Covid Stimulus Checks, Return To Work Reluctances, and The Jaw-Dropping Spike of Mass Quitting Across Fast Food Chains
Rachel Flores was the general manager of a Burger King in Lincoln, Nebraska. When the air conditioning in the kitchen stopped working, Rachel and her team didn't quit; They doubled down serving Burgers during the pandemic, even short-handed. The air ended up getting so hot that it became thick and oily. Breathing in the kitchen was difficult and the team sweated through their polyester uniforms every day. The heat eventually got so bad that Rachel ended up in the hospital for dehydration, which means an IV of fluids and, of course, a big fat hospital bill.
When she tried confronting her boss about the AC on behalf of her team, telling them that the kitchen was over 90 degrees and had been for weeks, they told Rachel Flores that she was being a baby. So, she quit. Rachel Flores politely put in her two-week notice. But here's where you might have seen this story service in the news – the rest of her team quit too all at once. The entire staff of Burger King quit and walked off the job. They also took the time on their way out to change the Burger King sign. The white letters that proclaimed 11 million served every day now said, “We all quit, sorry for the inconvenience.”
Rachel Flores and her whole team gave up their 25k jobs to join the legions of unemployed currently waiting out the pandemic. But the Burger King in Nebraska isn't alone. In North Carolina, a congressman tweeted a picture he took outside of Hardee's, where the staff also quit in mass. The poster at Hardee's said, “due to no staff, we are closed.” Republican Congressman, David Roser, blamed the covid stimulus. He said in quote, “This is what happens when you extend unemployment benefits too long.” The wage at the North Carolina Hardee's is about $9.18 an hour.
In Wadesboro, a poster went up in Wendy's windows saying, “We all quit, closed.” The average hourly wage for Wendy's workers is $9. A sign on a Chipotle door went viral last week, which said, “ask our corporate offices why their employees are forced to work in borderline sweatshop conditions for 8+ hours without breaks. We are overworked, understaffed, underpaid, and underappreciated.” The average wage for a Chipotle worker is $11.82 an hour.
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Low-wage jobs have become a battlefield this month. Fast food restaurants have started advertising their hourly rates on the sides of buildings in bold, hoping to entice workers to come in for a job interview. Amazon has started offering $1,000 sign-on bonuses for new hires, yet people still aren't coming back to work. So, where the hell are all the laborers? Many rumors and myths are rolling around online, and where are here to bust a few of them.
Myth 1: In America, we keep losing manufacturing jobs, which have been the seat and all three legs of the middle-class stool since World War II. So, where the hell did these factory jobs go, and why is everyone working at Burger King or Amazon nowadays?
Joe: If you've seen Simon Sinek on YouTube, he kind of bashes on millennials a lot. Keep in mind that this whole episode is not a millennial issue; It's more of a labor issue.
Todd: I think it's always funny that the Simon Sinek types of people talk about how lazy kids are nowadays - like they invented laziness. We had just as many lazy people in my day. I promise.
Joe: I'm going to argue in favor of laziness, honestly. The whole history of humanity is finding the most efficient way to do things. I mean, there's a reason we went from mops to Roombas. The more we free ourselves up to do more intellectual pursuits, the better off we are as humans. So, why wouldn't you want to get away from a grill at Burger King and move into clerical work of some sort?
Todd: To put this into context, the price of living has gone up, and the pay has either stayed stagnant or not remaining equal to that influx.
Joe: If you look up the rate of rent versus the pay rate, pay has not gone up since the 90s, yet rent has kept climbing.
There is an article all about why wages have not gone up in America in the last 30 years, and it comes down to discomfort and fear. We will get to that in this episode.
The first real point we want to get into is Congressman David Rouzer. Is it possible that all these people are complainers, and we have an entire generation of lazy people? On paper, there are 14M unfilled jobs in America. The numbers go up and down depending on which source you go to. So, I took an average from our most trusted online sources, most of which is from AP news. In retrospect, New York has 8.4 million unemployed people as of 2019. In total, we have 16 million people in America are unemployed right now. If you are on Fox news or if you are Congressman Roser, it sounds self-explanatory. We have 14 million unfilled jobs, and we have 16 million people on unemployment. It sounds like a square peg has not been put in a square hole yet and that the only thing keeping these people back from being slotted into those 14 million unfilled positions is money. Something is holding them back, and if you are congressman Rouzer, you think it’s that extra $300 check on your coffee table.
Now, the kind of question we want to ask is on morality. Is it immoral to leave your dangerous flagging job where you might get hit by a car, or is it immoral to walk out of Burger King if that $300 check is at home? I don't think people understand that it isn't about just clocking in and clocking out. It's the workload that is going to crush you. Between the stress, the customers reprimanding you, and the cleanup, it's more than someone can take when understaffed and/or in poor conditions. Taking on the workload of somebody else and slacking because of it is not fair, even when the pay stays the same. It seems expected that people will pick up that slack and get the same amount of money for doing so.
Now, we are believers in quitting. If you are not being sustained by something, quit and find something that fulfills you. Walking away from Burger King is a good thing. You have the freedom to choose which labor you want to do in life, and it could result in the fast-food chains getting their act together for future employees.
Myth 2: According to Fox News, the covid stimulus killed jobs, period. If you pay people to sit on the couch all day during a pandemic, they will want to stay there. So, if we cut off these poor people from their relief funds, it will be doing them a favor by starving them out of the house, right?
We want to talk about what would happen if people didn't have to rush back to work. If you look at the total scope of humanity, our goal should be to have unemployment. If you believe in a strenuous life filled with hard work and dedication, you're probably yelling at me right now. But our goal as humans should be to have robots and automation instead of manual labor so we can do more creative work. A kiosk replaces two people at the cashier's desk. That's a good thing in my book, and we should let those people go home and slowly find a new job elsewhere that is fulfilling.
To give a little bit of perspective, since 2000, we've lost 5.6 million jobs to automation. Almost six million jobs were of the middle class like factory jobs. When you see those McDonald's kiosks or you see a machine that is autoloading, those are all things that middle-class Americans were doing 20 years ago. And now those people are left doing a $15-hour job like Amazon box loading or flipping burgers for $9. Therefore, getting people into a workplace for $15 an hour and benefits has become the economic model for businesses. That is the sweet spot to lock labor in and get them to stay.
We covered a Slate article once that was about why can't Americans get a raise, and this is the only time I've seen an article this heavy talk about the 90s recession and how so many companies got used to paying the 90s recession rates. The nuts and bolts of it is that people could get away with paying lower rates because employees were too afraid to go anywhere else. You won't go to another company because they were in a labor crisis. But that business model stuck around, and that mindset of corporate not needing to pay never went away.
Do you remember what pensions looked like? It used to be that every job had a good pension. This means when you retire, you get almost what your pay was for the rest of your life. But companies decided that pensions are just too expensive, and they didn't want to pay forever for these people, especially when they're living longer. Even more, a lot of these companies opt for contract work, so they don't have to pay into a 401k either. They simply get to use your labor, and then it's up to you to save whatever you can.
Myth 3. If the stimulus is already over and it didn't actually cause mass laziness, then why aren't people going back to work with everyone hiring? It should be a job frenzy. Not a quitting spree.
Do you want to talk a little bit about unions and World War II? People might think we're all over the map with this and that we are extrapolating from everywhere, but we're getting into the history of why we built ourselves a labor crisis. We built a middle class with World War II, and then we took away our opportunities.
We talked before about our Lee Iacocca quitting. He got a corporate bailout only when he ran it upright for the whole company during World War II. One of our favorite presidents, FDR, handed out civil project jobs. He'd hire people to sweep the streets. He paid a lot of money to get Americans working again and to get the economy moving. In World War II, the US government was trying to avoid basically what we have now – aka groups of laborers just walking off a job because the company they were working with just wouldn't pay them or fix the AC in the case of Burger King. The US government had a system where they offered to arbitrate for union leaders and labor groups, meaning they would come in and negotiate with their boss. But they would only do this if they agreed not to strike.
In short, the no-strike pledge was we will help negotiate for a higher wage, but you can't go on strike, and you can't stop the flow of coal. What Burger King has done is that since all these franchises aren't under an umbrella and they don't have a union, they have made it impossible for the government to help. This means the government can't come in to help or force them not to strike. Since we're coming in and out of the pandemic, all the restaurant businesses are at high risk of being exposed to thousands of people every day. They are the least protected not just health-wise, but business-wise and pay-wise too. We call these people essential workers during the pandemic, and we deem them as essential as miners during World War II. Yet here we are, watching them walk off the job in masses.
We covered the Easterlin paradox before, and I'm starting to really lean into it. Briefly, we talked about a study that showed people would rather make less money in life if their neighbors made less than them. If you're the big fish in the small pond, people are more likely to pick that than to be the small fish in a big pond. So, the whole argument about the minimum wage is held up by modern polls done by neutral sources. They've done polls where they look at how many people are voting for keeping minimum wage low. Almost without exception, the people voting to keep the minimum wage low are people themselves who make just barely over the minimum wage. They don't want to see that limit rise above them because it would mean that they make less by comparison.
There is a lot to say for that, but there is also an economic movement map if you are wondering if you can bootstrap yourself from the lowest tax bracket to the highest. We in the Pacific Northwest are closer to the 10% mark. To give you some context for that, if you are in some of the southern states in a city that has a very low mobility rate, you might as well live in a closed-off caste system in India. Your chances of bootstrapping yourself and working your way out of poverty are less than 4%. There are some cities in America where it's higher than 10%, which means you will likely be fine with making that goal happen. A lot of it comes down to where you live and what your opportunities are. So, if you see a lot of people in poverty, it doesn't necessarily mean they are lazy; it could very well be because they don’t have as many chances or opportunities based on where they live.
We have trudged all over the idea that a $300 stimulus check is not the factor keeping people at home. But now we want to cover one last article for this. This is from Esther Duflo, who is an MIT Professor. She is the youngest person ever to receive a Nobel Prize for the economy, and she says she doesn't think that the stimulus package keeps people from finding jobs. She says gender inequality, unequal access to childcare, returning to in-person work mandates, and vaccine access are among the many pressing issues surrounding the return-to-work issues we face today. The stimulus is not stopping the strive, but it does give us a buffer and a few breaths of air to take their time and find a job that actually fits them.
Did you hear about Jimmy John's being sued? It was because they were using non-compete clauses.
Jimmy John's used a system enabling anyone who walked in to make sandwiches for them for $10 an hour but also made them sign a non-compete clause. So, if you wanted to work at a deli in Fred Meyer later, you would be competing with Jimmy John’s, and you couldn't do that. It's a sneaky way of locking labor into your company. The dream of capitalism is that if I’m in a job that isn't good, I can go to a competitor. That is the soul of capitalism. But places like Jimmy John’s, McDonald's, and Amazon have all made their people sign a non-compete clause so they can’t do that.
Now, there is another wage theft that takes place in the lower pane jobs and for the middle and the higher paid wages contractors. Contractors hired by an outside agency do not get benefits. They're given a lot of responsibilities but receive no benefits and potentially not even minimum wage. Even middle-class jobs, you might have a role that should be about $120K with full benefits, but suck doing it for $65K if you are contracted out. So, our Burger King employees were all contractors. They are not actual Burger King people, and they usually work for the franchise. But on that point in the narrative, we talked about Wendy's, and Wendy's pays a wage of $9 an hour over the whole country.
I want to put this into perspective for one of your earlier points. If you have $580 each week and no other obligations, what can you really afford with that? Can you afford night classes to better yourself? No. You likely couldn't afford the bus fare to get there. Anyone who thinks that is doable, go back and listen to our college degrees episode. We talked about how much money it costs to go to school, even for trade schools and the cheaper schools. And if you're rolling your eyes, just go pull up your Wells Fargo Chase account and look what your withdrawals were this week.
Final Thoughts
In May, President Biden announced the following: “we're going to make it clear that anyone collecting unemployment that was offered a suitable job must take the job or lose their unemployment.” What's a suitable job for an adult in America? For years we've looked down on burger flippers. People on Twitter still insist that if you're behind the burger grill or a cash register, then you're an adult working a teenager's job, and you don't deserve a livable wage. So, Rachel Flores just took the advice of every condescending American on Twitter and quit her job. Now, she is holding out for that all-important "adult job." You know, the kind of adult jobs factories used to offer.
We like to think the economy is a simple system - just push on one side of the scale, and the other side goes up. You offer people $300 a week to survive, and they'll be $300 a week less incentivized to work. But Americans aren't stupid. Nobody thinks covid relief payments are permanent. Nor is it a livable wage by any stretch. Rachel Flores and her team didn't walk out of Burger King thinking they had a sweet $300 check waiting for them at home. They walked out because they knew if they got sick, there's no tomorrow for them.
Burger King cared so little about their health that they couldn't be bothered to fix the damn air conditioner in the kitchen - the one place in the restaurant necessary to run a restaurant. Can you imagine working for an employer who calls you a baby for suffering from dehydration when the stakes are even higher? What if you're not asking for that and asking for coverage after catching covid because half of the customers aren't vaccinated?
Americans aren't becoming fed up because they're lazy, and $300 a week is a fortune; they have been fed up for a long time, and this happens to be the golden moment for wage workers. While employers are desperate right now, employees are sending the message "we quit." Because despite not having other qualifications, a job at Burger King isn't worth dying for, which is exactly what we've been asking them to do.