. The average restaurant worker isn’t a teenager on a summer job, but an adult worker trying and often failing to make ends meet. They are twice as likely to need food stamps than the general workforce and three times as likely to live in poverty. So not only does the restaurant industry expect customers to directly pay a significant segment of its workforce, we, as tax-payers further subsidize the industry’s poverty wages by funding public-assistance programs that many restaurant workers simply couldn’t survive without, like SNAP and Medicare.

But workers are more than a set of statistics. In addition to weakening our economy, the abysmal conditions of the restaurant industry are dehumanizing and degrading. Ninety percent of restaurant workers report not having access to paid sick days. Instead, workers -- often mothers or fathers -- are forced to make the difficult decision between staying home sick and losing pay or potentially losing their jobs, not to mention the potential health crises sick food-service workers could cause.

Unpredictable and constantly changing schedules also force working parents into difficult corners when it comes to finding and affording adequate childcare. Sexual harassment is often seen as “just part of the job,” especially for women in the industry, who dominate occupations in which tips constitute the majority of their take-home pay. In fact, according to the Equal Employment Opportunity Commission, the restaurant industry is the single largest source of sexual harassment charges filed by women with a rate five times higher than the general female workforce.

"The average restaurant worker isn’t a teenager on a summer job, but an adult worker trying and often failing to make ends meet."'

The economic and human toll of poor working conditions in the restaurant industry also have long-term consequences. Forced to live shift-to-shift, not just paycheck-to-paycheck, most restaurant workers struggle to plan and save for their future. Imagine trying to buy a house, afford a healthcare emergency, send your children to college, and, eventually, retire from the job where your paycheck regularly forces you to choose between groceries and the utility bill.

This economic insecurity is bad for workers and bad for our economy. But the restaurant industry can do better—and some restaurant owners already are, by investing in their employees through livable wages, opportunities for career advancement, and worker and family-friendly policies that create sustainable jobs; proving that profits don’t need to come at the expense of fair labor practices. If we want to see robust and continued economic recovery, it’s time for the restaurant industry to stop masquerading and legitimately contribute to growth by providing jobs that enable people to make ends meet, support their families, and live above the poverty line.

Saru Jayaraman is the Co-Founder and Co-Director of the Restaurant Opportunities Centers United (ROC United), Director of the Food Labor Research Center at University of California, and author of "Behind the Kitchen Door," an exploration of the political, economic, and moral implications of dining out.