How do you quantify dignified, essential work? For food retail and hospitality workers in the age of Covid-19 and rising food prices, this descriptor does not translate into better wages. A new report from the Economic Policy Institute and The Shift Project of Harvard University details the low wages at dozens of firms throughout the industry and skewers the notion that profit-driven price inflation is due to workers’ wage demands.
Low wages are the norm in the service sector. The industry accounts for 20% of the U.S. workforce, including 7 out of 10 of the lowest paid jobs. This includes food, drug, discount and mass market retail, food service and hospitality and logistics/delivery. The EPI/Shift project data is based on extensive surveys of almost 21,000 hourly service-sector workers at 66 firms across the U.S. At least 100 respondents from each firm were surveyed, for an average of 317 per firm.
Over 56% of total service sector workers made less than $15 an hour, a data point underscored by the decades long but still incomplete Fight For $15 campaign, which has yet to translate into national policy despite some recent victories in cities across the country. Over 25% of service sector workers made less than $12 an hour across over 60 large companies. At the bottom of the heap is hospitality and fast food, with 73% of workers making less than $15 an hour.
According to the survey, over 60% of retail workers made under $15 an hour, represented by some of the largest private sector employers, including Walmart. Almost 5% of retail workers made less than $10 an hour, led by workers at deep discounters such as Dollar General at 22% and conventional chains such as Food Lion at 15%.
There are a few standouts that defy these norms. Only 1% of Whole Foods workers made under $15 an hour, while Target and Costco have less than 3% of workers making that little. No Amazon workers surveyed made under $15 an hour, despite industry leading injury rates, high turnover and the highly publicized union victory in New York.
About 36% of Safeway, Aldi and Albertson’s and 32% of CVS workers made under $15 an hour. 92% of workers at Dollar General, 77% at Food Lion (Ahold) and Meijer, 60% of workers at Publix, 68% at Rite Aid, 84% at Speedway, 56% at Stop & Shop (Ahold) and HEB, 51% at Walgreens, 50% at Wegmans,48% at Kroger/QFC made under $15 an hour. At full time rates, that is barely $30,000 a year for tens of thousands of grocery clerks and cashiers.
On the other end of the spectrum, 53% of Costco workers, 13% of Amazon, 24% of Whole Foods, 63% of the highly unionized UPS, 22% of Stop & Shop, 24% of Safeway, 21% of Albertsons, 15% of Hannaford, 12% of Wegman’s, 4% of Target, 9% of Kroger/QFC, 6% of HEB, 21% of Aldi, 3% of Food Lion and just 1% of Dollar General workers made over $20 an hour. The vast majority of grocery retail workers in the survey earned between $12 and $18 an hour at their jobs, or between $25,000 and $37,000 a year, unloading pallets, stocking shelves, ringing up customers, bagging groceries, enforcing mask mandates, wiping down and sanitizing carts, preparing sandwiches and helping customers buy food for their families. How do you quantify essential work in the U.S. grocery sector? It doesn’t translate into livable wages.
Yet for hundreds of thousands of service workers, grocery would be a welcome departure from food service, where popular national chains pay even more abysmally. 23% of workers at McDonald’s, 24% at Waffle House, 14% at Taco Bell, 17% at Wendy’s (which has come under fire for their tomato sourcing by the ever vigilant Fair Food Program), 23% of Subway, 22% of private equity-owned Sonic, 25% of Pizza Hut, 17% of Burger King and 14% of workers at Arby’s still made under $10 an hour. Full time, that is less than $20,000 a year. And 63% of workers at the rapidly unionizing Starbucks made under $15 an hour, underscoring the sense of urgency of hundreds of baristas.
On a somewhat brighter side, 24% of Applebees, 15% of IHOP, 14% of In-N-Out, 33% of Olive Garden, 31 % of Red Lobster, and admirable 48% of LongHorn Steakhouse workers made over $20 an hour. On the other hand, this goes for just 2% of Burger King and Wendy’s workers and 1% of McDonald’s workers. Fast food is a grease-pit sweatshop, and little of the recent price inflation of those cheeseburgers is hitting the pay stubs of the cashiers, burger flippers and French fry dunkers keeping working people fed every day.
Not surprisingly, the retail trade experienced 6.1% turnover in February 2022, or over 950,000 separations, a 28% jump from February 2021 when such numbers were starting to make headlines. Nowadays, it seems to be a given that there is so much turnover in the industry. Likewise, turnover in food service increased to 919,000, or 7% of the workforce and a 20% jump over 2021.
Despite media hysteria trying to connect wage inflation to the profit and supply chain driven price increases, the federal minimum wage remains at a dismal $7.25 an hour, a living wage nowhere in the 50 states. And while a number of high profile companies have announced wage hikes and other beneficial hiring and retention perks, the overall outlook for wages in the service sector is grim.
Had wages kept up with productivity since 1975, the minimum wage would be $21.50 an hour; if wages had kept up with Wall Street bonuses, it would be $44 an hour. This amounts to over $2.5 Trillion a year in lost wealth for working people, nearly twice the entire annual sales of the grocery industry, or 3 times the annual Pentagon budget. Nor does this include the $15 Billion a year in wage theft, including overtime and minimum wage violations.
What the report does not emphasize is that even the companies that pay a large share of their workers over $15 an hour do not guarantee full time, stable, 40 hour a week schedules. Unless those hourly rates are matched up against a full time schedule, it is impossible to meet livable wage thresholds in most metro areas. In my experience, I never would have stayed in a retail career if I hadn’t been full time with a career path, and even then we barely scraped by for many years with my wife working 2 part time jobs. While supporting a family of four we were constantly in debt, even eligible for public assistance, until I was promoted into a regional grocery director role. And that was 15 years ago when housing prices were still reasonable, gas wasn’t $6 a gallon and food at home prices weren’t going up 10%.
Livable wages, or the amount of income required for basic needs such as food and housing, tops $45,000 a year in most states and is well over $50,000 in cosmopolitan coastal cities. Based on the EPI/Shift Project data, only a small minority of service sector workers are taking home enough from their jobs to afford to survive, let alone thrive and make the most of life. It is no wonder that tens of thousands of retail workers need public assistance to make ends meet, a clear form of corporate welfare and externalization of costs to assure profit extraction. It also means that when 75% or more employees at one mass market retailer are food insecure and 14% have experienced homelessness in the last year, we may assume that these numbers are applicable to the entire industry.
And it also means that the gargantuan profits gleaned by large scale grocery and service sector chains during the pandemic, as well as the billion dollar dividends, stock buybacks and exorbitant CEO salaries, represent a direct transfer of wealth out of the pockets of retail workers into shareholders and executives. Livable wages could be paid for through more reasonable executive compensation and pay caps- perhaps maxing out at 10:1 and up to 50% bonus rates, meaning company bigwigs could still be taking home $200-300 an hour. Not too shabby. And a more conservative approach to shareholder buybacks and dividends could keep more cash on the balance sheet for employee wages, career development and training. The service sector could instead encourage the growth of a new, deeply diverse middle class.
The service sector is ground zero for economic justice in the U.S. If dignified, living wage jobs matter at all, then they should start with the essential work in food retail, service and hospitality.