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Half a Million California Workers Get a Raise—And a Seat at the Table

Fast-food workers compel McDonald’s and Starbucks to abandon a ballot measure that would have squelched both.

RINGO CHIU VIA AP In a deal partially overseen by California Gov. Gavin Newsom’s staffers, the fast-food industry agreed to withdraw a referendum from next year’s ballot that would have stifled worker power.,RINGO CHIU VIA AP

In the realm of burgers and fries, California’s hot labor summer is sizzling.

In a remarkable reversal of fortune, the state’s fast-food worker movement, created and steered by the Service Employees International Union (SEIU), has compelled the giants of the fast-food industry (both national stalwarts like McDonald’s, Wendy’s, Burger King, and Starbucks and local legends like In-N-Out) to withdraw their opposition to raising their workers’ wages and establishing a statewide labor-business board to deal with industry issues.

Last year, after the legislature and Gov. Gavin Newsom signed into law a bill that established such a council to raise those wages, the industry announced it would put $200 million behind a ballot measure it had devised to overturn that law. “This was just three frickin’ days after the bill was signed into law,” says SEIU President Mary Kay Henry. “It was a gut punch.”

The industry was following in the footsteps of Uber and Lyft, which had spent hundreds of millions to persuade state voters to overturn a law that would have required them to pay at least minimum wages to their drivers. They saturated the media with ads telling Californians that a yes vote on their measure would increase drivers’ incomes, and thus misinformed, voters approved the measure. (To keep that from happening again, the legislature just passed and Newsom signed a new law under which voters will be asked not to vote yes or no, but whether to “keep the law” or “overturn” it.)

A year later, studies showed that drivers were making a paltry $6.20 an hour on net driving for Uber and Lyft. But the companies had won their ballot measure, and given the inanities of California’s direct democracy, the only way to make things right for rideshare workers would be to pass a different ballot measure, over the industry’s wishes (and dollars).

Confronted by the prospect of another such megabucks industry campaign, SEIU began planning to wage a correspondingly costly opposition effort. But it did more than that. Progressive legislators obtained the votes for two more bills. The first would make companies like McDonald’s, and not just individual franchise owners, liable for violations of wage, health, and safety laws; the second would fund the long-dormant Industrial Welfare Commission (IWC), a division of the state Department of Industrial Relations that has the power to set wage levels and standards in a host of industries, with no limits on the size of its wage increases.

With the IWC funding already passed in the state budget and the franchising bill set to pass this week (which is the final week of this year’s legislative session), the industry relented. In a deal partially overseen by Newsom’s staffers, the companies agreed to withdraw their referendum from next year’s ballot in return for guarantees that the IWC will be defunded and the franchising bill, which had the votes to pass, would not be voted on. (To facilitate this, the legislature had to pass a new law, which Newsom already has signed, enabling the sponsors of referendums to withdraw them from the ballot.)

The deal that has emerged will give the state’s roughly 550,000 fast-food workers a raise, taking full effect in April, from an hourly wage of $15.50 to $20. It guarantees the workers an annual wage adjustment of either 3.5 percent or the increase in the cost of living, whichever is lower. With minor adjustments, it preserves the labor-management council that the law passed last year established. The nine-member council will consist of two franchise owner-operators, two representatives from the fast-food mega-corporations, two union representatives, two rank-and-file fast-food workers, and one public member. It will work alongside the state’s Department of Labor, which could monitor and enforce violations the council can highlight.

“There are lots of issues the council can address,” says SEIU’s Henry. “It can deal with health and safety concerns; it can deal with workplace violence.”

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Business-labor-government bodies have existed before in the United States, during World War I and in the early years of the Great Depression. California’s new council marks a departure, though, from more recent labor relations. It’s not really a form of sectoral bargaining, such as exists in most democracies with advanced economies. Given the straitjacket that our emaciated labor law places on workers’ right to form or join unions, fast-food workers remain unorganized. A few other blue states do have wage boards, but their jurisdiction is largely over workers in facilities that have government contracts.

Even with its limited ability to affect wages, however, the California board extends the council model to places where it hasn’t gone in nearly a century.

“The council has limited jurisdiction,” says Larry Cohen, the former president of the Communications Workers of America and the U.S. labor leader best versed in the range of bargaining models that other nations employ. “Compared to any other democracy on the planet, we’re at the bottom when it comes to sectoral bargaining. But the deal that’s just gone through is a game changer for the fast-food workers. It’s an almost immediate 30 percent raise, which can make a huge difference in their lives.”

Can workers’ presence opposite management at the new California table also spur SEIU’s long-standing efforts to unionize fast-food workers? Henry thinks it can. “We intend to build worker organization as a part of making the council work,” she says. “When the $20 wage goes into effect, that will whet workers’ appetite, too.” SEIU will also push to have other blue states adopt the council model as well, which it hopes will build more nationwide pressure for McDonald’s, Starbucks et al. to cease opposing their workers’ efforts to unionize.

The fast-food deal isn’t the only breakthrough for workers moving though Sacramento this week. Another bill likely to move to Newsom’s desk would raise the wages of hospital support staffers to $25, to be phased in over a number of years. A long-becalmed bill permitting the legislature’s own staff to unionize has begun to move as well. And a bill allowing striking workers to qualify for unemployment insurance, a particularly important measure given the hot labor summer and the continuing walkout of the Screen Actors Guild and the Writers Guild of America that has brought most Hollywood production to a halt, has passed the Assembly and is on the way to the Senate.

But the survival of the fast-food council is the biggest victory, in part due to the unique strategy employed by worker advocates who have been overwhelmed by big money in California for years. Instead of watching helplessly as industry throws prodigious sums together for deceptive campaigns that accomplish at the ballot what it cannot in the legislature, labor used its leverage with Sacramento’s elected representatives to force business into submission.

The 2022 elections brought a number of pro-labor progressives to the legislature, many of whom had to defeat more conservative Democratic candidates to get there. That, in turn, was the result of a major progressive mobilization, involving California’s Working Families Party, and union rank-and-filers. And not just union members.

“Our fast-food workers—who are 80 percent immigrants, Latinas, Blacks—knocked on doors alongside SEIU members,” Henry says. “This was a David-against-Goliath battle, and the Davids prevailed.”

Harold Meyerson is editor at large of The American Prospect.

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