WEBVTT 00:00:00.000 --> 00:00:02.960 You know, when you look at a massive complex 00:00:02.960 --> 00:00:05.919 machine... Like a city's power grid or something. 00:00:06.139 --> 00:00:08.220 Yeah, exactly. A power grid or even just the 00:00:08.220 --> 00:00:09.740 operating system running your phone right now. 00:00:09.800 --> 00:00:12.060 You expect it to just sort of run quietly in 00:00:12.060 --> 00:00:13.539 the background. Right. You don't want to think 00:00:13.539 --> 00:00:16.399 about it. Exactly. You only really notice that 00:00:16.399 --> 00:00:18.739 underlying architecture when the system completely 00:00:18.739 --> 00:00:21.579 crashes or, you know, when it requires a highly 00:00:21.579 --> 00:00:23.660 disruptive update. Yeah, that's a good way to 00:00:23.660 --> 00:00:27.149 put it. And today we are doing a deep dive into 00:00:27.149 --> 00:00:30.609 the Wikipedia archives of a movement that basically 00:00:30.609 --> 00:00:33.929 forced the whole world to look at the invisible 00:00:33.929 --> 00:00:36.310 gears of the American economy. Which is, of course, 00:00:36.369 --> 00:00:40.090 the fight for 15. Right. And the source material 00:00:40.090 --> 00:00:42.570 we're working through today details the history, 00:00:42.929 --> 00:00:46.009 the economic mechanisms and the sweeping downstream 00:00:46.009 --> 00:00:48.009 impacts of this whole movement. Because it wasn't 00:00:48.009 --> 00:00:50.909 just a small thing. Oh, no, not at all. Our goal 00:00:50.909 --> 00:00:54.539 today is to really examine how a What seemed 00:00:54.539 --> 00:00:57.079 like an isolated walkout by just a few hundred 00:00:57.079 --> 00:01:00.759 fast food workers back in 2012, how that cascaded 00:01:00.759 --> 00:01:03.700 into this massive global campaign. A campaign 00:01:03.700 --> 00:01:05.859 that fundamentally altered the wage landscape. 00:01:06.140 --> 00:01:09.140 Right. Yeah. And it sparked these intense economic 00:01:09.140 --> 00:01:11.799 debates that are literally dictating corporate 00:01:11.799 --> 00:01:14.280 strategy right now as we speak. OK, let's unpack 00:01:14.280 --> 00:01:16.760 this, because to really understand the mechanics 00:01:16.760 --> 00:01:19.159 of where we are today, we have to look at the 00:01:19.159 --> 00:01:21.500 pressure cooker that caused that initial spark. 00:01:21.599 --> 00:01:24.159 Right. The backdrop. Yeah. It's a very rigid 00:01:24.159 --> 00:01:26.739 backdrop. I mean, the federal minimum wage in 00:01:26.739 --> 00:01:29.079 the United States has been completely locked 00:01:29.079 --> 00:01:34.000 at $7 .25 an hour. Since 2009. 2009. Think about 00:01:34.000 --> 00:01:36.560 that. If you chart out the rising cost of housing 00:01:36.560 --> 00:01:40.159 or health care or just like basic groceries over 00:01:40.159 --> 00:01:42.379 that time. The purchasing power is just gone. 00:01:42.560 --> 00:01:45.579 Right. The purchasing power of that $7 .25 effectively 00:01:45.579 --> 00:01:49.120 cratered. And that erosion. that loss of purchasing 00:01:49.120 --> 00:01:51.540 power is really what pushed the system to a breaking 00:01:51.540 --> 00:01:55.560 point, specifically on November 29th, 2012. That 00:01:55.560 --> 00:01:57.540 was the big day in New York City, right? Exactly. 00:01:58.040 --> 00:02:00.239 Over a hundred fast food workers in New York 00:02:00.239 --> 00:02:02.959 City, so we're talking employees from McDonald's, 00:02:03.079 --> 00:02:06.959 Wendy's, Burger King, Domino's, they orchestrated 00:02:06.959 --> 00:02:09.500 a coordinated walkout. Which doesn't sound like 00:02:09.500 --> 00:02:12.039 a huge number of people, a hundred workers, but 00:02:12.039 --> 00:02:15.199 the impact was massive. Oh, it was huge. It wasn't 00:02:15.199 --> 00:02:17.099 just, you know, a handful of disgruntled employees. 00:02:17.340 --> 00:02:19.379 It was actually the largest strike in the history 00:02:19.379 --> 00:02:21.460 of the fast food industry at that time. Wow. 00:02:21.780 --> 00:02:24.580 Yeah. And they cited this absolute inability 00:02:24.580 --> 00:02:28.439 to cover basic living costs. They were noting 00:02:28.439 --> 00:02:30.900 that the low wages effectively forced them to 00:02:30.900 --> 00:02:33.610 rely on government assistance. Like. food stamps 00:02:33.610 --> 00:02:35.550 and things like that? Right, food stamps just 00:02:35.550 --> 00:02:37.689 to subsidize their own survival while working 00:02:37.689 --> 00:02:40.930 a real job. Plus, a lot of them allege chronic 00:02:40.930 --> 00:02:43.310 wage theft by their employers. Meaning they weren't 00:02:43.310 --> 00:02:46.349 even getting the $7 .25. Exactly. They were taking 00:02:46.349 --> 00:02:48.889 home less than the mandated minimum. That's just 00:02:48.889 --> 00:02:51.849 brutal. And, you know, the timing here is incredibly 00:02:51.849 --> 00:02:54.050 critical. They didn't just walk out into a cultural 00:02:54.050 --> 00:02:56.150 vacuum. No, the atmosphere was already tense. 00:02:56.229 --> 00:02:58.409 Right. This was right on the heels of the Occupy 00:02:58.409 --> 00:03:01.319 Wall Street movement. Public momentum regarding 00:03:01.319 --> 00:03:04.060 economic inequality was already at a boiling 00:03:04.060 --> 00:03:06.120 point. Which is a really vital piece of context. 00:03:06.349 --> 00:03:10.030 It is. Occupy Wall Street laid down this broad 00:03:10.030 --> 00:03:13.210 cultural groundwork by popularizing the conversation 00:03:13.210 --> 00:03:15.770 around wealth gaps. And what these fast food 00:03:15.770 --> 00:03:19.229 workers did was they localized that macroeconomic 00:03:19.229 --> 00:03:21.810 theory to the daily reality of the drive through 00:03:21.810 --> 00:03:24.409 window. Yeah, they took the abstract concept 00:03:24.409 --> 00:03:27.310 of inequality and grounded it in a very tangible 00:03:27.310 --> 00:03:31.129 demand. Give us $15. Yeah. And what really stands 00:03:31.129 --> 00:03:33.590 out in the labor history documented in our sources 00:03:33.590 --> 00:03:37.030 is just how rapidly this model expanded. Because 00:03:37.030 --> 00:03:39.349 it didn't stay in fast food for long. Not at 00:03:39.349 --> 00:03:42.210 all. By 2014 the strikes had spilled way beyond 00:03:42.210 --> 00:03:44.750 fast food. The coalition grew to include home 00:03:44.750 --> 00:03:47.389 care workers, child care aides, airport baggage 00:03:47.389 --> 00:03:49.830 handlers. Basically a whole cross -sector alliance 00:03:49.830 --> 00:03:51.990 of low -wage workers. Exactly. It's sort of like 00:03:51.990 --> 00:03:54.900 a software patch. You know, it wasn't just fixing 00:03:54.900 --> 00:03:57.500 a bug in one local system in New York, it was 00:03:57.500 --> 00:04:00.259 a systemic update to how low -wage workers across 00:04:00.259 --> 00:04:02.360 the board saw their collective power. That's 00:04:02.360 --> 00:04:04.400 a great analogy. And the source actually cites 00:04:04.400 --> 00:04:06.699 Gary Chason, a professor of industrial relations, 00:04:07.159 --> 00:04:09.840 who points out exactly why this was such a structural 00:04:09.840 --> 00:04:12.300 anomaly in labor history. Oh, really? How so? 00:04:12.580 --> 00:04:15.280 Well, traditional labor disputes are almost always... 00:04:15.289 --> 00:04:17.670 Defensive. Like protecting what you already have. 00:04:17.850 --> 00:04:20.329 Right. They usually involve a group of workers 00:04:20.329 --> 00:04:22.629 who are already covered by a collective bargaining 00:04:22.629 --> 00:04:24.930 agreement and they're just trying to protect 00:04:24.930 --> 00:04:27.970 their existing benefits. The fight for 15 bypass 00:04:27.970 --> 00:04:30.170 that entirely because they didn't have contracts 00:04:30.170 --> 00:04:32.529 to protect. Exactly. This was community based 00:04:32.529 --> 00:04:35.790 organizing aimed at uplifting an entire demographic 00:04:35.790 --> 00:04:38.589 of workers who were operating on the absolute 00:04:38.589 --> 00:04:41.160 fringe of the economy. It wasn't about protecting 00:04:41.160 --> 00:04:43.540 a contract, it was about establishing a basic 00:04:43.540 --> 00:04:47.120 standard of living. Wow. Yeah, Chaison basically 00:04:47.120 --> 00:04:50.040 framed it as a modern civil rights movement rather 00:04:50.040 --> 00:04:52.139 than a standard union dispute. And it really 00:04:52.139 --> 00:04:54.500 crossed over into broader social justice movements, 00:04:54.899 --> 00:04:58.779 too. I mean, by 2014, these labor protests were 00:04:58.779 --> 00:05:00.879 intersecting directly with the Black Lives Matter 00:05:00.879 --> 00:05:02.459 movement. Right, you'd see the signs right next 00:05:02.459 --> 00:05:04.639 to each other. Yeah. Workers were chanting 15 00:05:04.639 --> 00:05:06.939 and a union right alongside chants of, hands 00:05:06.939 --> 00:05:09.430 up, don't shoot, and I can't breathe. They were 00:05:09.430 --> 00:05:11.709 fundamentally making the case that economic rights 00:05:11.709 --> 00:05:14.910 and civil rights are essentially the exact same 00:05:14.910 --> 00:05:17.689 structural fight. And that new template for community 00:05:17.689 --> 00:05:20.189 organizing, it proved to be highly exportable. 00:05:20.470 --> 00:05:22.170 Exportable globally, you mean? Oh, absolutely. 00:05:22.689 --> 00:05:24.750 Once the mechanism was proven to work in American 00:05:24.750 --> 00:05:27.209 cities, it crossed oceans almost immediately. 00:05:27.350 --> 00:05:30.750 Yeah, I saw that May 15th, 2014. Yes. Coordinated 00:05:30.750 --> 00:05:33.810 strikes hit 230 cities worldwide on that exact 00:05:33.810 --> 00:05:36.750 day. That is wild. Workers in Brazil, Japan, 00:05:36.870 --> 00:05:40.029 India, the UK. They all walked out. And I guess 00:05:40.029 --> 00:05:42.449 that international solidarity really highlighted 00:05:42.449 --> 00:05:45.149 how universal these labor conditions had become 00:05:45.149 --> 00:05:47.829 under corporate globalization. Definitely. Take 00:05:47.829 --> 00:05:50.769 London, for instance. Workers gathered at Trafalgar 00:05:50.769 --> 00:05:54.329 Square and they were chanting, zero hours, no 00:05:54.329 --> 00:05:57.029 way. Zero hour contracts. Those are incredibly 00:05:57.029 --> 00:05:59.930 tough. They are. It was a targeted protest against 00:05:59.930 --> 00:06:02.930 that specific legal mechanism, which is really 00:06:02.930 --> 00:06:05.139 prevalent in the UK. Just to clarify for the 00:06:05.139 --> 00:06:07.279 listeners, a zero -hour contract means you have 00:06:07.279 --> 00:06:10.079 to be available on call, but the employer guarantees 00:06:10.079 --> 00:06:12.300 you absolutely zero paid hours. You nailed it. 00:06:12.439 --> 00:06:14.600 All the logistical flexibility goes to the employer, 00:06:15.040 --> 00:06:17.600 and all the financial risk is basically dumped 00:06:17.600 --> 00:06:19.879 on the employee. I mean, you literally cannot 00:06:19.879 --> 00:06:22.040 plan your life around that. How do you budget 00:06:22.040 --> 00:06:24.620 for rent or childcare if you don't know if you're 00:06:24.620 --> 00:06:27.600 working zero hours or 40? You really can't. And 00:06:27.600 --> 00:06:29.759 what's interesting is how the tactics used to 00:06:29.759 --> 00:06:32.779 fight these structures varied wildly depending 00:06:32.779 --> 00:06:34.740 on the local culture. Right, like the Philippines 00:06:34.740 --> 00:06:38.399 example. Yes. In Manila, the protest took the 00:06:38.399 --> 00:06:41.319 form of a flash mob. They took over a McDonald's 00:06:41.319 --> 00:06:44.050 and started dancing to let it go. from the movie 00:06:44.050 --> 00:06:46.709 Frozen. Let it go. Like literally the Disney 00:06:46.709 --> 00:06:48.589 song. Literally the Disney song. They were urging 00:06:48.589 --> 00:06:52.110 the company to, you know, let go of its low wage 00:06:52.110 --> 00:06:55.810 model. That is amazing. But amidst all this global 00:06:55.810 --> 00:06:58.110 coordination, I know labor activists constantly 00:06:58.110 --> 00:07:00.569 pointed to one specific country as their sort 00:07:00.569 --> 00:07:04.029 of primary economic proof of concept, which was. 00:07:04.610 --> 00:07:07.149 Denmark. Oh, Denmark became the ultimate rhetorical 00:07:07.149 --> 00:07:09.069 weapon for the movement. Because their fast food 00:07:09.069 --> 00:07:11.810 workers make so much more, right? Right. In Denmark, 00:07:12.189 --> 00:07:14.490 fast food workers make a living wage, and that's 00:07:14.490 --> 00:07:18.089 largely due to incredibly dense, powerful unionization. 00:07:19.269 --> 00:07:22.290 Activists basically use the Danish model to argue 00:07:22.290 --> 00:07:24.949 that multinational fast food corporations could 00:07:24.949 --> 00:07:27.389 easily operate profitably while paying a living 00:07:27.389 --> 00:07:29.310 wage. Because they're already doing it over there. 00:07:29.470 --> 00:07:31.629 Exactly. They're already doing it in Scandinavia, 00:07:31.649 --> 00:07:34.470 so why not here? OK. But framing Denmark as a 00:07:34.470 --> 00:07:37.069 one -to -one utopian comparison kind of ignores 00:07:37.069 --> 00:07:39.329 some massive structural realities, doesn't it? 00:07:39.589 --> 00:07:41.750 I mean, the American fast food model has historically 00:07:41.750 --> 00:07:45.050 been built on the premise of massive scale, dollar 00:07:45.050 --> 00:07:48.470 menus, and an assumption of extremely cheap labor. 00:07:48.670 --> 00:07:50.629 Right. It's a volume game in the US. Exactly. 00:07:50.769 --> 00:07:53.550 So mathematically, could that specific high volume 00:07:53.550 --> 00:07:56.870 US model even survive a sudden, drastic shift 00:07:56.870 --> 00:07:59.430 to the Danish wage model without the underlying 00:07:59.370 --> 00:08:01.990 businesses just collapsing. Well, if we connect 00:08:01.990 --> 00:08:04.250 this to the bigger picture, you are hitting on 00:08:04.250 --> 00:08:07.610 the absolute core friction between consumer expectations 00:08:07.610 --> 00:08:10.410 and labor costs. Because we want cheap burgers. 00:08:10.850 --> 00:08:13.139 Exactly. And Stephen J. Caldera, who is from 00:08:13.139 --> 00:08:15.879 the International Franchise Association, he pushed 00:08:15.879 --> 00:08:18.620 back hard on the Denmark comparison in the sources. 00:08:18.680 --> 00:08:21.480 He called it comparing apples to autos. Apples 00:08:21.480 --> 00:08:24.060 to autos. OK. Yeah. He argued that Denmark's 00:08:24.060 --> 00:08:26.100 restaurant industry has a fundamentally different 00:08:26.100 --> 00:08:28.939 operational structure. They rely far more heavily 00:08:28.939 --> 00:08:32.159 on automation. They employ fewer people per location. 00:08:32.399 --> 00:08:35.460 And crucially, the consumer is accustomed to 00:08:35.460 --> 00:08:38.440 a much higher price point. Right. But the U .S. 00:08:38.620 --> 00:08:41.629 model isn't entirely immune to adapting, is it? 00:08:41.750 --> 00:08:44.529 I mean, there was that study from January 2015. 00:08:44.789 --> 00:08:48.090 The UMass Amherst study, yes. Economists there 00:08:48.090 --> 00:08:50.370 looked directly at the American fast food market 00:08:50.370 --> 00:08:52.230 and concluded that the industry actually could 00:08:52.230 --> 00:08:56.009 absorb a wage hike from $7 .25 to $15 without 00:08:56.009 --> 00:08:58.590 shedding jobs. Which shocked a lot of people. 00:08:58.750 --> 00:09:01.110 Right. And the mechanism for how they absorb 00:09:01.110 --> 00:09:02.789 it is what's really fascinating to me. It's not 00:09:02.789 --> 00:09:05.309 just about, you know, wealthy CEOs deciding to 00:09:05.309 --> 00:09:08.029 take a K -cut. It's about the behavioral economics 00:09:08.029 --> 00:09:10.830 of turnover. Turnover is the silent killer of 00:09:10.830 --> 00:09:13.269 profit margins in low wage industries. I mean, 00:09:13.350 --> 00:09:16.389 in fast food, annual turnover can easily exceed 00:09:16.330 --> 00:09:20.289 100%. Meaning a restaurant is replacing its entire 00:09:20.289 --> 00:09:23.750 staff every single year. Yes. The hidden costs 00:09:23.750 --> 00:09:26.590 of constantly interviewing, onboarding, and training 00:09:26.590 --> 00:09:29.690 replacements combined with just the lost productivity 00:09:29.690 --> 00:09:33.090 and the errors made by new staff, it's astronomical. 00:09:33.190 --> 00:09:35.809 So the UMass study basically modeled that by 00:09:35.809 --> 00:09:40.169 paying a $15 base wage, employee retention skyrockets. 00:09:40.370 --> 00:09:42.629 Exactly. People stay in the job. And the business 00:09:42.629 --> 00:09:45.710 saves so much capital on reduced turnover that 00:09:45.710 --> 00:09:48.309 it effectively subsidizes a massive portion of 00:09:48.309 --> 00:09:50.750 the wage hike itself. That's the theory. You 00:09:50.750 --> 00:09:52.830 combine that with a very marginal increase in 00:09:52.830 --> 00:09:54.970 menu prices. Yeah. We're talking often just pennies 00:09:54.970 --> 00:09:57.769 per item and the mathematical gap closes. But, 00:09:57.769 --> 00:09:59.669 you know, while fast food workers were definitely 00:09:59.669 --> 00:10:02.159 the loudest voices in the streets. They were 00:10:02.159 --> 00:10:05.299 actually a minority in the broader low wage landscape. 00:10:05.460 --> 00:10:07.580 Yeah, that's a common misconception. The real 00:10:07.580 --> 00:10:09.659 silent engine of this wage debate was operating 00:10:09.659 --> 00:10:13.629 inside big box stores and hospital wards. According 00:10:13.629 --> 00:10:16.450 to the Bureau of Labor Statistics data from 2018, 00:10:17.129 --> 00:10:19.289 the restaurant and food service industry employs 00:10:19.289 --> 00:10:22.870 about 60 % of all workers paid at or below the 00:10:22.870 --> 00:10:25.289 minimum wage. And for waitstaff and bartenders, 00:10:25.710 --> 00:10:28.149 the math is even more convoluted. Oh, because 00:10:28.149 --> 00:10:30.769 of the federal tipped minimum wage. Right, which 00:10:30.769 --> 00:10:35.409 sits at just $2 .13 an hour. $2 .13! It's insane! 00:10:35.669 --> 00:10:38.009 The TIP credit system is highly controversial. 00:10:39.029 --> 00:10:42.360 Legally, The employer pays that 213 base, and 00:10:42.360 --> 00:10:44.419 the customer's tips are supposed to make up the 00:10:44.419 --> 00:10:46.240 difference to reach the standard minimum wage. 00:10:47.100 --> 00:10:50.240 And if they don't? If the tips fall short, the 00:10:50.240 --> 00:10:52.379 employer is legally required to cover the gap. 00:10:52.559 --> 00:10:55.000 But do they actually do that in practice? Well, 00:10:55.159 --> 00:10:57.580 that's the issue. Labor advocates argue this 00:10:57.580 --> 00:10:59.720 system is just a breeding ground for wage theft 00:10:59.720 --> 00:11:02.570 and income instability. It essentially shifts 00:11:02.570 --> 00:11:05.190 the burden of paying the workforce directly onto 00:11:05.190 --> 00:11:07.669 the fluctuating generosity of the consumer. Wow. 00:11:07.950 --> 00:11:10.230 I mean, think about your last trip to a restaurant 00:11:10.230 --> 00:11:13.690 or even a hospital. There is a profound economic 00:11:13.690 --> 00:11:16.990 irony at play here. The people who are the most 00:11:16.990 --> 00:11:19.409 physically essential to our daily infrastructure, 00:11:20.190 --> 00:11:23.190 the people handling our food, stocking the shelves 00:11:23.190 --> 00:11:26.210 and providing direct physical care to our sick 00:11:26.210 --> 00:11:29.350 relatives, they are structurally the lowest paid. 00:11:29.789 --> 00:11:32.049 The health care statistics heavily underscore 00:11:32.049 --> 00:11:36.470 that exact point. In 2019, nearly seven million 00:11:36.470 --> 00:11:38.970 people worked in low -paid health jobs in the 00:11:38.970 --> 00:11:41.610 United States. Seven million. Yeah. We're talking 00:11:41.610 --> 00:11:43.409 about health care support and direct care roles, 00:11:43.809 --> 00:11:45.690 where the median wage hovered around just $13 00:11:45.690 --> 00:11:49.240 .48 an hour. That's less than 15. Right. And 00:11:49.240 --> 00:11:51.720 the disparity between the vital nature of that 00:11:51.720 --> 00:11:54.019 work and the economic value assigned to it by 00:11:54.019 --> 00:11:56.480 the market became a major, major focal point 00:11:56.480 --> 00:11:59.370 for the whole movement. But we've also seen major 00:11:59.370 --> 00:12:01.330 movement in the retail sector that wasn't even 00:12:01.330 --> 00:12:03.409 driven by government mandates at all. Right. 00:12:03.529 --> 00:12:06.850 Very true. Like massive corporations target Best 00:12:06.850 --> 00:12:09.889 Buy and Amazon. They voluntarily raise their 00:12:09.889 --> 00:12:11.830 starting wages to fifteen dollars an hour. You 00:12:11.830 --> 00:12:14.309 did. When you have a company the size of Amazon 00:12:14.309 --> 00:12:17.070 just volunteering to double the federal minimum 00:12:17.070 --> 00:12:20.570 wage for its workers. I mean it completely rewrites 00:12:20.570 --> 00:12:23.490 the local labor dynamics. It is a massive disruption. 00:12:24.039 --> 00:12:27.019 But we have to recognize that corporate giants 00:12:27.019 --> 00:12:30.860 raising wages voluntarily is a highly calculated 00:12:30.860 --> 00:12:32.980 strategic maneuver. Right. It's not a sudden 00:12:32.980 --> 00:12:36.179 burst of altruism. Definitely not. In a tight 00:12:36.179 --> 00:12:38.600 labor market, companies like Amazon and Target 00:12:38.600 --> 00:12:42.059 leverage their immense capital to set a $15 floor. 00:12:42.620 --> 00:12:45.080 And what that does is it immediately starves 00:12:45.080 --> 00:12:47.779 smaller competitors of available labor. Oh, because 00:12:47.779 --> 00:12:49.799 everyone wants to work at Amazon for the $15. 00:12:50.340 --> 00:12:52.879 Exactly. Yeah. A local hardware store simply 00:12:52.879 --> 00:12:55.419 might not have the profit margins to match Amazon's 00:12:55.419 --> 00:12:58.419 baseline. So Amazon drastically reduces its own 00:12:58.419 --> 00:13:01.019 turnover, secures the best available talent and 00:13:01.019 --> 00:13:03.240 gets excellent public relations out of it. All 00:13:03.240 --> 00:13:05.580 while squeezing smaller competitors right out 00:13:05.580 --> 00:13:07.820 of the labor pool. Exactly. They are essentially 00:13:07.820 --> 00:13:10.960 using a higher wage floor as a competitive moat. 00:13:11.139 --> 00:13:13.480 That's a great way to describe it. And that kind 00:13:13.480 --> 00:13:15.860 of corporate maneuvering naturally forces the 00:13:15.860 --> 00:13:18.200 conversation back to the ultimate battleground, 00:13:18.399 --> 00:13:20.799 which is Washington, D .C. Where things get very 00:13:20.799 --> 00:13:23.899 complicated. Attempting to mandate a federal 00:13:23.899 --> 00:13:28.440 $15 wage involves some brutal economic math and 00:13:28.440 --> 00:13:31.419 just intense political gridlock. Let's talk about 00:13:31.419 --> 00:13:34.779 the CBO report. Right. February 2021, the Congressional 00:13:34.779 --> 00:13:37.659 Budget Office released this pivotal report modeling 00:13:37.659 --> 00:13:40.860 the proposed Raise the Wage Act. They were trying 00:13:40.860 --> 00:13:43.320 to project what What would actually happen if 00:13:43.320 --> 00:13:45.740 the U .S. incrementally raised the federal minimum 00:13:45.740 --> 00:13:50.480 to $15 by 2025? And the CBO presented a set of 00:13:50.480 --> 00:13:52.620 tradeoffs that completely fractured lawmakers. 00:13:53.759 --> 00:13:55.899 On the positive side of the ledger, they estimated 00:13:55.899 --> 00:13:58.759 the hike would benefit 17 million workers. 17 00:13:58.759 --> 00:14:01.539 million? Yeah, and it would lift 900 ,000 people 00:14:01.539 --> 00:14:04.120 entirely over the poverty line. See, here's where 00:14:04.120 --> 00:14:06.309 it gets really interesting. Because instead of 00:14:06.309 --> 00:14:08.730 looking at the CBO report like a simple policy 00:14:08.730 --> 00:14:10.929 suggestion, you kind of have to look at it more 00:14:10.929 --> 00:14:13.769 like the blueprints for a massive hydroelectric 00:14:13.769 --> 00:14:16.649 dam. Okay, how so? Well, if you raise the minimum 00:14:16.649 --> 00:14:19.429 wage, you are building that dam higher, right? 00:14:19.610 --> 00:14:22.049 creating a much deeper reservoir of wealth and 00:14:22.049 --> 00:14:24.129 stability for the millions of workers who are 00:14:24.129 --> 00:14:26.929 safely inside that job market. Nearly a million 00:14:26.929 --> 00:14:28.769 people cross the poverty line. That's completely 00:14:28.769 --> 00:14:30.850 life changing. Absolutely. But if you build the 00:14:30.850 --> 00:14:34.529 dam too high or too fast, the pressure overflows 00:14:34.529 --> 00:14:38.179 and drowns the entry level jobs downstream. the 00:14:38.179 --> 00:14:41.259 CBO estimated that exact downstream damage at 00:14:41.259 --> 00:14:45.600 1 .4 million lost jobs. Right. And alongside 00:14:45.600 --> 00:14:49.120 a $54 billion increase in the federal deficit 00:14:49.120 --> 00:14:51.679 over 10 years, mostly because the government's 00:14:51.679 --> 00:14:54.980 own labor costs would rise. The debate is entirely 00:14:54.980 --> 00:14:57.100 about where to set the spillway. That captures 00:14:57.100 --> 00:14:59.519 the structural tension perfectly. And economists 00:14:59.519 --> 00:15:01.480 are fiercely divided on where that spillway should 00:15:01.480 --> 00:15:03.879 be. They really are. Many argue the CBO's methodology 00:15:03.879 --> 00:15:06.919 was just fundamentally flawed. Like Michael Reich. 00:15:07.149 --> 00:15:09.669 an economist at UC Berkeley, he published research 00:15:09.669 --> 00:15:12.309 arguing that a $15 wage would actually increase 00:15:12.309 --> 00:15:15.250 federal tax revenue by $65 billion annually. 00:15:15.309 --> 00:15:18.210 Wait, increase it? Yes. His mechanism for that 00:15:18.210 --> 00:15:21.730 relies on the velocity of money. Low wage workers 00:15:21.730 --> 00:15:24.870 spend almost every dollar they earn immediately 00:15:24.870 --> 00:15:26.509 out of necessity. Right, they aren't hoarding 00:15:26.509 --> 00:15:28.950 it in offshore accounts. They're buying groceries. 00:15:29.470 --> 00:15:31.750 Exactly. So if they make more, they pay more 00:15:31.750 --> 00:15:34.289 in payroll taxes. They inject that capital straight 00:15:34.289 --> 00:15:37.070 back into the local economy. And simultaneously, 00:15:37.490 --> 00:15:39.730 the government's expenditure on safety net programs 00:15:39.730 --> 00:15:42.149 like those food stamps we mentioned plummets. 00:15:42.320 --> 00:15:44.980 OK, so Reich projects a net financial gain for 00:15:44.980 --> 00:15:47.980 the government. But what about the 1 .4 million 00:15:47.980 --> 00:15:51.220 lost jobs? You can't just brush past over a million 00:15:51.220 --> 00:15:53.919 people losing their livelihood. No, you can't. 00:15:53.960 --> 00:15:56.220 And that's where Orenjurajet Dube comes in. He's 00:15:56.220 --> 00:15:58.440 another prominent labor economist. He reviewed 00:15:58.440 --> 00:16:00.759 the recent literature and argued that the CBO's 00:16:00.759 --> 00:16:03.480 job loss predictions were vastly overstated. 00:16:03.620 --> 00:16:06.440 What were his numbers? Based on his models, Dube 00:16:06.440 --> 00:16:08.720 estimated that potential job losses would be 00:16:08.720 --> 00:16:11.779 under 500 ,000. So less than half of what the 00:16:11.779 --> 00:16:14.559 CBO predicted Wow, that's a massive discrepancy 00:16:14.559 --> 00:16:17.279 But the threat of job loss isn't just a theoretical 00:16:17.279 --> 00:16:19.970 model debated by academics, right? I mean it 00:16:19.970 --> 00:16:22.629 is physically materializing in the form of automation. 00:16:23.090 --> 00:16:25.570 Oh, absolutely. The kiosks. Yeah. Former McDonald's 00:16:25.570 --> 00:16:28.429 CEO Ed Renzi explicitly pointed to the Fight 00:16:28.429 --> 00:16:31.509 for 15 movement as the direct catalyst for the 00:16:31.509 --> 00:16:33.850 chain rolling out those self -service ordering 00:16:33.850 --> 00:16:37.090 kiosks nationwide. Basically, if labor costs 00:16:37.090 --> 00:16:40.049 too much, capital simply replaces the labor with 00:16:40.049 --> 00:16:42.830 a screen. Which introduces the whole automation 00:16:42.830 --> 00:16:45.570 debate. And we have to look impartially at both 00:16:45.570 --> 00:16:48.269 sides of the economic spectrum here. Right. Critics 00:16:48.269 --> 00:16:51.009 of the wage hike view those kiosks as definitive 00:16:51.009 --> 00:16:54.710 proof of job destruction. They argue that artificially 00:16:54.710 --> 00:16:57.450 inflating the price of labor simply prices low 00:16:57.450 --> 00:16:59.690 skilled workers out of the market entirely. Makes 00:16:59.690 --> 00:17:02.049 sense from that perspective. It does. However, 00:17:02.309 --> 00:17:05.349 proponents of the hike and actually many macroeconomists, 00:17:05.490 --> 00:17:07.910 they view this automation as standard economic 00:17:07.910 --> 00:17:10.450 evolution. Yeah, proponents argue that replacing 00:17:10.450 --> 00:17:12.950 order -takers with touchscreens boosts overall 00:17:12.950 --> 00:17:15.609 labor productivity, right? Theoretically allowing 00:17:15.609 --> 00:17:17.970 employers to shift their human capital away from 00:17:17.970 --> 00:17:20.609 mundane tasks toward higher value roles within 00:17:20.609 --> 00:17:22.549 the company. That's the optimistic view. But 00:17:22.549 --> 00:17:24.410 you really have to wonder if the data actually 00:17:24.410 --> 00:17:27.089 supports that upward shift, or if that is just 00:17:27.089 --> 00:17:30.269 corporate optimism masking the reality of a shrinking 00:17:30.269 --> 00:17:32.549 headcount. And that is the central unknown of 00:17:32.549 --> 00:17:35.039 the transition right now. Neither side holds 00:17:35.039 --> 00:17:37.839 a monopoly on the economic truth regarding automation. 00:17:38.680 --> 00:17:41.819 But while Washington DC remained kind of paralyzed, 00:17:42.039 --> 00:17:44.720 arguing over the CBO math and the philosophy 00:17:44.720 --> 00:17:47.279 of robotics. Local governments stepped in. Exactly. 00:17:47.500 --> 00:17:49.220 They looked at the rising cost of living and 00:17:49.220 --> 00:17:51.240 decided they simply couldn't afford to wait for 00:17:51.240 --> 00:17:54.119 federal consensus. Which resulted in this massive, 00:17:54.339 --> 00:17:57.220 highly complex patchwork of legislative victories 00:17:57.220 --> 00:18:00.079 at the state and municipal levels. California 00:18:00.079 --> 00:18:02.420 was the first state to act, passing a phase in 00:18:02.420 --> 00:18:05.839 law in 2016. And since then, the map has fundamentally 00:18:05.839 --> 00:18:09.359 changed. By 2024, states spanning the entire 00:18:09.359 --> 00:18:12.170 political spectrum from Alaska to Missouri passed 00:18:12.170 --> 00:18:14.670 their own wage hikes. It totally stopped being 00:18:14.670 --> 00:18:18.009 just a coastal phenomenon. It really did. Currently 00:18:18.009 --> 00:18:22.029 15 states and Washington DC have laws on the 00:18:22.029 --> 00:18:25.230 books to eventually hit $15. And because several 00:18:25.230 --> 00:18:27.190 jurisdictions have their minimum wages tied to 00:18:27.190 --> 00:18:31.569 inflation, by 2027 an estimated 48 % of the country 00:18:31.569 --> 00:18:34.789 will live in an area with at least a $15 minimum 00:18:34.789 --> 00:18:37.390 wage. That is almost half the country. Yeah. 00:18:37.789 --> 00:18:41.119 The aggregate impact is staggering. Since the 00:18:41.119 --> 00:18:43.460 movement began, it's estimated that 26 million 00:18:43.460 --> 00:18:48.220 workers have gained a combined $151 billion in 00:18:48.220 --> 00:18:50.900 raises. Wow. And that's strictly due to the state 00:18:50.900 --> 00:18:54.599 and local loss. $151 billion. That is a colossal 00:18:54.599 --> 00:18:57.500 wealth transfer. Huge. But, you know, we have 00:18:57.500 --> 00:18:59.660 to look at the other side of that geographic 00:18:59.660 --> 00:19:02.299 coin. That means 20 states representing roughly 00:19:02.299 --> 00:19:05.480 37 percent of the U .S. population are currently 00:19:05.480 --> 00:19:08.700 still locked at that 725 federal minimum. It's 00:19:08.700 --> 00:19:12.289 a tale of two economies. Literally. The economic 00:19:12.289 --> 00:19:15.210 reality of a low -wage worker is now entirely 00:19:15.210 --> 00:19:17.710 dependent on which side of a state line they 00:19:17.710 --> 00:19:21.230 live on. And as I dug into the sources, I noticed 00:19:21.230 --> 00:19:24.069 that even in the states that pass the $15 mandate, 00:19:24.690 --> 00:19:26.829 the laws aren't always clean across the board 00:19:26.829 --> 00:19:29.130 victories. No, they're not. Local governments 00:19:29.130 --> 00:19:31.930 wrote in some highly specific loopholes. The 00:19:31.930 --> 00:19:34.769 carve -outs. They are fascinating. Lawmakers 00:19:34.769 --> 00:19:37.470 frequently build in exceptions intended to minimize 00:19:37.470 --> 00:19:40.630 economic shock to specific industries. Like agriculture, 00:19:40.650 --> 00:19:43.750 right? Yes. For example, when New Jersey passed 00:19:43.750 --> 00:19:48.470 its law to reach $15 by 2024, agricultural lobbyists 00:19:48.470 --> 00:19:51.490 successfully argued for an exclusion. Farm workers 00:19:51.490 --> 00:19:53.609 in the state had their minimum wage legally capped 00:19:53.609 --> 00:19:56.690 at $12 .50. Okay, the political math behind an 00:19:56.690 --> 00:19:58.509 agricultural carve -out makes sense when you 00:19:58.509 --> 00:20:00.809 consider lobbying power, but the exemption that 00:20:00.809 --> 00:20:03.210 requires some real mental gymnastics for me is 00:20:03.210 --> 00:20:05.589 the union loophole. Ah, yes. The source material 00:20:05.589 --> 00:20:07.710 notes that several cities, including Chicago, 00:20:07.849 --> 00:20:11.150 Los Angeles, and Sea -Tac, wrote laws that explicitly 00:20:11.150 --> 00:20:14.190 exempted labor unions from the $15 minimum wage 00:20:14.190 --> 00:20:16.210 requirement. It sounds contradictory, doesn't 00:20:16.210 --> 00:20:19.400 it? Totally. If the rallying cry of the movement 00:20:19.400 --> 00:20:23.819 from day one was 15 India Union, why on earth 00:20:23.819 --> 00:20:27.279 would labor advocates support a law that legally 00:20:27.279 --> 00:20:30.279 allows a unionized business to pay its workers 00:20:30.279 --> 00:20:33.779 less than $15 an hour? This raises an important 00:20:33.779 --> 00:20:36.200 question, and it really exposes the intricate 00:20:36.200 --> 00:20:39.359 game theory of labor politics. Game theory. Yeah. 00:20:40.359 --> 00:20:43.119 Lawmakers didn't include those loopholes by accident. 00:20:43.500 --> 00:20:45.980 They engineered them specifically to incentivize 00:20:45.980 --> 00:20:48.119 collective bargaining. OK, walk us through the 00:20:48.119 --> 00:20:50.119 mechanics of how that actually works on the ground. 00:20:50.259 --> 00:20:52.579 OK, put yourself in the shoes of a local business 00:20:52.579 --> 00:20:55.640 owner. If the city legally mandates you to pay 00:20:55.640 --> 00:20:58.599 every employee $15 an hour no matter what, you 00:20:58.599 --> 00:21:00.960 might fight unionization efforts aggressively 00:21:00.960 --> 00:21:03.240 because a union will only drive your costs even 00:21:03.240 --> 00:21:05.799 higher. Right, that makes sense. But if the city 00:21:05.799 --> 00:21:08.900 ordinance says you must pay $15 an hour unless 00:21:08.900 --> 00:21:10.759 you sign a collective bargaining agreement with 00:21:10.759 --> 00:21:13.440 a recognized union, the math suddenly changes. 00:21:13.799 --> 00:21:16.140 An employer might willingly recognize a union 00:21:16.140 --> 00:21:19.559 and agree to a contract at, say, $14 an hour. 00:21:19.759 --> 00:21:22.680 The employer gets a predictable labor cost below 00:21:22.680 --> 00:21:25.279 the mandated minimum, and the union significantly 00:21:25.279 --> 00:21:28.339 increases its membership density and its institutional 00:21:28.339 --> 00:21:32.000 power. Wow. It is a backdoor mechanism for lawmakers 00:21:32.000 --> 00:21:34.759 to force the expansion of organized labor by 00:21:34.759 --> 00:21:36.980 offering businesses a financial escape hatch. 00:21:37.180 --> 00:21:39.119 Exactly. It's brilliant in its own way. That 00:21:39.119 --> 00:21:42.019 is next level political chess. They are leveraging 00:21:42.019 --> 00:21:45.200 the minimum wage mandate to rebuild union density. 00:21:45.359 --> 00:21:48.190 They are. But even as these legislative games 00:21:48.190 --> 00:21:51.309 play out, the ground is shifting under everyone's 00:21:51.309 --> 00:21:54.609 feet again. We are now deep into the 2020s. And 00:21:54.609 --> 00:21:57.109 thanks to relentless inflation, the fight for 00:21:57.109 --> 00:22:00.549 15 has practically become obsolete in high cost 00:22:00.549 --> 00:22:03.089 areas. Yeah, $15 just doesn't cut it in Los Angeles 00:22:03.089 --> 00:22:05.380 or New York anymore. Right. The movement has 00:22:05.380 --> 00:22:07.920 already pivoted to the fight for 20 at the local 00:22:07.920 --> 00:22:10.380 level. The target just keeps moving because the 00:22:10.380 --> 00:22:12.740 fundamental cost of staying alive keeps rising 00:22:12.740 --> 00:22:15.099 faster than the legislation can keep up. And 00:22:15.099 --> 00:22:17.220 that perpetual chase brings us to the criticism 00:22:17.220 --> 00:22:18.940 section of our source material. Which is pretty 00:22:18.940 --> 00:22:21.640 heavy. It is. As this movement pushes the wage 00:22:21.640 --> 00:22:25.579 floor to 15 and now 20, it rapidly accelerates 00:22:25.579 --> 00:22:28.230 the deployment of capital into automation. We 00:22:28.230 --> 00:22:30.970 are seeing massive corporate investments in AI, 00:22:31.369 --> 00:22:33.769 self -driving logistics, automated accounting 00:22:33.769 --> 00:22:36.849 software, and those next generation self -service 00:22:36.849 --> 00:22:39.549 kiosks we talked about. So what does this all 00:22:39.549 --> 00:22:42.519 mean? If we trace this narrative all the way 00:22:42.519 --> 00:22:45.140 back, we started with a few hundred fast food 00:22:45.140 --> 00:22:47.940 workers walking out into the cold New York City 00:22:47.940 --> 00:22:50.940 air in 2012, demanding enough money to simply 00:22:50.940 --> 00:22:53.940 get off food stamps. Right. And that hyper local 00:22:53.940 --> 00:22:57.160 action rippled out to Trafalgar Square, sparked 00:22:57.160 --> 00:22:59.859 flash mobs in Manila, and ultimately triggered 00:22:59.859 --> 00:23:04.299 a 151 billion dollar wealth shift for 26 million 00:23:04.299 --> 00:23:06.819 American workers. They literally rewrote the 00:23:06.819 --> 00:23:09.019 cone of the localized economy. They absolutely 00:23:09.019 --> 00:23:10.920 proved the power of community organizing, there's 00:23:10.920 --> 00:23:13.240 no denying that. But as that technological evolution 00:23:13.240 --> 00:23:15.539 we just discussed accelerates, it leaves us with 00:23:15.539 --> 00:23:17.440 a highly provocative final thought from the sources. 00:23:17.480 --> 00:23:20.480 Okay, lay out on us. Are we nearing an economic 00:23:20.480 --> 00:23:23.380 horizon where arguing over an hourly wage is 00:23:23.380 --> 00:23:26.180 structurally obsolete? Critics, and increasingly 00:23:26.180 --> 00:23:29.259 some progressive economists as well, point to 00:23:29.259 --> 00:23:32.259 universal basic income as the inevitable successor 00:23:32.259 --> 00:23:35.690 to this debate. UBI? Yeah. We have to seriously 00:23:35.690 --> 00:23:37.990 ponder whether a universal baseline of capital 00:23:37.990 --> 00:23:40.289 will eventually have to replace the minimum wage 00:23:40.289 --> 00:23:43.690 entirely, simply because the entry level jobs 00:23:43.690 --> 00:23:47.130 themselves will cease to exist. That is a heavy 00:23:47.130 --> 00:23:49.569 paradigm shifting question to leave hanging in 00:23:49.569 --> 00:23:52.009 the air. We've gone from debating how to properly 00:23:52.009 --> 00:23:54.930 compensate human labor to questioning if we are 00:23:54.930 --> 00:23:56.869 on the verge of an economy that doesn't require 00:23:56.869 --> 00:23:59.769 that labor at all. Exactly. Well, thank you for 00:23:59.769 --> 00:24:01.650 joining us on this deep dive. We hope you take 00:24:01.650 --> 00:24:03.829 this context with you. The next time you tap 00:24:03.829 --> 00:24:06.470 a digital ordering kiosk or hand your card to 00:24:06.470 --> 00:24:09.009 a cashier, take a second to look at the invisible 00:24:09.009 --> 00:24:11.690 gears turning behind the transaction. Keep asking 00:24:11.690 --> 00:24:13.710 questions, and we will see you next time.