April 15, 2015: High school students, union activists, and fast food workers march in Manhattan’s Upper West Side to demand a $15 per hour federal minimum wage. Photo credit: a katz / Shutterstock
In a lot of ways, the economy in America today is strong. Unemployment is historically low, and growth indicators such as stock prices are high. In the aggregate, a lot of people are richer. Yet, one problem persists: wage growth is stagnating, and a lot of hardworking people wish they could earn more money. What gives?
Many have speculated that the problem is working-class people are unable to bargain for more earning power. The Washington Post shined a spotlight on why: a number of employers have “no poaching” agreements in place with their laborers, which prevent them from gaining leverage by moving to other job locations. Many franchises such as fast food chains use these deals to keep their employees from having job mobility, making it easier to fix their wages. Now, 11 states are launching investigations into this practice.
“No-poach agreements unfairly limit the freedom of fast food and other low-wage workers to seek promotions and earn a better living,” said Maura Healey, attorney general of Massachusetts.
Josh Shapiro, attorney general of Pennsylvania, added: “Many workers only learn these agreements exist when they are denied the chance to advance to a better job, earn more money or obtain family-friendly schedule options.”
Healey’s office estimated that about 80 percent of all workers in the American fast food industry are under no-poach clauses. Their employers include such big names as Burger King, Dunkin’ Donuts, Panera, and Wendy’s. Beyond the food service sector, Jiffy Lube, H&R Block, and Anytime Fitness are also under investigation. Economists told The Washington Post that these establishments prohibit employees from switching job locations and unfairly prevent them from bargaining for higher wages.
The employers have spoken out against these investigations, saying that limiting employees’ mobility is not only lawful but important to their business models.
“Provisions in franchise agreements allow franchise owners to protect the significant financial investments they make to train employees [in] the skills and methods necessary to deliver the product or service to customers,” said Matthew Haller, spokesman for the International Franchise Association.
