How to Raise Worker Wages

Organize, arrive, persist, persist, persist

Dan Gillotte, general manager at Wheatsville Co-op (Photo by John Anderson)

"Wages are tough, Austin's expensive. What are we going to do?"

That was the question Dan Gillotte, general manager of Wheatsville Co-op, asked himself two years ago at the beginning of an arduous process to provide every employee of the local grocery stores with a living wage. The question marks the balance that every employer must strike – but for Wheatsville, sustained complaints from underpaid workers threatened to undermine its image as an ethical and mission-driven community business. That mission: to "promote a transformation of society toward cooperation, justice, and non-exploitation."

As such, said Gillotte, he was "stung" by a Chronicle article ("Is Something Rotten at Wheatsville Co-op?" May 22, 2015) that detailed the dissatisfaction some Wheats­ville employees had about the level of their pay. Not only had a number of workers voiced their grievances, claiming that workers were underpaid to the benefit of executive management, but a member of the co-op's board resigned, accusing fellow members on her way out of trying to cut off communication between Wheatsville workers and the co-op's membership.

It will take a long time for other service sector businesses to begin paying their workers appropriate living wages.

"It was pretty unpleasant and uncomfortable around here at that time," said Gillotte. "People were mad and disappointed. We felt really under the microscope."

At the time, the entry-level wage for Wheatsville employees was $9.50 per hour. Workers called for an hourly increase, to $11.38, to fall in line with what the city of Austin had recently determined served as a reasonable living wage for city employees and those working for city contractors. Gillotte was skeptical that the co-op could absorb that increase; a grocer's infamously thin profit margins likely wouldn't allow it. Making matters worse was that the two stores were planning a loss. "We weren't flush with money," he said. But management took the complaints to heart, and decided to do something.

Gillotte began a series of weekly meetings, open to all staff, to discuss boosting employee compensation. In order to substantially raise starting wages, something had to give: staffing levels, health benefits, or other assorted cost-drivers. Gillotte called the situation "vexing," but that September he and other managing members designed a livable wage and benefits calculator to determine what compensation an employee in Austin would need to cover the costs of a one-bedroom apartment, utilities, health care premiums, food, a cell phone plan, transportation, and a modest savings. Taking into account the benefits Wheatsville provide – health care, a 401(k) match plan, and 15% discount on store food – managers decided on a starting wage of $13.01 per hour, more than workers had initially asked for.

Wheatsville's pay bump was made possible, in part, by improved business. The stores were projecting profits in 2016, making it easier to redistribute that money to wage workers. But the co-op also underwent a rearrangement of its workforce, including a very small reduction in the overall number of employees – possible through attrition, said Gillotte, not layoffs. The stores stopped hiring part-time workers. In accordance with the Affordable Care Act, Wheatsville offers health insurance to anybody who works 30 hours or more each week. The co-op also complies with the overtime provisions imposed by the Obama administration under the Fair Labor Standards Act, despite their ultimately being blocked by a federal judge. (See "Welcome to the Working Week-and-a-Half," Nov. 18, 2016.)

Some workers who spoke with the Chronicle expressed gratitude for the wage increase. Nandy Castillo had worked at Whole Foods for a decade before getting laid off and taking a job at Wheatsville at $10 per hour. The new policy boosted her wages 30%. Although her current pay falls short of the $16 per hour she was making at Whole Foods, Castillo noted that it took her years to reach that wage level. Fellow deli clerk Linden Hill, who came to the co-op after years working as a bartender, also considers her situation solid. Her wages, along with what her husband makes at a bar, allow the couple to provide for their young son.

Yet the pay increase has not fully healed divisions between employees and management. A number of workers complained that the same alleged lack of transparency and top-down leadership that workers historically bemoaned still persists today. The co-op's method of governance is more democratic than the average business, but most big decisions, including those relevant to personnel, are left to management. One worker, who makes slightly more than the co-op minimum, said she still feels her experience in the industry is not reflected in her pay, and that Gillotte pushed aside concerns expressed by staff about "wage compression" between entry-level workers and more senior employees. Two other workers complained that, in its drive to cut costs, the co-op hastily switched to an automatic ordering system that's resulted in a surplus of some products, sustained dearth of others, and a long line of unhappy customers.

Gillotte acknowledged that not everybody was equally happy. "Some of the changes haven't been easy," he wrote in an email. "But we're certain that we are paying most of our staff dramatically better than we were in 2015 and better than most retail jobs in Austin." (To which even Wheatsville's disgruntled employees agreed.) Gillotte suggested that other retailers should pay workers better than they currently do. "If Austin is going to survive and thrive," he said, "we need people in retail to be paid livable wages."

"Basic Economics"

It will take a long time for many other service sector businesses to begin paying their workers appropriate living wages. Unlike Wheatsville, which has a formal structure set up for both employees and owner-members to voice grievances, most employers answer to nobody except stockholders and to no mission beyond profit. While laws in other countries, particularly France and Germany, require companies to make rank-and-file employees a part of company governance, such a concept has little political traction in the U.S., and in Texas in particular. Business interests have waged a lengthy battle to convince public and political leaders that laws aimed at protecting workers – minimum wage and overtime regulations – as well as organizations that seek to empower workers, like unions – are bad for business, and therefore bad for everyone. Workers will get laid off, customers will pay higher prices, and businesses will be forced to shutter.

"If you make something more expensive, you're going to have less of it," explained Will Newton, head of the Texas chapter of the National Federation of Independent Bus­iness, an influential lobby group for small businesses. "That's just basic economics." Richie Jackson, who runs the Texas Restaurant Association, argued the market would set wages where they belong. "Most restaurants in Texas are paying well above minimum wage now," he said. "The labor market really does work."

"Well above" the $7.25 per hour threshold still falls short of a living wage. But Jackson dismissed pressure put on restaurants by labor activists, most notably Fight for 15, a 4-year-old movement backed by the Service Employees Inter­na­tion­al Union, which organizes worker strikes across the country. The group's demand for a $15 per hour minimum wage, among other terms, is simply unrealistic to Jackson. "You can't create a middle-class by trying to turn entry-level jobs into middle class salaries," he said.

Even businesses that actually pay their workers well above the minimum wage feel threatened by the thought of other companies being forced to pay employees more. Robert Mayfield, who owns eight local Dairy Queens and the Wally's Burger on Mesa Drive, starts his employees at $12 per hour, "not because we're nice guys, but because we want the best people" – a competitive advantage he would lose if other fast food outlets were to raise their wages. Newton is confident business regulations will continue to operate in his favor: "What I don't think that this country, or certainly this state, is going to accept, is basically state-mandated redistribution of wealth."

The Fight for $15

The push for higher wages is in many ways an attempt for the working and middle classes to take back much of the wealth that has been redistributed over the past 30 years to America's ultra-rich. While the U.S. is wealthier than it was 50 years ago, the poverty rate today remains roughly the same as in 1967. Meanwhile, other developed countries have mandated higher wages for workers without destroying their economies. In Denmark, McDonald's employees, who are unionized, make about $20 per hour. A Big Mac there costs 80 cents more: $5.60 to $4.80.

Texas, in particular, has shown a dearth of organized labor. Unions, a key force in building the American middle class, have declined nationally, but their situation has become particularly bleak in state. Nationally, the percentage of workers represented by unions has dropped from 33% in 1964 to 10% today. In Texas, it went from 13.5% to 5%.

One factor is the state's "right to work" law, which forbids employees from negotiating "union security clauses" with employers, to require workers covered by the contract to pay union dues.

While business interests and conservative groups argue that such laws protect a worker's right to disassociate from a union, the intent is clearly to hurt organized labor financially and dissuade unions from trying to organize workplaces. Julius Getman, a professor at the UT law school, has worked with unions since the Fifties. He doesn't attribute the poor state of the labor movement in Texas to right-to-work as much as the lack of tradition and more general cultural and political hostility toward unions. "There aren't union families," he said. He pointed to labor affairs in Nevada, which has both a right-to-work and is home to one of the strongest unions in the country. The Culinary Workers Union, which represents tens of thousands of hotel and casino employees in Las Vegas, represents a model that unions yearn to replicate elsewhere. The union's success is evidenced not just by the middle-class salaries and benefits that it has negotiated, but by its widely regarded ability to shape state politics by mobilizing workers on behalf of progressive causes and candidates.

Glimmers of such hope exist for Austin's labor movement. One is found at Austin-Bergstrom International Airport, where UNITE HERE Local 23, an affiliate of the same national organization as the Culinary Workers Union, now represents more than 350 employees of the airport's eateries that are operated by its two main concessions contractors: Delaware North and LSG Sky Chefs. Those workers get paid at least $13.03 an hour, in accordance with an ordinance approved by City Council last year that requires city contractors to pay workers that living wage.

Members of the UNITE HERE Local 23 union (l-r): Karla Sanchez, Sharale Williams, Ofelia Medrano, Iris Leija, Maria Ortiz, Angelica Salazar-Ruiz, and Esmeralda Valdez. Chapter president Willy Gonzalez in back. (Photo by John Anderson)

UNITE HERE also organized the contracted cafeteria workers at St. Edward's University, who in January 2016 agreed to a "labor peace agreement" – in which an employer agrees not to interfere in union organizing and to recognize the union if more than half of the employees sign union authorization cards – with its contractor, Bon Appétit Management Company. St. Edward's workers likely won't be paid as much as airport workers, said Willy Gon­zal­ez, UNITE HERE's Texas Chapter president, but he emphasized that negotiating for affordable health insurance is in many instances a higher priority for local workers. "Anybody who has negotiated contracts will tell you it's all about insurance," said Gonzalez. "For low-wage workers, that is critical. You will find for many of them, as much as they need the raises, if you have a chronic condition, you end up making choices ... 'Do I put food on the table or do I get my diabetes medication?'"

An increasingly vocal segment of activists argue that the labor movement has been constrained by unions' traditional focus on winning official representation from employers, and negotiating collective bargaining agreements. Workplace activism can empower workers even if such efforts do not result in official contracts, they say. That's what led to the wage increases at Wheatsville: A group of employees met off the job then publicly pressured management to make changes.

More visible than unions is Fight for 15, which locally has put pressure on international chains like Popeyes and Carl's Jr. to increase wages and improve working conditions. "We're like little popcorn strikes popping all over Texas," said Josh Perez, a Wendy's employee in San Marcos who helped lead an employee walkout last year that shut the restaurant down during a dinner shift. Employees were fed up with management repeatedly ignoring their complaints about the kitchen's broken air conditioner. One day after the strike, the manager ordered the air conditioner fixed.

Although Perez, who works full time at $8.65 per hour and no benefits, would like to secure a union contract for his co-workers, he said that much can be accomplished without one, "if you can manage to get more than six or eight employees to go on strike.

"Especially the strong employees, the ones who get employee of the month and still get treated like shit," he said.

Stories from workers active in the Fight for 15 movement often cite persistent challenges that reduce employees' ability to negotiate for better pay. Perez doesn't have a car, which makes it hard to look for jobs, let alone commute every day to one. Moving into Austin, where he may be closer to better-paying jobs, isn't a good deal, either, because of the cost of living here. The absence of affordable housing and good public transit not only makes life unaffordable for low-wage workers, but often prevents them from landing a better-paying job. Indeed, even at $11.50 per hour at an Austin Whataburger, Rydell Early and his longtime partner Rochell Bryant (who made $9.50 working the same job at the same Whataburger), had no car and were living at a motel when they spoke with the Chronicle during a January strike on Slaugh­ter Lane. The two said they were unable to save enough money to pay one month's rent. A few weeks later, both were fired in what they claim was illegal retaliation for participating in the strike. Friends launched an online fundraiser to help them sue the Whataburger for wrongful termination.

Rochell Bryant (l) and Rydell Early (Photo by John Anderson)

Both Early and Perez are also burdened by another common feature of the American working class: a criminal record. Even Perez, who was never incarcerated for his one offense, said he has been rejected from better-paying jobs because of that record, and has to pay $120 every month as part of a payment plan to the court. "We can make more money off him being outside of jail," he joked.

While attempts to scale back criminalization of the American poor have gained support from leaders across the political spectrum, there is a clear left-right divide when it comes to helping those with convictions find fair paths toward employment. Repub­licans who control the Texas Legislature are pushing legislation via HB 577 to undo Austin's Fair Chance ordinance, which bars employers from asking job applicants about criminal convictions prior to making a conditional offer of employment.

What's Your Status?

Today's climate bears another barrier to higher wages for a large portion of Austin's working poor: immigration status. Most successful labor movements in town involve undocumented workers. President Donald Trump's immigration crackdown, which hits Austin particularly hard, threatens to send immigrant workers who had recently begun to stand up for their rights back from the activist limelight.

Jeymi Hernandez used to work at the Popeyes on East Riverside, and once led a strike against the restaurant to demand (what else?) a working air-conditioning system. A Honduran citizen who arrived in the U.S. as a young child and was granted protection from deportation under the Deferred Action for Childhood Arrivals (DACA) program, Hernandez today is far less certain about her future in the country. "If I have to go back, I'll go back," she said. "But I don't have a life there."

A Fight for 15 demonstration outside of a Southeast Austin Popeyes last October (Photo by John Anderson)
“We’re like little popcorn strikes popping all over Texas.” – Josh Perez, of Fight for 15

Working conditions for undocumented immigrants have been a problem since well before Trump came into office. Last year, a Department of Labor investigation of 60 restaurants in the area found that nearly all 60 illegally withheld wages from workers. The violations related to all sorts of workers, but those undocumented were found to be particularly vulnerable to exploitation. "A high number of kitchen workers in restaurants in Austin and nationwide work long hours, typically 50-70 hours per week, or more, without the legally required overtime pay," says Aaron Johnson, an attorney at the Equal Justice Center, a nonprofit that provides legal aid to low-wage workers. "They are often paid a flat salary that comes out to less than the minimum hourly wage of $7.25. A high percentage of these workers are undocumented immigrants."

Texas Restaurant Association's Richie Jack­son said restaurants investigated by the DOL don't represent the industry as a whole. They're a random sample, he said, but targeted due to complaints. However, local employment attorney Austin Kaplan charged that abuse is "rampant" in the service industry, and that the current political climate could make the situation worse. "As a practical matter, post-November, is there some additional risk in filing a lawsuit?" Kaplan wondered. "I hope not, but I think the answer is that it's worthy of consideration, which is really depressing. I hope that won't truly discourage people from calling attorneys."

Signs exist, however, that Trump's presence has strengthened the resolve among undocumented immigrants to demand respect and recognition for their contribution to American communities. That was on display on a Thursday in mid-February, during a day dubbed A Day Without Immigrants ("Undocumented, Unafraid," March 10). At least 48 Austin-area restaurants closed, either due to the owner's support of immigrant rights, or because enough workers refused to come to work.

"Everything that's happening with Trump, it's bringing us together," Her­nan­dez said of Hispanic workers. Longstanding tensions based on nationality, ethnicity, and legal status among immigrants in general – and Latinos specifically, she said – have eased due to a heightened sense of solidarity.

City Council Member Greg Casar, who organized immigrant workers in the construction sector before his election to Council in 2014, suggested that anti-immigrant rhetoric is part of a long tradition of powerful interests trying to "divide and conquer" workers by stoking divisions based on race and ethnicity. Speaking at the Inauguration Day rally in front of the Carl's Jr. on Slaugh­ter, Casar described Texas, with its large immigrant community, high poverty level, and a "Trump-aligned regime" that "has said that the minimum wage will be as low as ... humanly possible," as a logical ground zero for a labor movement.

"The solution," he added in a subsequent interview, "is to organize all working people in our community, period."

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wages, Willy Gonzalez, Dan Gillotte, Wheatsville Co-op, Greg Casar, Will Newton, Richie Jackson, Robert Mayfield, Julius Getman, UNITE HERE Local 23, Josh Perez, Rydell Early, Rochell Bryant, Donald Trump

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