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California’s FAST Recovery Act: Wage Increases

Workers and Corporations Have Competing Interests

Corporations don’t have an incentive to increase wages beyond the minimum that it takes for an employee to stay with the company and keep producing profit.  Instead, they prefer to distribute profits to shareholders, help upper management dodge their personal taxes, give massive bonuses to CEOs, and lobby.  These practices keep wealth in the hands of the already-rich, to the detriment of the workers that actually created that wealth.  This unmitigated corporate greed has led to unimaginable wealth inequality.

Workers do have an interest in increasing wages.  Company profits are wealth extracted from the labor of workers, so workers often feel that wages should increase to match company growth.  An increase in wages can also improve workers’ health outcomes, safety, and economic participation.  

Before Now, Corporations Exercised Far More Control Than Workers 

Corporations with not-yet-unionized employees have traditionally held most of the power when determining where profit goes.  This one-sidedness has largely led to a stagnation of wages in the face of an explosion of profit and productivity.  California aims to reduce the unequal power dynamic with the FAST Recovery Act.  This Act creates a council with representatives of all parties– employers, state representatives, union workers, and non-union workers– that would be affected by minimum wage increases for fast food workers.  This council will have the power to set the minimum wage for fast food workers between $15 and $22 per hour, with annual adjustments for inflation.

This arrangement is a fairly new concept for modern American workers.  Though workers who unionize can negotiate for pay increases, never before have non-union workers been able to directly impact these types of discussions at such a massive scale.  We don’t yet know how successful the council will be in negotiating for higher pay, but union leaders and other fast food workers are hopeful that the formation of this council will give them a voice to protect their interests.

Some Corporations Are Against the FAST Act

Despite the huge benefit that the FAST Recovery Act will bring to workers, corporations have campaigned against the passing of the Act, and have recently lobbied to propose a referendum to overturn the Act.  Part of the campaign involved spreading misleading information about minimum wage increases.  They claimed that a hike in minimum wage would worsen inflation.  Additionally, they claimed that it would reduce the quantity of available jobs.  Both claims are untrue. Not only is inflation disproportionately affected by corporate profits and corporate profiteering, right now, wage growth could dampen the effects of inflation.  Equally importantly, a recent study found that raising the minimum wage doesn’t generally affect the quantity of jobs, but can increase the quality of existing jobs.

Regardless, the FAST Act is Now Law

To the delight of workers across California, in early September, Governor Newsom signed the FAST Recovery Act into law.  From here, California fast food workers plan to continue the fight to protect the rights granted by the FAST Recovery Act, and keep their negotiating power.

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