Does Monopoly Power Explain Workers’ Stagnant Wages?

Posted by Social Science Research Network

Does Monopoly Power Explain Workers’ Stagnant Wages?

By Bryce Covert

In 2009, Leinani Deslandes got an entry-level job at a McDonald’s franchise in Apopka, Florida, making US$7 an hour. She advanced quickly and was promoted to department manager of guest services in 2011, a position that paid her US$12 an hour. Not wanting to stop there, Deslandes began the coursework that would make her eligible to become a general manager. The final step was attending a weeklong training at the company’s “Hamburger University” in Illinois. But when her supervisors found out she was pregnant, they canceled her trip, making it impossible for Deslandes to fulfill that last requirement.

Frustrated, Deslandes decided to look for another management job. Although she had gained a lot of experience and training, it was mainly applicable to working at McDonald’s, so she kept her search within the company. She soon found a manager opening at another location, run by a different franchisee, that started at US$13.75 an hour and would jump to US$14.75 after a 90-day probationary period. That kind of pay meant a 23% raise over her current job.

The other franchise was interested in hiring her, but there was a catch. McDonald’s franchisees are required to sign a contract with corporate headquarters that includes a “no hire” and “no solicitation” clause stipulating that they can’t “employ or seek to employ any person” who is either currently employed by another McDonald’s franchise or has been in the past six months.

Continue Reading…