Since time immemorial, the US food industry has relied on two pillars: Cheap labor coupled with cheap hamburgers. American economists are on a mission of understanding why American wages have stagnated for decades. As a result, they have decided to pay attention to the cheap labor of the food industry. Many economists believe that the issue of cheap labor in the food industry has a huge part to play in the stagnating wages. It’s only recently that big names in the food industry have changed rules about hiring. These giants include McDonald’s, Pizza Hut, Carl’s Jr., and Burger King.
These firms made it impossible for workers to be hired by two entities at the same time. However, these are contracts that you won’t see while signing the contract as an employee. This is because they are buried deep in lengthy contracts where they appear in just a paragraph. At the same time, these contracts are signed between corporate headquarters and fast-food outlets. The disadvantage with these contracts is that they prevent an employee from negotiating for higher pay. At the same time, the employee cannot switch jobs which leaves many with the option staying at one stop for some time. As a result, economists believe that lack of worker mobility is playing a huge role in making the wages stagnant. They argue that employees can only get better salaries by switching from one job to the other. On the other hand, there are defenders of the practice to hold onto a worker for some time. They reason that these institutions use resources such as money and time to train these workers.
Therefore, it’s their right to protect what they feel like their investment. However, there are recent lawsuits that have been filed against CKE Restaurant Holdings and McDonald’s. These lawsuits say that when employees subject their workers to such rules, they are violating labor laws and antitrust laws. While CKE declined to comment on the issue, McDonald decided to remove the language from its contract. However, the food giant explicitly said that the decision had not been molded by the lawsuit. At the moment, it is estimated that over 70,000 restaurants are affected by the no-hire rules. This is more than a quarter of the fast-food outlets in the country. Economists argue that these rules by restaurants are different from the non-compete agreements. A non-compete is geared to prevent trading of secrets between companies.