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November 3, 2022

According to the Bureau of Labor Statistics, the food service industry has one of the lowest unionization rates in America – 1.2% compared to 10.3% for the country overall. But from Starbucks to Chipotle, service workers across America have launched a movement to increase that percentage.

It is not difficult to understand why.

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The BLS reports that the median full-time unionized worker earned $1,169 a week in 2021. The median non-union worker earned $975. However, it is not just about salary.

Since the beginning of the 20th century, unions have fought for better conditions, decent hours, more benefits, a safer working environment and job security. But all this costs money, which will inevitably be passed on to the customer. So what will it cost patrons if the service trade union achieves its goals? Let’s take a look.

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First, Understand Which Service Workers Are Organizing

The term “service industry” might make you think of your local bartender or restaurant server, but service workers who earn tips aren’t pushing for large-scale organizing — and they’re in a unique category of American labor.

They can be paid as little as $2.13 an hour as long as they earn more than $30 a month in tips, and according to The New York Times, tipped employees are particularly difficult to organize. Work organization takes time and commitment, and turnover in restaurants and bars is particularly high. In addition, distinctions between back-of-house and front-of-house staff complicate negotiations, and since each restaurant operates differently, there is no way to write standardized employment contracts.

Chances are, nothing will change at your local pub or cafe.

“It’s important for independent restaurateurs to note that these union efforts are almost exclusively focused on large chains and franchisees like McDonald’s and Starbucks,” said Mary King, a restaurant analyst for Fit Small Business and a 14-year restaurant veteran who has worked in all facets of the industry.

“Brands whose profits have been rising for years while front-line workers’ pay has changed little. A union push certainly wasn’t the first time these brands learned that their employees felt devalued. Unionization takes a lot of time and energy. Front-line service workers don’t have much to offer . So you have to ask yourself how desperate unionizing baristas and cashiers must feel if they’re willing to go to the lengths of full-scale unionization.”

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The $22 Red Herring

So even if unionization doesn’t affect your neighborhood restaurant, it could affect the big corporate chain with a drive-thru. So how will prices change there?

King cited a recent study from the University of California Riverside, which found that consumers can expect a price increase of 7% to 22% if wages for service workers rise above $22 an hour.

“Most of us won’t notice a 7% increase, but 20% or more could encourage consumers to make smaller purchases or eat out less often,” she said.

However, $22 is an outlier that does not represent the larger movement’s goals. This number comes from notoriously expensive California, where Governor Gavin Newsom recently signed a law to protect fast food workers.

The FAST Recovery Act created a council that would oversee wages and working conditions in the specific industry in the specific state. The council has the authority to raise the state’s fast-food minimum wage to as high as $22 — but it hasn’t yet, and there’s no national movement seeking equal pay across the industry.

The Movement Is About More Than Money

According to Forbes, the movement that led to the FAST Recovery Act was born during the pandemic, when stories emerged of fast food workers toiling in unsafe conditions. Some were forced to work in close quarters at the height of the COVID scare and were told to wear coffee filters or dog diapers as masks.

Banning that kind of practice will not make fries more expensive.

“Union is not just about wages,” King said. “It’s about fair schedules, enough break time and health benefits. It is entirely possible that the union’s efforts will focus on these issues, rather than simply arguing for higher wages. Fair schedules and reasonable breaks are unlikely to have any impact on costs.”

Prices Are Rising, but Not Because Workers Are Overpaid

The service industry union movement is gaining ground across the country, and customers are paying a lot more for their coffee, burritos and salads, but in times of high inflation, it’s not a direct cause-and-effect relationship.

“Keep in mind that in addition to potential wage increases, restaurants are dealing with rent increases, fuel surcharges and higher prices for basic ingredients like flour and bread,” King said. “It is just as likely that price increases will come from the increased costs, not just because some restaurants may be asked to pay their employees higher wages.”

Some argue that restaurants will be forced to close as higher labor costs drive them out of business, but there is little evidence of that in the cities that served as canaries in the coal mine.

“Minimum wages went up for restaurant workers in San Francisco, Seattle and Los Angeles years ago, and we didn’t see the increase in restaurant closings that was predicted at the time,” King said.

Rising Prices Aren’t Always a Side Effect of Unionization

A common misconception is that unionization leads to higher wages, which will inevitably lead to higher prices – but history shows that this is not always the case.

“It’s important to note that workers at many hotels have been unionized for years, as have grocery store workers at big brands like Kroger,” King said. “Macy’s, Bloomingdale’s and H&M workers are also unionized. Yet somehow we don’t see the price increases at those stores that those restaurant brands are proposing to be on the horizon if restaurant workers unionize.”

She concluded: “I’m not saying that prices don’t need to rise somewhat to cover increased costs, but I’m not sure that increased wages will be entirely to blame if prices rise.”

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This article originally appeared on GOBankingRates.com: How Service Industry Unionization Could Impact Prices

Why are companies so scared of unions?

There has long been rhetoric that trade unions change the relationship between employee and employer – and can influence the incentivization of workers. When wages are standardized, good conditions are guaranteed, and layoffs are limited, workers have little motivation to work harder, companies argue.

Why are employers so afraid of unions? Large firms often oppose unions because of their impact on corporate autonomy and fear of financial losses as workers fight for higher wages and better benefits.

Why is the US afraid of unions?

Why are American companies so afraid of their employees joining forces? Because American unions have a history of creating an adversarial relationship between managers and employees. They are self-serving and have a zero-sum approach where they try to extract as much as they can from a company.

What are the arguments against unions?

The arguments against unionization management tend to cluster around three main themes: (1) employees should trust management to do what is best for everyone, without management needing to negotiate formally with employees; (2) the union cannot be trusted; and (3) sticking with the status quo is better than the uncertainty…

What are three reasons for the decline of unions?

Four reasons for the decline in union membership

  • Unions often seem irrelevant. …
  • Unions have a bad public image as bloated, ineffective and often downright corrupt. …
  • Workers are often “out of sync” with union politics. …
  • Most Americans now turn to government, not unions, for basic protections.

What are 3 disadvantages of unions?

Unions require dues to pay wages to union leaders and workers during a strike. And unfortunately, some unions spend union dues on six-figure executive salaries and luxurious headquarters. Other disadvantages of union membership include less autonomy, workplace tension and slower advancement.

What were the main problems for the unions? Many problems were faced by the trade unions during the 19th century. One problem was that the British government denied workers the right to form unions and saw these unions as a threat to social stability and order. The Combination Acts of 1799 and 1800 prohibited strikes and unions.

What is the advantage and disadvantage of labor union?

Although union jobs often have increased competition, they are generally beneficial to employees. They generally offer higher wages, better healthcare, pensions, better working conditions and more. That said, employees who join labor parties must pay regular fees to maintain their membership.

What are 4 advantages of unions?

Through their trade union, employees have the opportunity to negotiate from a position of strength with employers on pay, benefits, health and safety in the workplace, job training and other work-related issues. Trade unions also have an important role in ensuring that management acts fairly and treats its employees with respect.

What are disadvantages of working unionized environment?

What are the disadvantages of unions?

  • Unions may give discounts on worker education and experience. …
  • Trade unions require an ongoing membership fee and may charge a start-up fee. …
  • Unions can participate in activities that workers disagree about. …
  • Unions discourage individuality.

Why do workers not want unions?

There has long been rhetoric that trade unions change the relationship between employee and employer – and can influence the incentivization of workers. When wages are standardized, good conditions are guaranteed, and layoffs are limited, workers have little motivation to work harder, companies argue.

What are three reasons for the decline of unions?

Four reasons for the decline in union membership

  • Unions often seem irrelevant. …
  • Unions have a bad public image as bloated, ineffective and often downright corrupt. …
  • Workers are often “out of sync” with union politics. …
  • Most Americans now turn to government, not unions, for basic protections.

Why don t more workers join unions?

The lack of union provision, power dynamics in labor relations, and employers’ strategies to avoid unions all work together to deter workers from exercising their right to unionize.

What are the 3 pros and 3 cons of unions?

Pro 1: Unions provide worker protection.

  • Pro 2: Unions promote higher wages and better benefits.
  • Pro 3: Unions are economic trendsetters.
  • Pro 4: Political organization is easier.
  • Con 2: Unions discourage individuality.
  • Con 3: Unions make it harder to promote and fire workers.
  • Cons 4: Unions can increase costs.

What are 3 advantages to belonging to a union?

Unions build workforces by helping members stand together for better wages, fair benefits, safe and healthy workplaces and stable working hours. Unions also help workers gain more rights and power in their workplace – and have more say over their working conditions – by serving as a counterweight to management.

Why is Walmart opposed to unions?

Walmart is not anti-union. But while a union may represent its members who work for other employers or competitors in the retail industry, Walmart believes that if its values ​​and beliefs are applied, there is no real or marked benefit to joining a union.

Why are companies opposed to unions? There has long been rhetoric that trade unions change the relationship between employee and employer – and can influence the incentivization of workers. When wages are standardized, good conditions are guaranteed, and layoffs are limited, workers have little motivation to work harder, companies argue.

How is Walmart anti-union?

The Labor Party’s opposition. Walmart has been criticized for its anti-union policies. Critics blame workers’ reluctance to join the union on Walmart’s anti-union tactics such as management surveillance and preemptive closings of stores or departments that choose to organize.

Are any Walmart employees unionized?

Walmart is the largest private employer in the United States. Not one of the 1.4 million employees belongs to a trade union.

What is Walmart’s philosophy on unions?

Walmart has been anti-union since Sam Walton opened his first store in Rogers, Ark., in 1962. As he put it in his autobiography, Sam Walton: Made in America: “In theory, I understand the argument that unions are trying to make, that the employees need someone to represent them and so on.

Can Walmart be unionized?

Only once has anyone successfully unionized a Walmart store located within US borders. It happened in the winter of 2000, when ten meat cutters at a Walmart Supercenter in Jacksonville, Texas, voted 7-3 to join Local 540 of the United Food and Commercial Workers International Union (UFCW).

Are any Walmart employees unionized?

Walmart is the largest private employer in the United States. Not one of the 1.4 million employees belongs to a trade union.

Can Walmart fire you for joining a union?

Under federal law, you have the right to form, join, or assist a union, and you cannot be fired for participating in union activities.

Is it better to be union or nonunion?

Better wages and benefits Union members earn better wages and benefits than non-union workers. On average, union workers’ wages are 11.2% higher than their non-union counterparts.

Are unions better than non-unions? Unions Raise Wages for All Workers Union-represented workers enjoy a significant wage premium compared to non-union workers. The Bureau of Labor Statistics reports that non-union workers earn only 83 percent of what unionized workers earn ($975/week vs. $1,169/week).

What are the disadvantages of being in a union?

Cons

  • Annual dues. Employees often pay 1.5-3% of their salary in union dues.
  • You need skilled dealers at the helm. …
  • Limits your individuality. …
  • Seniority rules. …
  • Less cooperative work environment.

What are the advantages and disadvantages of unions in the workplace?

They generally offer higher wages, better healthcare, pensions, better working conditions and more. That said, employees who join labor parties must pay regular fees to maintain their membership. Union members also agree to abide by any conditions negotiated between the union and companies.

Is it better to have a union or not?

Union workers typically earn higher wages than non-union workers. In 2020, non-union workers’ median weekly earnings were 84% of union workers’ median weekly earnings – $958 versus $1,144. In addition, union workers have access to better benefits.

What are the disadvantages of not having a union?

Without a union, workers must negotiate wages and benefits on their own – and studies show that many women and minorities have a tougher time doing this.

What are the benefits of not being in a union?

Lower employee costs Unions have discretion when determining the total amounts for fees and dues. These fees and charges usually come directly out of the employees’ paychecks. By working in non-unionized workplaces, employees avoid the costs imposed by unions, potentially increasing their total take-home pay.

What are the benefits of not being in a union?

Lower employee costs Unions have discretion when determining the total amounts for fees and dues. These fees and charges usually come directly out of the employees’ paychecks. By working in non-unionized workplaces, employees avoid the costs imposed by unions, potentially increasing their total take-home pay.

Why would employees avoid joining a union?

It costs money to pay a trade union for its “services”. This money can add up to literally thousands of dollars over the course of a multi-year collective bargaining agreement. Payments from employees to a trade union can come in the form of periodic dues, fees, special rates and even fines.

What happens if you don’t join the union?

Employees may choose not to join a union and pay dues, or choose to pay only the portion of dues that is used directly for representation, such as collective bargaining and contract administration. Known as objectors, they are no longer union members but are still protected by the contract.