McDonald’s workers in 15 U.S. cities are staging a one-day strike this week. They’re demanding at least a $15 hourly wage for every McDonald’s worker. McDonald’s is resisting, pledging only to raise average wages to $13 an hour.
In the meantime, the profits keep rolling in. The fast-food giant registered $4.7 billion in 2020 earnings and shelled out $3.7 billion in dividends. CEO Chris Kempczinski personally pocketed $10.8 million last year, 1,189 times more than the $9,124 that went to McDonald’s most typical employee.
Kempczinski and his executive mates at McDonald’s seem to think they can outlast the Fight for $15 crowd. These execs, more to the point, seem to think they know everything.
Knowing everything, after all, has been the secret sauce behind McDonald’s corporate success. Nothing happens at Mickey D’s without incredibly intensive market research: “Plan, test, feedback, tweak, repeat.” That cycle never ends. More people-hours may go into planning the launch of a new McDonald’s menu item than Ike marshaled planning the D-Day invasion.
All this planning has McDonald’s executives supremely confident about their business know-how. But, in fact, these execs do not know their business inside-out. They do not know their workers.
Workers remain, for McDonald’s executive class, a disposable item. Why pay them decently? If some workers feel underpaid and overstressed, the McDonald’s corporate attitude has historically been, good riddance to them. The company has always been able to find workers willing to work ever harder for ever little. Turnover at McDonald’s, Bloomberg reported before the pandemic, was running at an annual rate of 150 percent.
McDonald’s, of course, hardly rates as unique. The entire fast-food industry rests on a low-wage, high-turnover foundation. And at those rare moments — like this spring — when new workers seem harder to find and hire, the industry starts expecting its pals in public office to cut away at jobless benefits and force workers into having to take positions that don’t come close to paying a living wage.
This entire approach, even in business terms, makes no sense. Instead of treating workers as disposable and replaceable, businesses ought to be treating them as partners. Who says so? The Harvard Business Review, hardly a haven for anti-corporate sloganeering. Last week, this eminent journal published an insightful piece on the insanity — from a business efficiency perspective — of treating high turnover as just another unavoidable expense of doing business.
Businesses should never see workers as throwaways, the Harvard Business Review analysis argues. Businesses should be turning workers into co-owners. Employee ownership, the piece pronounces, “can reduce inequality and improve productivity.”
Authors Thomas Dudley and Ethan Rouen base that declaration on a host of studies that have examined enterprises where employees hold at least 30 percent of their company’s shares. These companies turn out to be “more productive” and “grow faster” than their counterparts. They also turn out to be “less likely” to go out of business.
Enterprises with at least a 30-percent employee ownership share currently employ about 1.5 million U.S. workers, just under 1 percent of the nation’s total workforce. What would happen if 30 percent of enterprises in the United States had at least 30-percent employee ownership? Authors Dudley and Rouen have calculated an answer: “The share of wealth held by the bottom 50 percent of Americans would more than quadruple, jumping from just 1.4 percent of the total net worth of Americans to 6.4 percent.”
And what about the nation’s top 1 percent? Americans in that elite percentile would see “their net worth decreasing 14 percent” if employee ownership hit 30 percent at 30 percent of the nation’s enterprises.
We ought to see this 30-percent employee ownership share, the Harvard Business Review analysis suggests, as the place we start our journey to a more equitable economy, not the place we finish. The greater the employee ownership, the better. Enterprises with 100-percent employee ownership are both already existing and flourishing.
Especially in Spain, where the Mondragón network of cooperatives, the New York Times noted earlier this year, has ever since the 1950s aimed “not to lavish dividends on shareholders or shower stock options on executives, but to preserve paychecks.”
At each of Mondragón’s 96 cooperative enterprises, executives make no more than a tiny fraction of U.S. executive take-home, no more than six times what workers in the network’s Spanish co-ops make.
Overall, Mondragón co-ops currently employ 70,000 people in Spain. In other words, we’re not talking artsy-crafty boutiques here. The Mondragón group includes, for instance, one of Spain’s largest grocery chains.
Mondragón has had a particularly powerful impact on the Basque region in Spain, the network’s home base. By one standard measure, the Basque region currently ranks as one of the most egalitarian political areas on Earth.
“We want to transform our society,” Mondragón International president Josu Ugarte told me in a 2016 interview. “We want to have a more equal society.”
So do workers at McDonald’s.