Fast food franchises: ‘Have it our way’
Apply mayo to the toasted bun, sprinkle with lettuce, and top with two slices of tomatoes. Place the hamburger patty on the bottom bun, cover with four pickles, and drizzle with ketchup. Voilà: The Whopper.
In Albuquerque’s Winrock shopping mall, my former Burger King colleagues and I had been entrusted with these corporate “trade secrets.”
Fast food franchise owners increasingly cite “secrets” and “training” to justify secret contracts with their corporate headquarters that prohibit employees from seeking promotions or higher-paid positions at other franchise locations within the same company — all without ever notifying the employees.
These no-poach clauses may be appropriate in industries that employ high-skilled workers, where it’s fair to protect investments in human capital. But in the fast-food industry, where workers typically earn minimum wage, it’s simply a trap and limits workers’ economic mobility.
“By limiting workers’ outside options, a no-poaching agreement reduces worker bargaining power,” wrote Princeton University economists Alan B. Krueger and Orley Ashenfelter in a 2017 study. The authors contend no-poaching, and related non-compete practices, could partially explain why wage growth is stagnant while unemployment is low and job openings are at an all-time high.
At Burger King, I was one of a handful of employees grateful for the summer job during high school. However, many of my colleagues were already well into their careers, and that is not atypical. There is a common misconception that the majority of the approximately 4.5 million fast food employees are teenagers living at home. In fact, the average fast food worker is 28 and more than one-quarter are raising their own children, according to a 2013 analysis.
One of my colleagues at Burger King was a kindhearted woman in her mid-50s – a single mother to two teenage boys; let’s call her “Veronica.” She earned minimum wage without any health benefits, but approached every task of the day with the utmost dedication and seriousness, and eagerly accepted double shifts when colleagues called in sick.
Toward the end of the day, Veronica would regularly shift her weight back and forth between her feet and hold her lower back in pain. But she would arrive early the following morning, believing that potentially, one day, she might be promoted to shift manager. She and thousands of other hardworking New Mexicans working at fast food franchises deserve a fair shot at building upon their hard work and experience to earn promotions and higher wages.
The detrimental impact of no-poach clauses could be particularly pronounced in New Mexico, where food preparation remains the lowest-paying occupation and is expected to account for one in every two new jobs between 2014 and 2024 (along with personal care). With New Mexico food preparation workers earning an average of $21,470 annually, their ability to leverage experience into higher-paying positions, potentially with other franchises, could be essential to improving their families’ well-being.
Leaders around the country are pushing back, and New Mexico needs to join the charge. Recently, Attorneys General in 10 states (not including New Mexico) sent a letter to a number of fast food corporations requesting information about no-poaching clauses within their franchisees’ contracts. The action prompted a number of fast food companies – including McDonald’s and Arby’s – to announce that they will end their no-poach practices. But many fast food restaurants, including Burger King, are absent from the list.
New Mexico regulators and consumers deserve to know whether fast food franchises in our state are using no-poach clauses, and the extent of negative economic consequences for workers. It’s more essential than ever that we remain vigilant regarding corporate practices which could thwart Veronica and other workers from reaching the middle class. That’d make for an even tastier secret sauce.
Benjamin Nathanson served as a U.S. Senate policy adviser and is a political partner with Truman National Security Project. He is from Albuquerque and is a senior vice president with Ichor Strategies, a public affairs consulting firm. Views expressed are his own.