You know, when you look at a massive complex
machine... Like a city's power grid or something.
Yeah, exactly. A power grid or even just the
operating system running your phone right now.
You expect it to just sort of run quietly in
the background. Right. You don't want to think
about it. Exactly. You only really notice that
underlying architecture when the system completely
crashes or, you know, when it requires a highly
disruptive update. Yeah, that's a good way to
put it. And today we are doing a deep dive into
the Wikipedia archives of a movement that basically
forced the whole world to look at the invisible
gears of the American economy. Which is, of course,
the fight for 15. Right. And the source material
we're working through today details the history,
the economic mechanisms and the sweeping downstream
impacts of this whole movement. Because it wasn't
just a small thing. Oh, no, not at all. Our goal
today is to really examine how a What seemed
like an isolated walkout by just a few hundred
fast food workers back in 2012, how that cascaded
into this massive global campaign. A campaign
that fundamentally altered the wage landscape.
Right. Yeah. And it sparked these intense economic
debates that are literally dictating corporate
strategy right now as we speak. OK, let's unpack
this, because to really understand the mechanics
of where we are today, we have to look at the
pressure cooker that caused that initial spark.
Right. The backdrop. Yeah. It's a very rigid
backdrop. I mean, the federal minimum wage in
the United States has been completely locked
at $7 .25 an hour. Since 2009. 2009. Think about
that. If you chart out the rising cost of housing
or health care or just like basic groceries over
that time. The purchasing power is just gone.
Right. The purchasing power of that $7 .25 effectively
cratered. And that erosion. that loss of purchasing
power is really what pushed the system to a breaking
point, specifically on November 29th, 2012. That
was the big day in New York City, right? Exactly.
Over a hundred fast food workers in New York
City, so we're talking employees from McDonald's,
Wendy's, Burger King, Domino's, they orchestrated
a coordinated walkout. Which doesn't sound like
a huge number of people, a hundred workers, but
the impact was massive. Oh, it was huge. It wasn't
just, you know, a handful of disgruntled employees.
It was actually the largest strike in the history
of the fast food industry at that time. Wow.
Yeah. And they cited this absolute inability
to cover basic living costs. They were noting
that the low wages effectively forced them to
rely on government assistance. Like. food stamps
and things like that? Right, food stamps just
to subsidize their own survival while working
a real job. Plus, a lot of them allege chronic
wage theft by their employers. Meaning they weren't
even getting the $7 .25. Exactly. They were taking
home less than the mandated minimum. That's just
brutal. And, you know, the timing here is incredibly
critical. They didn't just walk out into a cultural
vacuum. No, the atmosphere was already tense.
Right. This was right on the heels of the Occupy
Wall Street movement. Public momentum regarding
economic inequality was already at a boiling
point. Which is a really vital piece of context.
It is. Occupy Wall Street laid down this broad
cultural groundwork by popularizing the conversation
around wealth gaps. And what these fast food
workers did was they localized that macroeconomic
theory to the daily reality of the drive through
window. Yeah, they took the abstract concept
of inequality and grounded it in a very tangible
demand. Give us $15. Yeah. And what really stands
out in the labor history documented in our sources
is just how rapidly this model expanded. Because
it didn't stay in fast food for long. Not at
all. By 2014 the strikes had spilled way beyond
fast food. The coalition grew to include home
care workers, child care aides, airport baggage
handlers. Basically a whole cross -sector alliance
of low -wage workers. Exactly. It's sort of like
a software patch. You know, it wasn't just fixing
a bug in one local system in New York, it was
a systemic update to how low -wage workers across
the board saw their collective power. That's
a great analogy. And the source actually cites
Gary Chason, a professor of industrial relations,
who points out exactly why this was such a structural
anomaly in labor history. Oh, really? How so?
Well, traditional labor disputes are almost always...
Defensive. Like protecting what you already have.
Right. They usually involve a group of workers
who are already covered by a collective bargaining
agreement and they're just trying to protect
their existing benefits. The fight for 15 bypass
that entirely because they didn't have contracts
to protect. Exactly. This was community based
organizing aimed at uplifting an entire demographic
of workers who were operating on the absolute
fringe of the economy. It wasn't about protecting
a contract, it was about establishing a basic
standard of living. Wow. Yeah, Chaison basically
framed it as a modern civil rights movement rather
than a standard union dispute. And it really
crossed over into broader social justice movements,
too. I mean, by 2014, these labor protests were
intersecting directly with the Black Lives Matter
movement. Right, you'd see the signs right next
to each other. Yeah. Workers were chanting 15
and a union right alongside chants of, hands
up, don't shoot, and I can't breathe. They were
fundamentally making the case that economic rights
and civil rights are essentially the exact same
structural fight. And that new template for community
organizing, it proved to be highly exportable.
Exportable globally, you mean? Oh, absolutely.
Once the mechanism was proven to work in American
cities, it crossed oceans almost immediately.
Yeah, I saw that May 15th, 2014. Yes. Coordinated
strikes hit 230 cities worldwide on that exact
day. That is wild. Workers in Brazil, Japan,
India, the UK. They all walked out. And I guess
that international solidarity really highlighted
how universal these labor conditions had become
under corporate globalization. Definitely. Take
London, for instance. Workers gathered at Trafalgar
Square and they were chanting, zero hours, no
way. Zero hour contracts. Those are incredibly
tough. They are. It was a targeted protest against
that specific legal mechanism, which is really
prevalent in the UK. Just to clarify for the
listeners, a zero -hour contract means you have
to be available on call, but the employer guarantees
you absolutely zero paid hours. You nailed it.
All the logistical flexibility goes to the employer,
and all the financial risk is basically dumped
on the employee. I mean, you literally cannot
plan your life around that. How do you budget
for rent or childcare if you don't know if you're
working zero hours or 40? You really can't. And
what's interesting is how the tactics used to
fight these structures varied wildly depending
on the local culture. Right, like the Philippines
example. Yes. In Manila, the protest took the
form of a flash mob. They took over a McDonald's
and started dancing to let it go. from the movie
Frozen. Let it go. Like literally the Disney
song. Literally the Disney song. They were urging
the company to, you know, let go of its low wage
model. That is amazing. But amidst all this global
coordination, I know labor activists constantly
pointed to one specific country as their sort
of primary economic proof of concept, which was.
Denmark. Oh, Denmark became the ultimate rhetorical
weapon for the movement. Because their fast food
workers make so much more, right? Right. In Denmark,
fast food workers make a living wage, and that's
largely due to incredibly dense, powerful unionization.
Activists basically use the Danish model to argue
that multinational fast food corporations could
easily operate profitably while paying a living
wage. Because they're already doing it over there.
Exactly. They're already doing it in Scandinavia,
so why not here? OK. But framing Denmark as a
one -to -one utopian comparison kind of ignores
some massive structural realities, doesn't it?
I mean, the American fast food model has historically
been built on the premise of massive scale, dollar
menus, and an assumption of extremely cheap labor.
Right. It's a volume game in the US. Exactly.
So mathematically, could that specific high volume
US model even survive a sudden, drastic shift
to the Danish wage model without the underlying
businesses just collapsing. Well, if we connect
this to the bigger picture, you are hitting on
the absolute core friction between consumer expectations
and labor costs. Because we want cheap burgers.
Exactly. And Stephen J. Caldera, who is from
the International Franchise Association, he pushed
back hard on the Denmark comparison in the sources.
He called it comparing apples to autos. Apples
to autos. OK. Yeah. He argued that Denmark's
restaurant industry has a fundamentally different
operational structure. They rely far more heavily
on automation. They employ fewer people per location.
And crucially, the consumer is accustomed to
a much higher price point. Right. But the U .S.
model isn't entirely immune to adapting, is it?
I mean, there was that study from January 2015.
The UMass Amherst study, yes. Economists there
looked directly at the American fast food market
and concluded that the industry actually could
absorb a wage hike from $7 .25 to $15 without
shedding jobs. Which shocked a lot of people.
Right. And the mechanism for how they absorb
it is what's really fascinating to me. It's not
just about, you know, wealthy CEOs deciding to
take a K -cut. It's about the behavioral economics
of turnover. Turnover is the silent killer of
profit margins in low wage industries. I mean,
in fast food, annual turnover can easily exceed
100%. Meaning a restaurant is replacing its entire
staff every single year. Yes. The hidden costs
of constantly interviewing, onboarding, and training
replacements combined with just the lost productivity
and the errors made by new staff, it's astronomical.
So the UMass study basically modeled that by
paying a $15 base wage, employee retention skyrockets.
Exactly. People stay in the job. And the business
saves so much capital on reduced turnover that
it effectively subsidizes a massive portion of
the wage hike itself. That's the theory. You
combine that with a very marginal increase in
menu prices. Yeah. We're talking often just pennies
per item and the mathematical gap closes. But,
you know, while fast food workers were definitely
the loudest voices in the streets. They were
actually a minority in the broader low wage landscape.
Yeah, that's a common misconception. The real
silent engine of this wage debate was operating
inside big box stores and hospital wards. According
to the Bureau of Labor Statistics data from 2018,
the restaurant and food service industry employs
about 60 % of all workers paid at or below the
minimum wage. And for waitstaff and bartenders,
the math is even more convoluted. Oh, because
of the federal tipped minimum wage. Right, which
sits at just $2 .13 an hour. $2 .13! It's insane!
The TIP credit system is highly controversial.
Legally, The employer pays that 213 base, and
the customer's tips are supposed to make up the
difference to reach the standard minimum wage.
And if they don't? If the tips fall short, the
employer is legally required to cover the gap.
But do they actually do that in practice? Well,
that's the issue. Labor advocates argue this
system is just a breeding ground for wage theft
and income instability. It essentially shifts
the burden of paying the workforce directly onto
the fluctuating generosity of the consumer. Wow.
I mean, think about your last trip to a restaurant
or even a hospital. There is a profound economic
irony at play here. The people who are the most
physically essential to our daily infrastructure,
the people handling our food, stocking the shelves
and providing direct physical care to our sick
relatives, they are structurally the lowest paid.
The health care statistics heavily underscore
that exact point. In 2019, nearly seven million
people worked in low -paid health jobs in the
United States. Seven million. Yeah. We're talking
about health care support and direct care roles,
where the median wage hovered around just $13
.48 an hour. That's less than 15. Right. And
the disparity between the vital nature of that
work and the economic value assigned to it by
the market became a major, major focal point
for the whole movement. But we've also seen major
movement in the retail sector that wasn't even
driven by government mandates at all. Right.
Very true. Like massive corporations target Best
Buy and Amazon. They voluntarily raise their
starting wages to fifteen dollars an hour. You
did. When you have a company the size of Amazon
just volunteering to double the federal minimum
wage for its workers. I mean it completely rewrites
the local labor dynamics. It is a massive disruption.
But we have to recognize that corporate giants
raising wages voluntarily is a highly calculated
strategic maneuver. Right. It's not a sudden
burst of altruism. Definitely not. In a tight
labor market, companies like Amazon and Target
leverage their immense capital to set a $15 floor.
And what that does is it immediately starves
smaller competitors of available labor. Oh, because
everyone wants to work at Amazon for the $15.
Exactly. Yeah. A local hardware store simply
might not have the profit margins to match Amazon's
baseline. So Amazon drastically reduces its own
turnover, secures the best available talent and
gets excellent public relations out of it. All
while squeezing smaller competitors right out
of the labor pool. Exactly. They are essentially
using a higher wage floor as a competitive moat.
That's a great way to describe it. And that kind
of corporate maneuvering naturally forces the
conversation back to the ultimate battleground,
which is Washington, D .C. Where things get very
complicated. Attempting to mandate a federal
$15 wage involves some brutal economic math and
just intense political gridlock. Let's talk about
the CBO report. Right. February 2021, the Congressional
Budget Office released this pivotal report modeling
the proposed Raise the Wage Act. They were trying
to project what What would actually happen if
the U .S. incrementally raised the federal minimum
to $15 by 2025? And the CBO presented a set of
tradeoffs that completely fractured lawmakers.
On the positive side of the ledger, they estimated
the hike would benefit 17 million workers. 17
million? Yeah, and it would lift 900 ,000 people
entirely over the poverty line. See, here's where
it gets really interesting. Because instead of
looking at the CBO report like a simple policy
suggestion, you kind of have to look at it more
like the blueprints for a massive hydroelectric
dam. Okay, how so? Well, if you raise the minimum
wage, you are building that dam higher, right?
creating a much deeper reservoir of wealth and
stability for the millions of workers who are
safely inside that job market. Nearly a million
people cross the poverty line. That's completely
life changing. Absolutely. But if you build the
dam too high or too fast, the pressure overflows
and drowns the entry level jobs downstream. the
CBO estimated that exact downstream damage at
1 .4 million lost jobs. Right. And alongside
a $54 billion increase in the federal deficit
over 10 years, mostly because the government's
own labor costs would rise. The debate is entirely
about where to set the spillway. That captures
the structural tension perfectly. And economists
are fiercely divided on where that spillway should
be. They really are. Many argue the CBO's methodology
was just fundamentally flawed. Like Michael Reich.
an economist at UC Berkeley, he published research
arguing that a $15 wage would actually increase
federal tax revenue by $65 billion annually.
Wait, increase it? Yes. His mechanism for that
relies on the velocity of money. Low wage workers
spend almost every dollar they earn immediately
out of necessity. Right, they aren't hoarding
it in offshore accounts. They're buying groceries.
Exactly. So if they make more, they pay more
in payroll taxes. They inject that capital straight
back into the local economy. And simultaneously,
the government's expenditure on safety net programs
like those food stamps we mentioned plummets.
OK, so Reich projects a net financial gain for
the government. But what about the 1 .4 million
lost jobs? You can't just brush past over a million
people losing their livelihood. No, you can't.
And that's where Orenjurajet Dube comes in. He's
another prominent labor economist. He reviewed
the recent literature and argued that the CBO's
job loss predictions were vastly overstated.
What were his numbers? Based on his models, Dube
estimated that potential job losses would be
under 500 ,000. So less than half of what the
CBO predicted Wow, that's a massive discrepancy
But the threat of job loss isn't just a theoretical
model debated by academics, right? I mean it
is physically materializing in the form of automation.
Oh, absolutely. The kiosks. Yeah. Former McDonald's
CEO Ed Renzi explicitly pointed to the Fight
for 15 movement as the direct catalyst for the
chain rolling out those self -service ordering
kiosks nationwide. Basically, if labor costs
too much, capital simply replaces the labor with
a screen. Which introduces the whole automation
debate. And we have to look impartially at both
sides of the economic spectrum here. Right. Critics
of the wage hike view those kiosks as definitive
proof of job destruction. They argue that artificially
inflating the price of labor simply prices low
skilled workers out of the market entirely. Makes
sense from that perspective. It does. However,
proponents of the hike and actually many macroeconomists,
they view this automation as standard economic
evolution. Yeah, proponents argue that replacing
order -takers with touchscreens boosts overall
labor productivity, right? Theoretically allowing
employers to shift their human capital away from
mundane tasks toward higher value roles within
the company. That's the optimistic view. But
you really have to wonder if the data actually
supports that upward shift, or if that is just
corporate optimism masking the reality of a shrinking
headcount. And that is the central unknown of
the transition right now. Neither side holds
a monopoly on the economic truth regarding automation.
But while Washington DC remained kind of paralyzed,
arguing over the CBO math and the philosophy
of robotics. Local governments stepped in. Exactly.
They looked at the rising cost of living and
decided they simply couldn't afford to wait for
federal consensus. Which resulted in this massive,
highly complex patchwork of legislative victories
at the state and municipal levels. California
was the first state to act, passing a phase in
law in 2016. And since then, the map has fundamentally
changed. By 2024, states spanning the entire
political spectrum from Alaska to Missouri passed
their own wage hikes. It totally stopped being
just a coastal phenomenon. It really did. Currently
15 states and Washington DC have laws on the
books to eventually hit $15. And because several
jurisdictions have their minimum wages tied to
inflation, by 2027 an estimated 48 % of the country
will live in an area with at least a $15 minimum
wage. That is almost half the country. Yeah.
The aggregate impact is staggering. Since the
movement began, it's estimated that 26 million
workers have gained a combined $151 billion in
raises. Wow. And that's strictly due to the state
and local loss. $151 billion. That is a colossal
wealth transfer. Huge. But, you know, we have
to look at the other side of that geographic
coin. That means 20 states representing roughly
37 percent of the U .S. population are currently
still locked at that 725 federal minimum. It's
a tale of two economies. Literally. The economic
reality of a low -wage worker is now entirely
dependent on which side of a state line they
live on. And as I dug into the sources, I noticed
that even in the states that pass the $15 mandate,
the laws aren't always clean across the board
victories. No, they're not. Local governments
wrote in some highly specific loopholes. The
carve -outs. They are fascinating. Lawmakers
frequently build in exceptions intended to minimize
economic shock to specific industries. Like agriculture,
right? Yes. For example, when New Jersey passed
its law to reach $15 by 2024, agricultural lobbyists
successfully argued for an exclusion. Farm workers
in the state had their minimum wage legally capped
at $12 .50. Okay, the political math behind an
agricultural carve -out makes sense when you
consider lobbying power, but the exemption that
requires some real mental gymnastics for me is
the union loophole. Ah, yes. The source material
notes that several cities, including Chicago,
Los Angeles, and Sea -Tac, wrote laws that explicitly
exempted labor unions from the $15 minimum wage
requirement. It sounds contradictory, doesn't
it? Totally. If the rallying cry of the movement
from day one was 15 India Union, why on earth
would labor advocates support a law that legally
allows a unionized business to pay its workers
less than $15 an hour? This raises an important
question, and it really exposes the intricate
game theory of labor politics. Game theory. Yeah.
Lawmakers didn't include those loopholes by accident.
They engineered them specifically to incentivize
collective bargaining. OK, walk us through the
mechanics of how that actually works on the ground.
OK, put yourself in the shoes of a local business
owner. If the city legally mandates you to pay
every employee $15 an hour no matter what, you
might fight unionization efforts aggressively
because a union will only drive your costs even
higher. Right, that makes sense. But if the city
ordinance says you must pay $15 an hour unless
you sign a collective bargaining agreement with
a recognized union, the math suddenly changes.
An employer might willingly recognize a union
and agree to a contract at, say, $14 an hour.
The employer gets a predictable labor cost below
the mandated minimum, and the union significantly
increases its membership density and its institutional
power. Wow. It is a backdoor mechanism for lawmakers
to force the expansion of organized labor by
offering businesses a financial escape hatch.
Exactly. It's brilliant in its own way. That
is next level political chess. They are leveraging
the minimum wage mandate to rebuild union density.
They are. But even as these legislative games
play out, the ground is shifting under everyone's
feet again. We are now deep into the 2020s. And
thanks to relentless inflation, the fight for
15 has practically become obsolete in high cost
areas. Yeah, $15 just doesn't cut it in Los Angeles
or New York anymore. Right. The movement has
already pivoted to the fight for 20 at the local
level. The target just keeps moving because the
fundamental cost of staying alive keeps rising
faster than the legislation can keep up. And
that perpetual chase brings us to the criticism
section of our source material. Which is pretty
heavy. It is. As this movement pushes the wage
floor to 15 and now 20, it rapidly accelerates
the deployment of capital into automation. We
are seeing massive corporate investments in AI,
self -driving logistics, automated accounting
software, and those next generation self -service
kiosks we talked about. So what does this all
mean? If we trace this narrative all the way
back, we started with a few hundred fast food
workers walking out into the cold New York City
air in 2012, demanding enough money to simply
get off food stamps. Right. And that hyper local
action rippled out to Trafalgar Square, sparked
flash mobs in Manila, and ultimately triggered
a 151 billion dollar wealth shift for 26 million
American workers. They literally rewrote the
cone of the localized economy. They absolutely
proved the power of community organizing, there's
no denying that. But as that technological evolution
we just discussed accelerates, it leaves us with
a highly provocative final thought from the sources.
Okay, lay out on us. Are we nearing an economic
horizon where arguing over an hourly wage is
structurally obsolete? Critics, and increasingly
some progressive economists as well, point to
universal basic income as the inevitable successor
to this debate. UBI? Yeah. We have to seriously
ponder whether a universal baseline of capital
will eventually have to replace the minimum wage
entirely, simply because the entry level jobs
themselves will cease to exist. That is a heavy
paradigm shifting question to leave hanging in
the air. We've gone from debating how to properly
compensate human labor to questioning if we are
on the verge of an economy that doesn't require
that labor at all. Exactly. Well, thank you for
joining us on this deep dive. We hope you take
this context with you. The next time you tap
a digital ordering kiosk or hand your card to
a cashier, take a second to look at the invisible
gears turning behind the transaction. Keep asking
questions, and we will see you next time.