The low wage sector – Background text for the second meeting


Prep-text for the second meeting: Low wage sector struggles, health workers’ experiences and the current state of revolutionary organising

For our second meeting we invited Scott Nappalos who will be joined by his comrades Monica and Juan. Scott works as a nurse, has participated in the IWW blog Re-composition and written extensively about revolutionary organising. Below you can find some basic information regarding the topics we’ll be talking about and some suggested reading.

*** Composition of the low wage sector

Before we look at the recent struggles and mobilisations, amongst fast-food workers in particular, here is some basic information about the composition of the low wage sector in the USA. There are certain legal differences compared to the UK, e.g. the fact that federal states can set their own local minimum wage. Another difference is the composition of the social wage, e.g. while the US state subsidises low wages through benefit payments similar to what we see in the UK, this leaves out services such as general health care. At first glance it also seems that the undocumented labour market segment, where workers might receive less than the minimum wage is more significant in the US.

* Scope of the sector

The current ‘average wage’ in the US is around $24. Nearly 40 percent of American workers earn less than the $15 an hour demanded by the official representatives of the ‘low-wage workers’. This might be comparable with the Living Wage demand of £9.75 (within London) or £8.45. In 2016, in the UK 5.6 million people were paid less than the Living Wage, which constitutes around 22 percent of the total workforce.

* Historical dynamic 

The US ruling class used the 2008 crisis and subsequent increase in unemployment to put additional pressure on wages. The US federal minimum wage has been stuck at $7.25 since July 2009. The total number of job-seekers more than doubled over the course of the 2007-2009 recession, going from 10.8 million in 2007 to 22.2 million in 2009. This particularly affected Black workers and workers in the manufacturing sector. An estimated 19.6 percent of Black workers—one in five—were unemployed at some point in 2013, nearly two and a half times the unemployment rate for white workers. The increase in unemployment or job insecurity has expanded the low wage sector.

So-called ‘middle-wage occupations’ (hourly earnings between $14 to $21 – which is still pretty low!) accounted for 60 percent of employment losses between 2007 and 2009, yet they represent just 20 percent of post-recession job growth. In turn, low wage positions account for nearly three out of five jobs generated in the first three years of ‘economic recovery’. The federal minimum wage in 2014 of $7.25 has significantly less purchasing power than 1968’s $1.60, which would be the equivalent of $10.74 today. Additionally, because increases in wages have lagged sharply behind productivity, minimum-wage workers today are working harder for less money. If minimum wage increases had matched productivity, it would be $21.72—three times the current federal minimum.

This tendency towards wage depression is not just a result of the ‘invisible hand’ of market forces, but partially aided through state intervention. Between 2011 and 2012 several states either repealed or capped their minimum wages, and others, like Mississippi, passed laws preventing counties and municipalities from instituting minimum wages.

* Workforce composition of the sector 

In 1979, more than 75 percent of low-wage workers were white. Today, that percentage has dropped to just over 50 percent. Since then Latino workers in particular have been funnelled into low-wage jobs. From 1979 to 2013, Latino workers went from approximately 6 percent of the low-wage workforce to 26 percent – in 2010 they comprise 14.3 percent of the total work-force. African-Americans, who comprise 12 percent of the total workforce, represent 15 percent of those making less than $15. Or in other words, more than half (53 percent) of Black workers and 60 percent of Hispanic workers earn under $15 an hour. Women in general account for 56 percent of low-waged workers. In certain low-wage occupations the concentration of women is far more dramatic. Women are 89 percent of all home healthcare workers, 71.7 percent of retail cashiers, 87.7 percent of housekeeping staff, 70 percent of food servers, 65.2 percent of fast-food workers, and 92 percent of receptionists. The over-all gender wage gap is significant: average weekly pay for white male workers in 2013 was $884.00. For Black women, average weekly take home pay was $606.00, and for Hispanic women it was $541.00. Today, the average age of minimum-wage workers is thirty-five; 88 percent are twenty or older, and 35.5 percent are over forty.

* Contractual composition

Often people assume that low wages are necessarily ‘precarious’ in the sense of non-permanent jobs or self-employment. At least in the US ‘irregular’ work contracts are not predominant. About 90 per cent of all employed people in the US work in traditional employer-employee arrangements, with 83 per cent of those in full-time work. Bureau of Labor Statistics surveys done in 1995 and 2005 both showed that those working in ‘alternative arrangements’, such as self-employment or temp agency work, consistently compose about 10 per cent of the workforce. While the number of those working through temp agencies soared from 1.5 million in 1990 to 3.8 million in 2000, by 2010 their number had fallen to 2.7 million. This doesn’t mean that ‘irregular work practice’ is not significant, e.g. a recent report by the Raise the Floor Alliance, which is a coalition of Chicago worker centres, and the National Economic and Social Rights Initiative (NESRI) states that there are more than 180 sweatshop-like workplaces in Chicago area, this is more than the number Starbucks cafes – official labour law was frequently violated in these places.

* Sectorial composition

While low-wages are generally identified with the retail, fast-food or care sector, wage depression has also pushed many manufacturing workers into the lower ranks of the wage scale. Manufacturing production wages now rank in the bottom half of all jobs in the United States. The median wage for production workers in the manufacturing industry in 2013 was $15.66, with 25 percent of these workers earning $11.91 or less. The families of nearly 40 percent of production manufacturing workers were enrolled in one or more public safety net programs. Again, this tendency is not just an ‘automatic consequence of recession’, but often based on company strategies, e.g. when General Electric shifted production of electrical capacitors from Fort Edward, New York to Clearwater, Florida, the company decreased wages by more than 50 percent, from an average of $29.03 per hour for New York employees to $12.00 per hour for workers in Florida.

* Regional concentrations 

Unsurprisingly the lowest wages are paid in the south. The states with the highest percentages of hourly paid workers earning at or below the federal minimum wage were Arkansas, Indiana, Louisiana, Mississippi, and Tennessee (all between 6 percent and 7 percent). The states with the lowest percentages of hourly paid workers earning at or below the federal minimum wage were Alaska, California, Oregon, and Washington. Eight of the ten states with the highest participation rates in public programs that support frontline production workers’ families are in the American south.

* State subsidies

Nearly three-quarters (73 percent) of enrolments in America’s major public benefits programs are from working families. This is particularly obvious in the fast-food sector, which employs around 4 million people. The cost of public assistance to families of workers in the fast-food industry is nearly $7 billion per year. At an average of $3.9 billion per year, spending on Medicaid and the Children’s Health Insurance Program (CHIP) accounts for more than half of these costs. Due to low earnings, fast-food workers’ families also receive an annual average of $1.04 billion in food stamp benefits and $1.91 billion in Earned Income Tax Credit payments. Another example is the retail sector, where wages comprise around 10 percent of total revenue, compared to over 30 percent in fast food.

Walmart is an interesting example. Today, Walmart is the largest private employer in the world, employing 2.1 million people worldwide. Two-thirds of those employees are in the United States. The average Walmart “associate” makes $8.81 per hour. In 2013, Walmart received a $6.2 billion dollar subsidy as its employees were forced to rely on food stamps, Medicaid, housing and heating assistance. Walmart then pockets more than $13.5 billion in revenue annually from food stamp sales—accounting for 18 percent of all food stamp sales in the country.

Another major state-subsidised segment of the low-wage sector is prison labour. Around 900,000 out of 2.2 million prisoners work, many of them for bigger corporations and other prison external trade, from sewing McDonalds uniforms to answering calls for American Airlines to working the plantations of the expanding ‘prison farming’ sector…

*** Low wage sector struggles

In recent years there have been several nation-wide, one-day actions of fast-food workers for an increase of the minimum wage (‘Fight For $15’) and ‘the right to unionise’. There have been various criticisms of the campaign from a revolutionary or rank-and-file organising point of view:

– The mobilisation is dominated by mainstream unions like the Service Employees International Union (SEIU) and their top-down organising approach;

– Rather than actual collective work stoppages, most ‘strikes’ were protest pickets or other symbolic actions which mainly aimed at media attention;

– Workers who actually walked out often had to face the subsequent repression alone, given that the mobilisation lacked actual force on the ground beyond the one-day protest;

– The mobilisation of the SEIU was tuned to the Democratic Party election campaign and local electoral strategies, such as in Seattle.

While these criticisms seem valid for the official campaign, we know too little about what actually happens on the ground – there are not many inside reports. We also lack the overview concerning other independent struggles in the low-wage sector. Furthermore, even if the main funding body of the campaign is closely attached to the establishment, the current wider political climate might encourage and force the workers’ participants to go beyond the symbolic stage-shows. We saw evidence that many of the fast-food workers militants were active in the anti-police violence protests after Ferguson and the most recent protests in November 2016 of low-wage workers at various US airports took place at a moment in time when airports became focal points of the anti-Trump mobilisations in response to the ‘Muslim ban’. Young workers who take part in these mobilisations will be forced to question the role of the state, which the union presents to them as an ally or at least a neutral agent in the struggle with the corporations. All reports agree that the campaign has different local dynamics, e.g. militants from Chicago point out the impact of the 2012 Chicago teachers strike and how it influenced the more rank-and-file character of the local fast-food workers’ campaign.

* The role of the SEIU

The SEIU grew significantly mainly due to an internal concentration process, mergers with other unions and an ‘agressive organising’ campaign – with the aim to increase individual membership rather than form strong local branches. While union membership overall stagnated between 1995 and 2000, SEIU reported a growth of 392,969 members. By 2004, while others were losing members, it had added another 328,339 members bringing it to 1.7 million. While membership grew, the number of locals in the SEIU fell from 373 in 1995 to 140 in 2008, with 15 ‘mega-locals’ encompassing 57 per cent of the membership – that is, just over one million members. ‘Servicing’ and grievances were moved to call centres, known as Member Resource Centers, in some of the larger ‘locals’. Members of various smaller unions, such as UNITE  joined the seemingly more successful apparatus. The focus of the union shifted to lobbying and in many cases their recognition by employers was not based on actual struggle, but achieved through political agreements on a regional level and/or agreements which tied the hands of the affected workers in future, e.g. through no-strike clauses. The fast-food workers campaign is run top-down: 

“A national conference was held in Detroit August 15-16 [2013] by the campaign with 7-800 attendees from the core cities of the campaign, a large number being campaign staff as well. Here workers were guided through a rapid fire pep rally, where they were handed a pre-written agenda and presented with the pre-packaged plan of the August 29 strike as the only decision of the meeting. No further discussion of the direction of the campaign was had.”  

Even Trots of the Socialist Worker agree with this ‘anarcho-syndicalist’ position taken by Adam Weaver:

“Our (admittedly limited) experience supporting the New York iteration of FF15, which goes by the name Fast Food Forward, organized by a group called New York Communities for Change (NYCC), unfortunately validates a number of Weaver’s criticisms. At the pickets some comrades attended on the April 4 day of action in New York, there were more campaign organizers and Democratic mayoral candidates (ready to pose for pre-arranged photo ops) involved than actual workers.”

* The role of the political class

The SEIU launched the fast-food workers campaign mainly in “relatively liberal cities where they have legislative connections and feel confident they can use them to pass or at least introduce legislation locally at the base of the Democratic Party to put pressure on the national angle with the drive for $9 an hour by Obama”. In the most recent election campaign the Democrats under Clinton proposed an increase to $12 by 2020. During the nation-wide action-day in April 2016, local political figures were invited to lead the local protests, such as the former secretary of labor Robert Reich in New York or former Mayor McGinn in Seattle. The following assessment by Adam Weaver of the relationship between SEIU and the political class regarding the fast-food campaign seems accurate:

“One possible route is a focus on major chains aimed towards a neutrality or industry standards agreement and would likely include SEIU agreeing to lobby for some sort of pro-restaurant industry tax breaks similar to what SEIU did in the California nursing home industry in promising to lobby the heavily Democratic state government for pro-industry legislation in exchange for industry wide union recognition which included agreements barring workers from striking or speaking out on their working conditions. I think this route is unlikely and not very realistic. The second, and I believe more likely route, would be a move towards a range of legislative efforts including state ballot initiatives allowing cities and counties to set their own minimum wage. A third potential direction might be a combination of both employer agreements and legislation such as previous efforts of unions such as HERE to raise wages through legislation but which exempted workers covered by union agreements. Another factor is that Obama recently announced plans to introduce a bill to increase the federal minimum wage. I think it’s hard to believe it coincidental that SEIU, one of the largest contributors to Obama’s 2012 reelection, unfolded the campaign just in time to deliver the legislative effort a ready-made support base.”

* Dynamics on the ground

There are various reports about the participation of fast food workers militants in the local protests after the police killings in Ferguson and Baltimore. While the rank-and-file restaurant workers will see immediate connections between their lives and those lives lost through police violence, the campaign leaders seem to have concerns about the fusion between the campaign and the more unruly riotous protests against state repression. Comrades from Red Atlanta wrote:

“Astonishingly, in the days before the September 4 national fast-food strike, the Show Me $15 campaign in St. Louis apparently made the decision to avoid staging any official demonstrations in the St. Louis or Ferguson areas. This came despite the local campaign’s initial plan to take part in the strike protests, just as they’ve taken part in all other major national actions. As near as I can tell, this decision was first made public in a story published online by the St. Louis Post-Dispatch just one day prior to the scheduled strike.”  

Interestingly, the workers from St.Louis who went to New York to join the campaign trail rather than the local protests ended up being arrested together with fast-food workers from other cities while taking part in ‘acts of civil disobedience’. If this was part of the media stage-show or an indication that the apparatus has difficulties controlling the angry young militants remains an open question. The fact that the police targeted fast-food workers with explicit endorsement from McDonalds management will contribute to the politicisation of the dispute – in March 2017 the Guardian reported:

“Police claimed they had “authorization from the president of McDonald’s” to arrest protesting fast-food workers, according to a civil rights lawsuit filed on Wednesday against the city of Memphis, Tennessee. Last November, police officers stepped behind the counter of a fast-food restaurant to prevent workers from signing petitions calling for better working conditions, the protesters’ lawyers claim. They also allege that officers have enforced local permit laws on the predominantly black workers in the Fight for $15, while allowing protests by mostly white crowds to continue unabated.”

*** Conditions in the health sector

The issues of low wages converge within the health sector: many low-waged workers depend on state benefits in order to access health care, which is increasingly contested. Health workers themselves are battling with the pressure on wages and the strain on the healthcare system. The so-called ‘Obamacare’ was at the centre of the election campaign. Before Trump got elected Scott Nappalos, who works as a nurse, wrote:

“The 2016 election cycle has shown that health care is lining up to be a key fight in the next few years. […] The Affordable Care Act (aka Obamacare) is looking increasingly weak as soaring costs of insurance, drugs, and equipment are eroding whatever meager benefits there were in reigning in the all consuming burden of the American health system.⁠ Medicare, Medicaid, and Children’s Health Insurance Programs alone represent 16% of the federal budget and are projected to grow substantially.⁠ […] Health care is at the center of stressing both market and state forces and this presents an opportunity for movements that challenge capitalism. Healthcare workers networks could provide the structure and voice of struggles that mobilize the communities receiving the services and challenging administrators and legislators tasked with imposing austerity and maintaining our unequal health system.” 

As part of Re-composition blog Scott has contributed to a recent series looking in detail at the current crisis in the health sector:

* Health crisis 

Among the lowest paid 20 percent of workers in the United States (and this excludes undocumented workers), which roughly equates to those workers earning $13.83 or less per hour, 54 percent did not have employer-provided health insurance and 37 percent had no health insurance of any kind. In 1979, only 15 percent of the lowest paid workers lacked health insurance. Similar to the minimum wage legislation, the state actively intervenes and limits the access to healthcare and entitlements, e.g. since 2010, nine states—Wisconsin, Louisiana, Arizona, Florida, North Carolina, Indiana, Mississippi, Tennessee, and Kansas—have banned local governments from establishing a right to paid sick leave.

* A growing sector and union ‘activity’

By individual occupation, ‘Registered Nurses’ is the fifth largest in the country, with nearly 2.7 million nurses employed in 2013 earning a median wage of $31.84 an hour. While many industries saw a significant decrease in employment during the Great Recession, between 2007 and 2009 the “Healthcare Practitioners and Technical industries” and “Healthcare Support Operations” industries experienced the largest growth in jobs among all industries, with an increase of 323,260 and 261,450 jobs, respectively. It is also one of the few sectors where union membership has grown over the last couple of decades, from 689,416 in 2000 to a high of 951,000 in 2008. In 2009 and 2010 there were 30 strike threats and 10 actual strikes involved in the nearly 100 labour contracts negotiated in those years with hospitals. Frequently, the issues involved in these disputes are about patient care, issues such as nurse-patient ratios or limits on ‘floating’ (shifting nurses around). Here, again, the SEIU plays a dicy game of poaching smaller union members, agreeing to recognition deals that tie workers hands, e.g. when it comes to whistle-blowing. But not only health workers are affected by some of these union-employer deals, but patients, too. For example, in California and Washington, SEIU agreed to lobby for restrictions on patients’ ability to sue over medical malpractice at the hands of hospitals and home healthcare providers.

* Some recent experiences

We found a recent report from May 2017 about organising activities in Illinois area nursing homes, where workers of a SEIU local prepared for the first strike since 1979. Most workers are on minimum wages and subjected to immigration raids. One of their demands was to “provide new protections for immigrant workers, such as banning the use of E-Verify”, a way to snoop on undocumented workers. The union encouraged the formation of a more democratic delegate structure during the dispute. Another report from Spring 2017 concerned a dispute at Pennsylvania Temple University Hospital over equal pay for migrant nurses. Nurses from India were not paid according to their experience, because management refused to take their nursing experience in India into account. They approached the union officers.

“The officers brought the grievance to the bargaining team, already in contract talks. This wasn’t a question of the difference between nurses trained abroad and those trained in the U.S., they argued—the problem was management not respecting the contract. The union’s 20-member bargaining team agreed to raise the issue in negotiations. Although it was nothing like 2010, when Temple nurses struck for 28 days, the 2016 contract campaign was vigorous. A hundred nurses packed into bargaining sessions; 1,000 signed petitions for better staffing. The union threatened an informational picket before winning a final contract agreement that included a provision spelling out that foreign nurses’ experience should be treated equally.”

*** Curent state of revolutionary organising

Scott has been involved with the IWW and Re-composition blog for a while and written extensively about organising and strategy. We encourage participants to have a look at the Re-composition blog and familiarise themselves with some of Scott’s writings:


*** For further reading:

* Health sector

* Low wage mobilisation’t-fight-fifteen-campaign food-industry/’t-fight-fifteen-campaign

2015 Low Wage Nation National Findings



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