Adam Smith, union man
"The Wealth of Nations" takes a dim view of concerted action by workers, but if the author stepped into a 21st-century fast-food joint you might get him singing "Joe Hill."
Eight years ago I wrote a piece for the late, lamented Pacific Standard magazine inviting readers to consider the small-business owners of fast-food outlets a sort of proletariat. Yes, they resisted unions and committed wage theft and subjected employees to all sorts of bad labor practices. But that was because their franchise contracts with big corporate players like McDonald’s and Domino’s made it extremely difficult to eke out a profit. They sort of needed a union themselves. I encouraged franchise owners to consider themselves united with their employees in opposition to their corporate masters.
It didn’t happen, partly because franchisors often include in their contracts provisions forbidding franchisees from joining professional associations where franchisees can share information about bad franchisor practices, and partly because franchisees just don’t think of themselves as proletarians. They tend to be Republican and to identify with the business class, even though they seldom take home enough income to justify that self-image. The Obama NLRB tried to help by declaring McDonald’s the joint employer of its franchisees’ workers, jointly liable for any labor violations arising from its stringent demands on franchisees. But that came to grief with Donald Trump’s election. The Biden NLRB is now trying to address the problem through a proposed regulation.
In the meantime, California has created a Fast Food Council that will impose an industry-specific wage minimum for fast food outlets and address labor complaints. It’s not a great solution, either for franchisees or for workers, because fast food restaurants come in all shapes and sizes. It would be better if wages and working conditions could be hammered out between labor and management through collective bargaining. But of course the franchisees are united with franchisors in opposing that. So now they get the heavy hand of government regulation instead. In my latest New Republic article, I write about this situation and, scrutinizing The Wealth of Nations, conclude that if Adam Smith were conversant with 21st century wage-setting, he’d conclude that labor unions are just another finger on the invisible hand. We might even get him to wear a Fight for $15 pin.
Read my TNR piece here.