The U.S. Department of Labor was founded in the 19th century to provide basic protections for workers from being mistreated by business owners whose drive to maximize profits resulted in intolerable worker abuse. America’s ascension to the world’s largest economy demonstrates that achieving a balance between corporate profitability and working conditions is both the right thing to do and a model for economic success.
But the role of the Labor Department as the protector of workers will end abruptly should Andrew Puzder become the Secretary of Labor. His actions and statements as the chief executive officer of fast food conglomerate CKE Restaurants demonstrate his open hostility to fair wages and working conditions.
Puzder says he is opposed to a higher minimum wage and other reforms because they would harm business and result in job losses. But we have seen that his true interest is protecting large and powerful corporations who pay their CEOs millions of dollars a year, yet pay their employees so little that they qualify for food stamps and welfare payments.
{mosads}The notion that treating workers fairly is inconsistent with a successful business is misguided. My own experience as a business owner is that treating your employees fairly makes a business stronger.
For 22 years, I was a partner in a profitable mid-size law firm in Manhattan where the partners had hands-on management responsibility for the running of the firm. We were proud to pay our staff employees well. In return, our employees were loyal and hardworking. We had little turnover, which meant less management time spent on hiring and training. Our clients commented positively on the performance and experience of our staff, which contributed positively to overall client satisfaction and the firm’s revenue.
On the opposite spectrum of business models, Puzder built CKE’s “success” on paying workers low wages and cutting corners at their expense. The public record is clear: CKE has been the subject of numerous investigations by the Labor Department over workforce safety and has been the defendant in a series of class action lawsuits filed by employees. While Puzder and other top executives benefited, their employees struggled.
Puzder insists that he has workers’ interests in mind by arguing that keeping wages at poverty levels and rolling back workplace protections saves jobs. But plainly, the only beneficiaries in his business model are the corporations and their executives. The workers and taxpayers are the losers. The facts show that a low minimum wage results in “corporate welfare” for big businesses, as their employees who make the minimum wage qualify for food stamps and welfare.
The cost to taxpayers is enormous. Last year, New York Gov. Andrew Cuomo estimated that the state paid out $700 million a year in public assistance benefits just to workers at McDonald’s and Burger King. In 2014, the Washington Post reported that Walmart’s low wages cost U.S. taxpayers as much as an estimated $6.2 billion a year in public assistance.
“Corporate welfare” does not just enable large businesses to make a profit at the expense of taxpayers—it actively masks structural weakness in those businesses. If a business can only stay in business by paying unreasonably low wage to its workers, then that business should be allowed to fail. There is no benefit to workers to staying aboard a sinking ship. Costs could be cut in other ways, including reducing the pay of top executives.
Puzder’s approach is out of mainstream American values. Americans believe that workers should be paid a living wage and enjoy good working conditions. Many employers take pride in paying their employees well and believe it is the right thing to do. I know from personal experience that a good salary and benefits make for a happier workforce with confidence in their future and more money to spend, thereby benefiting other businesses.
Puzder should not be confirmed as Secretary of Labor. He cannot provide the balanced leadership needed for this post. Instead, he will dismantle the mission of the Department of Labor, while advocating that the best way of creating jobs is to return to the working conditions of 19th century factories. In so doing, he will harm employees, taxpayers and businesses.
Patricia A. Martone is an adjunct professor at New York University’s School of Law. She has more than three decades of experience as an attorney and is a former partner at the law firms of Ropes & Gray and Morrison & Foerster.
The views of Contributors are their own and are not the views of The Hill.