Category Archives: minimum wage

Uber Must Overhaul Business Model in U.K. after High Court’s Ruling

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From today’s The Guardian:

Uber will be forced to change its business model in London to contract directly with passengers who book, after a high court ruling that will affect all private hire operators in the capital.

The judgment was hailed by unions for giving both drivers and passengers more protection, by underscoring previous legal rulings that drivers are workers with rights, and making firms responsible once bookings are accepted.

The ruling could indirectly lead to a price rise, with Uber and others now liable for VAT, which could add up to 20% more to the cost of a trip.

The high court case was brought by Uber after supreme court judges suggested, in the case this year where it ruled that drivers were workers and not contractors, that Uber could not be viewed simply as an agent.

Uber sought clarification on the point, hoping to retain its existing model, but in a ruling on Monday, the judges said the law required a contractual obligation between operators and passengers once a booking is made, adding: “To interpret the act in this way gives effect to the statutory purpose of ensuring public safety.

“If the passenger’s only contractual relationship is with a driver he or she has never heard of and who is in any event unlikely to be worth claiming against, any claim is likely to be practically worthless.”

Transport for London has written to the larger operators to review their contracts to ensure compliance. A TfL spokesperson said: “All operators will need to carefully consider the court’s judgment and take steps to ensure that they comply with it, including considering whether any changes to their way of working are required.”

Others said it was a “damning” verdict for TfL, as well as Uber. Sian Berry, a Green party London assembly member, said TfL had, since Uber emerged, been “failing properly to use the powers it has to regulate and protect London’s private hire operators and drivers”.

She added: “In the interests of passenger safety, they must now follow the court ruling and make sure all operators are compliant with the correct legislation without delay.”

The GMB union said the ruling confirms London private hire drivers are legally classed as workers and should be treated as such under law, adding: “It means TfL’s guidance is now incorrect and it means most operators are acting illegally and must get their house in order.”

Read the complete article here.

A proposed California law, AB 257, could transform fast-food work for the better

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From today’s Fortune Magazine:

A new policy strategy emerging in California holds the potential to transform fast-food work from some of the lowest-paying jobs in the state into good jobs, with solid wages, benefits, and a voice at work. Workers, employers, and policymakers in the state and around the country should pay close attention to this model, because setting and enforcing high standards in the fast-food industry is notoriously challenging—due to the industry’s franchising model, its numerous small employers with little ability to profitably raise standards, and its largely non-union workforce.

LOS ANGELES, CALIFORNIA - APRIL 16: Flags are flown at a car caravan and rally of fast food workers and supporters for passage of AB 257, a fast-food worker health and safety bill, on April 16, 2021 in the Boyle Heights neighborhood of Los Angeles, California. The rally was held outside of a McDonald’s location where a worker lodged public health complaints and a wage theft complaint. Some fast food workers are on strike in Los Angeles County today in support of the bill. (Photo by Mario Tama/Getty Images)

Fast food workers earn some of the lowest wages in California—$13.27 an hour, according to the Bureau of Labor Statistics—with only farm workers earning less in the state. Benefits are also meager: Researchers have estimated that just 13% of fast-food workers receive health benefits through their employer. A 2021 study found that more than two-thirds of the families of fast-food workers in California were enrolled in at least one public-safety net program, such as the Supplemental Nutrition Assistance Program (SNAP) or Medicaid, at a public cost of $4 billion a year.

Compounding these problems is that nearly 9 in 10 fast food-workers, say they are subject to illegal working conditions—refused overtime pay, forced to do off-the-clock work, denied breaks, or placed in unsafe situations.

At the heart of the strategy to improve conditions for fast food workers in California is a “sectoral council,” which would bring together representatives of workers, employers, and public-sector regulators to make recommendations regarding minimum compensation, safety, scheduling stability, and training standards for the industry.  A hearing on the FAST Recovery Act—a bill that would establish the sectoral council—was held on April 22, and some think the bill could pass this year.

Sectoral councils and similar bodies have succeeded in helping raise working standards in a number of industries and regions. The state of New York used a wage board to bring together representatives of workers, employers, and the public to raise wages for fast-food workers;  the city of Seattle Domestic Workers Standards Board provides a forum for domestic workers, employers, private households, worker organizations, and the public to improve conditions for that sector; and a number of countries, including Australia and Britain, have used similar bodies in labor relations.

A fast-food sectoral council could form the backbone of fundamental change in the industry: It could not only raise standards for workers but also provide a way for workers as well employers—both franchisees and franchisors—to have a strong voice on the standards in their industry, while helping ensure standards are actually implemented and complied with.  These features are critical, because the structure of the fast-food industry makes it difficult to improve working conditions with traditional measures that have succeeded in other industries, such as actions by high-road employers that want to provide good compensation, the push of collective bargaining, or stand-alone legislated standards.

Read the complete article here.

Biden administration blocks Trump-era rule affecting gig workers’ employment

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From today’s Reuters News Service:

The Biden administration on Wednesday blocked a Trump-era rule that would have made it easier to classify gig workers who work for companies like Uber and Lyft as independent contractors instead of employees, signaling a potential policy shift toward greater worker protections.

Shares of companies that employ gig labor such as Uber, Lyft and DoorDash immediately pared gains. At 2.15 p.m. ET (1815 GMT) Uber shares traded down 3.2%, Lyft was down 5.8% and DoorDash fell 5%.

“By withdrawing the independent contractor rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” Labor Secretary Marty Walsh said in a statement.

“Too often, workers lose important wage and related protections when employers misclassify them as independent contractors,” he said.

Walsh told Reuters in an interview last week that a lot of U.S. gig workers should be classified as “employees” who deserve work benefits. His comments hurt stocks of companies that employ gig labor.

Walsh said in the interview that his department would have conversations in coming months with companies that employ gig labor to make sure workers have access to consistent wages, sick time, healthcare and “all of the things that an average employee in America can access.”

An Uber spokesman acknowledged on Wednesday the current employment system is outdated.

“It forces a binary choice upon workers: to either be an employee with more benefits but less flexibility, or an independent contractor with more flexibility but limited protections.”

Read the complete article here.

Labor Secretary Says Gig Workers Should Be Converted to Employees

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From today’s Forbes Magazine:

President Joe Biden positioned himself as the champion of the American worker during his campaign, as well as an ardent proponent of unions. On Thursday, Biden’s Labor Secretary, Marty Walsh, told Reuters that gig workers should be treated as employees.

This simple statement could become an existential threat to app-based technology companies, such as Uber, Lyft, Instacart, DoorDash and dozens of others that heavily rely upon gig-economy workers.

The tech companies are basically built on the backs of contract workers. However, these gig workers are not classified as employees. Without the designation, contractors don’t qualify for traditional benefits, rights and privileges that are afforded to full-time permanent employees.

This sector represents a significant part of the economy. About 55 million Americans work in the gig economy, comprising around 36% of the workforce. If the Biden administration decides to take action based upon Walsh’s plan, it could have devastating consequences. 

Walsh seeks to rectify the situation by reclassifying contract workers as “employees.” The labor secretary said, “We are looking at it, but in a lot of cases, gig workers should be classified as employees…in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board.” Based upon this news, shares of Uber fell as much as 8%, while Lyft took a dive by 12%. Doordash fell nearly 9% and Grubhub was down 3.3%.

There are concerns raised by opponents of the gig-economy structure who say, similar to Walsh, it doesn’t seem fair to workers. Venture capitalists, institutions and wealthy individuals have flooded capital into this sector. When the tech companies went public, the investors, CEOs and top executives reaped vast fortunes. Contractors serve as cheap labor. If they acquiesce to critics like Walsh, they risk losing multimillions or billions of dollars. 

While many people earn a livelihood driving cars, delivering food and offering creative services through on-demand companies, there is a dark side. The contractors work long, hard hours for little pay and no real benefits. Near-monopolies have been created that crush or drive out the competition. Look at what happened to the once-ubiquitous yellow taxi cabs when Uber came to New York City. 

Uber, Lyft, DoorDash, Grubhub and other similar gig-based companies are highly dependent upon independent contractors. They have a financial self-interest in classifying drivers or workers as contractors. This model enables corporations to avoid paying payroll taxes, FICA (Social Security and Medicare), disability, federal and state-level unemployment and health insurance benefits. They are not required to comply with minimum-wage laws nor offer vacation days. 

Read the complete article here.

Senators who voted against $15 minimum wage represent three-quarters of workers who would benefit

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From today’s Business Insider:

Of the 32 million workers who would receive a raise under a $15 minimum wage, 24 million are in states where senators voted against it, according to a new report from the left-leaning Economic Policy Institute (EPI).

That works out to 75% of all the workers who would benefit from a higher federal minimum. The 32 million workers who would be impacted represent 21% of the overall workforce, according to the report.

Sen. Bernie Sanders’ push to include a provision for raising the wage to $15 by 2025 was voted down on Friday. Seven Democrats — including the moderates Joe Manchin and Kyrsten Sinema — joined Republicans in voting down the measure. Also voting against was independent Angus King of Maine, who caucuses with the Democrats.

The EPI report found that increasing the minimum wage to $15 by 2025 would also benefit America’s essential and frontline workers. It would be a wage hike for 19 million of them, around 60% of all workers impacted. 

As Insider’s Grace Dean previously reported, almost a third of Black workers would get a raise under the policy; EPI also found that 26% of Hispanic workers would benefit from the bump.

A $15 minimum wage has broad support. In an Insider poll, over 60% of respondents said they would definitely or probably support a $15 minimum wage. Respondents were more split on when an increase should come into effect: 39% said that, were the increase to go into effect, a “$15 minimum wage should be implemented immediately.” Conversely, 50% would “prefer a phased rollout, gradually raising the minimum wage annually to $15 in 2025.”

Sanders’ Raise the Wage Act would have raised the federal minimum wage to $15 by 2025. Even that schedule wasn’t quick enough for some minimum wage workers.

Cynthia Murray, a Walmart associate and member of United for Respect, testified at a Senate budget committee hearing on the proposed increase. 

Read the complete article here.

What McDonald’s Shows Us About Raising the Minimum Wage

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From today’s NPR News Online:

On November 29, 2012, dozens of fast-food workers assembled at a McDonald’s in midtown Manhattan to demand better pay. Their demonstration kicked off a massive wave of protests for a $15 minimum wage. Since then, cities and states around the nation have taken action. And now, the federal government, led by President Biden and a Democratic-controlled Congress, has begun to consider making the $15 minimum wage national.

McDonald’s is one of the nations’ biggest employers of low-wage workers. As such, it was kind of the perfect place to launch what was, in retrospect, the beginning of an historic labor movement. A new study by economists Orley Ashenfelter and Štěpán Jurajda suggests McDonald’s is also kind of the perfect place to test the effects of the minimum wage increases that workers have been fighting for.

Ashenfelter is an economist at Princeton University, and he’s spent a couple decades studying McDonald’s. Back in 2012, when he was president of the American Economic Association, he even dedicated part of his big presidential address to the company. And it’s not just because, as he told us, his “favorite meal is fries, a chocolate shake, and a Big Mac.” He views McDonald’s as a kind of natural “laboratory” to compare and contrast different labor markets. I mean, think about it: each McDonald’s restaurant is pretty much the same; the workers have almost identical jobs, regardless of which part of the world they’re in; the food they make is generally the same; and McDonald’s are basically everywhere.

Meanwhile, over the last decade, a McFlurry of cities and states has been raising their minimum wages. In their new study, Ashenfelter and Jurajda use McDonald’s restaurants as a kind of treatment and control group to assess the impact of these new minimum wage laws. They obtained data on hourly wage rates of McDonald’s “Basic Crew” employees, the prices of Big Macs, and other information from about ten thousand McDonald’s restaurants between 2016 and 2020. And they crunched the numbers to see what happens when a city or state increases its minimum wage.

One big fear of a higher minimum wage is that it could cause businesses to replace their workers with machines. Ashenfelter and Jurajda found some McDonald’s restaurants have already installed touch screens, so customers can input their meal orders without interacting with a human being. But they also found that those touch screens weren’t installed in response to a higher minimum wage. “We couldn’t find any relationship between minimum wage increases and the adoption of touch screen technology,” Ashenfelter says.

Read the complete article here.

$15 Minimum Wage Would Reduce Poverty But Cost Jobs, CBO Says

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From today’s NPR News Online:

Raising the federal minimum wage to $15 an hour by 2025 would increase wages for at least 17 million people, but also put 1.4 million Americans out of work, according to a study by the Congressional Budget Office released on Monday.

A phase-in of a $15 minimum wage would also lift some 900,000 out of poverty, according to the nonpartisan CBO. This higher federal minimum could raise wages for an additional 10 million workers who would otherwise make sightly above that wage rate, the study found.

Potential job losses were estimated to affect 0.9 percent of workers, the CBO wrote, adding: “Young, less educated people would account for a disproportionate share of those reductions in employment.”

President Biden has advocated for a gradual increase of the federal minimum over several years. The threshold has been stuck at $7.25 an hour since 2009. Dozens of states and cities have surpassed that level; several are already on track to $15 an hour.

Democrats in Congress have vowed to push ahead on raising the federal minimum, although the efforts to include the $15 minimum plan in coronavirus relief legislation have stalled.

Read the complete news story here.

Biden to sign executive orders boosting workers’ rights and pushing for $15 minimum wage for federal staff

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From today’s Business Insider Online:

President Joe Biden has planned a series of actions aimed at raising the minimum wage for federal staff to $15 and boosting workers’ rights, Brian Deese, his National Economic Council director, told reporters on Thursday.

This includes two executive orders Biden is set to sign on Friday. With one order, the Department of Labor would be asked to clarify that people seeking employment can continue to claim jobless benefits if they turn down a job because it puts their health at risk.

White House officials said the order would provide workers “a federally guaranteed right to refuse employment that will jeopardize their health, and if they do so, they will still qualify for unemployment insurance,” The New York Times reported.

Biden is set to ask agencies to review which federal workers make less than $15 an hour and to develop recommendations to boost them to that wage. That order would overturn three executive orders that President Donald Trump signed in 2018 that limited job protections for federal employees and weakened their labor unions.

Biden has asked his team to prepare another executive order to ensure that federal contractors offer a $15 minimum wage alongside emergency paid leave. Biden plans to sign this order in his first 100 days in office, Deese said.

The two executive orders Biden is set to sign on Friday also include measures to bolster food aid for people struggling with hunger during the coronavirus pandemic and to push for improved delivery of stimulus checks.

Read the complete article here.

OnlyFans: Jobless from the Pandemic, Selling Nudes Online and Still Struggling

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From today’s New York Tiimes:

Savannah Benavidez stopped working at her job as a medical biller in June to take care of her 2-year-old son after his day care shut down. Needing a way to pay her bills, she created an account on OnlyFans — a social media platform where users sell original content to monthly subscribers — and started posting photos of herself nude or in lingerie.

Ms. Benavidez, 23, has made $64,000 since July, enough not just to take care of her own bills, but to help family and friends with rent and car payments.

“It’s more money than I have ever made in any job,” she said. “I have more money than I know what to do with.”

Lexi Eixenberger was hoping for a similar windfall when she started an OnlyFans account in November. A restaurant worker in Billings, Mont., Ms. Eixenberger, 22, has been laid off three times during the pandemic and was so in need of cash by October that she had to drop out of dental hygiene school. After donating plasma and doing odd jobs, she still didn’t have enough to pay her bills, so at the suggestion of some friends, she turned to OnlyFans. She has made only about $500 so far.

OnlyFans, founded in 2016 and based in Britain, has boomed in popularity during the pandemic. As of December, it had more than 90 million users and more than one million content creators, up from 120,000 in 2019. The company declined to comment for this article.

With millions of Americans unemployed, some like Ms. Benavidez and Ms. Eixenberger are turning to OnlyFans in an attempt to provide for themselves and their families. The pandemic has taken a particularly devastating toll on women and mothers, wiping out parts of the economy where women dominate: retail businesses, restaurants and health care.

“A lot of people are migrating to OnlyFans out of desperation,” said Angela Jones, an associate professor of sociology at the State University of New York at Farmingdale. “These are people who are worried about eating, they’re worried about keeping the lights on, they’re worried about not being evicted.”

But for every person like Ms. Benavidez, who is able to use OnlyFans as her primary source of income, there are dozens more, like Ms. Eixenberger, who hope for a windfall and end up with little more than a few hundred dollars and worries that the photos will hinder their ability to get a job in the future.