TIME Retail

Walmart Must Pay $188 Million to Settle Claims of Cut Rest Breaks

The company said it may appeal the decision

Walmart has been ordered to pay $188 million over claims by employees that the company regularly cut their breaks for meals and rest. The payment would be a settlement for a class-action lawsuit that went all the way to the Pennsylvania Supereme Court. The ruling would hurt Walmart’s earnings, the company said, by reducing its profits from continuing operations by 6 cents per share. Wal-Mart said it may appeal the decision.

The lawsuit involved 187,000 Pennsylvania-based Walmart employees. They worked at the retailer between 1998 and 2006.

[Reuters]

TIME Kenya

Kenya: Suspected Islamist Rebels Kill 36 Workers

Kenya Attack
Relative Ziporah Mora, right, holds her child whom she declined to name, as she waits for news of the return of the bodies of those killed in the Mandera attack at Wilson Airport in Nairobi on Nov. 22, 2014 Ben Curtis—AP

No group has claimed responsibility, but the attack has all the markings of Somalia's Islamist rebels, al-Shabab

(NAIROBI, KENYA) — At least 36 quarry workers were killed early Tuesday in northern Kenya by suspected Islamic extremists from Somalia, say Kenyan police.

The killings took happened in Mandera County near the border with Somalia and the attackers escaped, said Kenyan police chief David Kimaiyo.

The workers were ambushed at the quarry as they slept by the gunmen, said other police sources, who insisted on anonymity because they are not authorized to speak to the press. The non-Muslims were singled out and killed. Some were shot dead and others were decapitated, the police officials said.

No group has yet claimed responsibility for the killings but the attack bears the hallmarks of Somalia’s Islamic militant rebels, al-Shabab. Al-Shabab attacked a bus in Mandera County last week in which 28 non-Muslims were separated from other passengers and shot dead.

TIME ebola

Nearly Half of Liberia’s Workforce Is Out of a Job Since Ebola Crisis Began

Liberia is the hardest hit nation in the Ebola outbreak

Nearly half of Liberia’s working population at the beginning of the Ebola crisis is no longer doing so, according to a new report released Wednesday.

The West African nation has been the hardest hit in the regional outbreak, accounting for more than 7,000 cases and nearly 3,000 deaths, according to the World Health Organization. To measure the economic impact of that devastation, the World Bank, Liberian Institute of Statistics and Geo-Information Services and the Gallup Organization conducted phone surveys and found that not only is a massive part of the country’s work force out of job, but food insecurity is worsening.

Wage workers and the self-employed have taken the biggest hit, the report finds. Prior to the epidemic, more than 30% of working household breadwinners were self-employed, but now that rate is just above 10%. Many people lost jobs because their business or government offices closed.

Agricultural workers were significantly burdened at the start of the outbreak, too, since transportation routes were interrupted and people avoided large gathering spaces like markets, but the report shows Liberians are beginning to return to work as the harvest approaches.

Read the full report here.

TIME The Brief

#TheBrief: Why Even Red States Want a Higher Minimum Wage

The first minimum wage was $0.25. Today, that’s $4.22

San Francisco and Oakland voted Tuesday to increase their minimum wages, and so did four states that roundly backed Republicans. Rising standards of living and inflation may be what triggered this increase, but is paying workers more the one issue we can all agree on?

Watch #TheBrief to find out what’s driving the push to pay their workers more.

MONEY Food & Drink

Stop Ordering Off the Starbucks “Secret” Menu

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F. Carter Smith—Bloomberg via Getty Images

Quit it with the Samoa, Kit Kat, and Nutella Frappuccinos. You're driving baristas crazy.

You may have heard some Internet buzz over the years about secret specialty drinks pop up at Starbucks STARBUCKS CORP. SBUX -1.2743% but are nowhere on the menu. What a cool factor, if you can get your hands on one — most of us love the feeling of being a first adopter who’s “in the know.” However, lots of baristas hate these secret drinks.

Baristas’ negative opinion of the drinks has nothing to do with the drinks themselves, which sound delicious as well as clever. With autumn upon us, they could conceivably include seasonal stealth offerings such as Candy Corn, Fall Mashup, and Perfect Pumpkin Frappuccino. Names like Cap’n Crunch and Oreo, not to mention favorite tastes Red Velvet and Cake Batter, sound fun and delicious. What about some of the treats people love, like Samoa Frappuccino, Kit Kat Frappuccino, and — wait for it, hazelnut addicts — the Nutella.

A site called Starbucks Secret Menu offers up the skinny on a whole slew of cool beverages like those. However, such revelation sites may actually be tantalizing us with the cool factor while doing baristas a disservice. In August, Buzzfeed named quite a list of Starbucks’ secret offerings, but its structure was an Internet quiz asking “How many have you tried ?”

Sadly, these revelations and even quiz challenges may theoretically be good buzz for Starbucks, but not necessarily for baristas. There’s a perfectly logical reason why some baristas hate or even despise the secret drinks.

The customer isn’t always right

A few of my colleagues and I recently talked about Starbucks’ awesome corporate culture. Its employees receive many great benefits that rarely show up in retail, such as health care coverage and a stake in the company called “Bean Stock.” Many of Starbucks’ initiatives, such as fair trade and artisan coffees, as well as increased environmental efforts, give many employees a sense of working for a company that cares about the world.

When I study companies to consider as investments, I include cultural attributes in my analysis. I loved the idea of secret, basically exclusive drinks at Starbucks. Front-line innovation is an awesome thing, and it illustrates pride in one’s work as well as offering customer-pleasing products.

However, one of my colleagues, who did some time as a Starbucks barista, brought up an interesting thing most of us wouldn’t suspect: many baristas hate them. Much like any art, they’re usually one individual’s creation that, of course, is not available in Starbucks’ 10,000+ cafes. When baristas don’t know the recipes to these specialized creations and turn down customer requests, it’s not an “I won’t” situation — it’s “I can’t.”

Meanwhile, customer reactions generate dread of what should be fun. Many customers become irate or even enraged if a barista can’t fulfill a “secret drink” order. Examples of customers’ extreme expressions of anger would shock most of us.

The downside of creativity

Maybe Starbucks could use the idea as a business builder while making employees happier, if it’s handled in some different ways.

Employees who work on extra tasks show engagement, and studies reveal that engagement with one’s work boosts happiness and productivity. From the business perspective, employees can find efficient ways to do things, or take it upon themselves to delight customers in creative ways. When they’re recognized and rewarded for their talents, it can be as strong or stronger an incentive than huge paychecks. Creating a product of one’s own is a pretty engaging activity.

I had a few thoughts off the top of my head on how Starbucks might be able to take the situation and flip it into a positive.

  • Make it clear that “secret drinks” are “secret” for a reason; they may not be on the menu. For baristas’ happiness and sanity, this would be the most important element.
  • Occasionally offer some “secret” drinks in some cafes for a taste test “beta.”
  • Use chalkboards, social media, and other ways and to reveal the opportunity to taste an exclusive, secret drink; this could be an exciting store-by-store exclusive offering.
  • Compile information and feedback from means like social media, trying to identify the most popular or promising ones.
  • The most popular secret drinks could be rolled out on a widespread basis, with clever names and barista attribution.
  • Take a page from many modern companies and allot some time once a month or so in which baristas are paid to work on concocting secret drinks instead of in the fray.
  • Drinks that make it to a test phase or some other goal could yield a monetary bonus incentive.

Testing a way to reduce elements that frustrate or upset workers is a big deal, given the importance of morale. Public-facing jobs can particularly degrade morale even among the most culturally sound companies, particularly jobs that are so frantically fast paced and so close to customers. Turning the negative feelings into a positive initiative turns into a win-win-win situation.

The most important thing is to hope some angry, impatient customers can start exercising respect for baristas who work hard in a stressful job, regardless of what their complaints are. Whether this type of situation is one that Starbucks deems necessary to address, everyone has a choice as to how they treat others, and treating people poorly is a win for no one.

MONEY Jobs report

How the Fed Will React to Today’s Surprising Jobs News

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altrendo images—Getty Images

The fact that employers created fewer jobs than expected in August only emboldens the Federal Reserve to keep rates low for the time being.

The Fed is unlikely to raise interest rates this year — and not just because of Friday’s disappointing jobs report.

Though the economy fell short of adding 200,000 jobs in August — as it had in the six prior months — the unemployment rate remains at a better-than-expected 6.1%. Consumer confidence, meanwhile, rose in August and the economy grew by a robust 4.2% last quarter.

Many have long-waited for the time when the economy picks up and the Federal Reserve raises interest rates along with it. Even the presidents of the St. Louis and Philadelphia Federal Banks recently said the nation’s central bank should raise interest rates sooner than expected thanks to job gains and slightly rising inflation.

But given muted inflation and the growing concerns in Europe — where the economy threatens to slip back into recession and central bankers are still slashing rates in a desperate attempt to jumpstart business activity in the region — Fed chair Janet Yellen was unlikely to act soon. And today’s Labor Department report, showing that only a modest 142,000 jobs were created in August, only reinforces this.

Jobs

The unemployment rate has already dropped more than half a percentage point this year.

US Unemployment Rate Chart

US Unemployment Rate data by YCharts

But that’s just one way to look at the labor market. Another is the labor force participation rate. Since younger Americans tend to go school, and Baby Boomers are beginning to retire en masse, you can look at the participation rate for workers between the ages of 25 to 54. Before the recession almost 80% of those Americans were working or looking for a job. Now, 77% are. To put that into perspective, 81% of prime aged workers in France participate in the labor force.

Another, more inclusive, employment metric is the so-called U-6 rate of unemployment — which includes unemployed workers, Americans who want to work but have stopped looking for a job, and part-time workers who’d rather put in full-time hours. The U-6 rate has dropped from about 17% after the recession to 12% now, but that’s still close to four percentage points higher than before 2008.

u-6

Here’s Yellen from her Jackson Hole speech a couple of weeks ago:

At nearly 5% of the labor force, the number of such workers is notably larger, relative to the unemployment rate, than has been typical historically, providing another reason why the current level of the unemployment rate may understate the amount of remaining slack in the labor market.

Inflation

Despite predictions of increased inflation thanks to unorthodox monetary policy, deflation has been a bigger concern since the recession than inflation. Nevertheless, some central bank officials are still worried about an unexpected rise in prices thanks to an improving jobs situation and want to head off that potential rise with higher interest rates.

As Philadelphia Fed President Charles Plosser said on a Bloomberg Radio interview, “I would rather us get started raising rates sooner and raise them more gradually than put them off and have to raise them very quickly.”

The Congressional Budget Office disagrees. The non-partisan agency predicted that over the next 10 years inflation will only rise around 2% a year, in a recent report. “CBO anticipates that prices will rise at a modest pace over the next several years reflecting slack in the economy and widely held expectations for low and stable inflation.”

Right now core inflation, according to the Federal Reserve’s preferred measurement, grew by 1.5% in July over the previous 12 months. That’s well below the Fed’s target rate of 2%.

Europe

Depressed Americans need only look across the pond to see how badly our recovery could be going. The Euro zone area experienced no growth in the second three months of 2014. Combine that with ultra-low inflation and you have the recipe for economic stagnation. Even the vaunted German economy stalled.

This three-year experience of little economic traction follows the European Central Bank’s decision to raise interest rates in 2011 during the sovereign debt crisis in order to fight inflation. Quash it they did. Prices recently rose by an annual rate of only 0.3% in August in the 18-country Euro zone, prompting ECB President Mario Draghi (who wasn’t in charge back then) to drop interest rates to an all-time low of 0.05%.

Eventually American consumers will see raises and go off and spend that extra cash. Demand will not stay depressed forever, and the Fed will one day raise interest rates. That decision, though, is more likely to be later than sooner.

TIME LGBT

Obama Signs Executive Order on LGBT Job Discrimination

Protects employees of federal contractors from discrimination based on sexual orientation and gender identity

President Obama signed an executive order Monday protecting lesbian, gay, bisexual and transgender people working for government contractors from discrimination.

The order protects any employee for a federal contractor from discrimination based on their sexual orientation and/or gender identification. It covers about 28 million workers, making up one-fifth of the U.S. workforce, and includes no exemption for religious organizations.

“It doesn’t make much sense, but today in America millions of our fellow citizens wake up and go to work with the awareness that they could lose their job, not because of anything they do or fail to do but because of who they are,” the president told supporters at the White House, CBS News reports. “America’s federal contracts should not subsidize discrimination against the American people.”

Many U.S. companies already offer protections for LGBT employees, according to data highlighted by the Obama Administration. Some 91% of Fortune 500 companies already prohibit discrimination based on sexual orientation and 61% prohibit discrimination based on gender identity.

The five top federal contractors–which get about a quarter of all federal contracting dollars–already prohibit discrimination based on sexual orientation and gender identity.

Still, although many companies were already in support of protections, Obama’s order makes it official, and without exceptions.

MONEY online shopping

Boycotting Amazon: A Brief History

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Amazon employees in Germany staged a strike over wages and working conditions during the holiday shopping season of 2013. UWE ZUCCHI—AFP/Getty Images

Throughout its history, Amazon has been the target of attempts to get you not to shop there. Here's a look at past boycott efforts against the retailer, and how they fared.

The recent rallying cry for a boycott of Amazon.com is hardly the first of its kind. It’s also not the first time the world’s largest e-retailer has been accused of using bullying, unfair, tone-deaf business practices.

To put the current “boycott Amazon” campaign—as promoted by The Stranger, Reuters, Gawker, and others—in perspective, here’s a brief retrospective of previous efforts to put Amazon in place by not giving it any of your money.

1999
The Free Software Foundation urged a boycott of Amazon because the site claimed a patent on one-click purchasing—something of a novelty at the time—and was suing other e-commerce companies (including BarnesandNoble.com) that used a one-click purchasing process. “Amazon has sued to block the use of this simple idea, showing that they truly intend to monopolize it,” a widely circulated e-mail that called for the boycott stated. “This is an attack against the World Wide Web and against e-commerce in general.” A couple years later, Amazon seemed less inclined to bother using its patent to threaten competitors, and the boycott was dropped.

2007
Around 2007—the year that NFL quarterback Michael Vick was suspended and sent to jail for running an illegal dogfighting ring—animal lovers began loudly calling for a boycott of Amazon because the site sold videos, magazines, and books about dogfighting and cockfighting. At least two of the titles described as “torture guides” by the People for the Ethical Treatment of Animals (PETA) are still available for purchase on Amazon.

2010
In late October 2010, a self-published e-book went on sale at Amazon with extremely disturbing subject matter, summed up in the title: The Pedophile’s Guide to Love and Pleasure: a Child-lover’s Code of Conduct.

At first, despite massive protests online and calls for a broad boycott of Amazon, the e-retailer refused to remove the item from the site. The company released a statement with its justification to keeping the e-book for sale, explaining, “Amazon.com believes it is censorship not to sell certain titles because we believe their message is objectionable.” Within a few days, however, Amazon relented and stopped selling the pedophilia book.

2010
After U.S. political leaders pressured Amazon to block Wikileaks, the whistle-blowing website known for leaking classified security documents, Amazon relented, and stopped hosting the site. Free speech advocates including Daniel Ellsberg, who leaked the Pentagon Papers to the press in 1971 leak of the Pentagon Papers, promptly called for a consumer boycott of Amazon.

2011
For several years, Amazon was in the habit of spending millions of dollars lobbying various states to cut off local efforts to start charging sales tax on online purchases. To small business owners, the fact that sales tax was not automatically charged for e-commerce purchases gave e-retailers such as Amazon an unfair advantage—customers could easily save 7% or whatever the local sales tax rate was simply by purchasing online. (Sure, those consumers were later supposed to pay the sales tax they owed to the state, but almost no one did that.) In 2011, while California approved the installation of a sales tax on online purchases but hadn’t yet put the policy in practice, Amazon was actively trying to get the law overturned. The company’s efforts were met with a call to (surprise, surprise) boycott Amazon.

The boycott never really gained steam, and as of mid-September 2012, the campaign was totally moot, as Amazon began charging sales tax in California. Amazon customers in many other states who once could skip out on sales tax are now automatically charged sales tax on e-commerce purchases as well.

2011
In the fall of 2011, reports spread about deplorable worker conditions at Amazon warehouses and shipping centers around the country. An investigation by the Pennsylvania Morning Call showed employees at the Amazon warehouse in the Lehigh Valley enduring sweatshop-like conditions, including indoor temperatures so hot (over 100 degrees during summer heat waves) that the company arranged for ambulances to parked outside, waiting to treat workers for dehydration or other heat-related issues.

“Workers said they were forced to endure brutal heat inside the sprawling warehouse and were pushed to work at a pace many could not sustain,” the Morning Call reported. “Employees were frequently reprimanded regarding their productivity and threatened with termination, workers said.”

After consumer and worker groups got wind of Amazon worker complaints, a boycott was called for during the 2011 winter holiday shopping season. Some 12,600 consumers pledged to boycott Amazon for the holidays, if not indefinitely. If nothing else, Amazon stated that it has since installed much-need air-conditioners in warehouses, when appropriate.

The U.S. isn’t the only country where Amazon workers have voiced gripes against the company. In late 2013, for instance, Germany’s Amazon.com workers went on strike and staged protests outside the company’s Seattle headquarters due to “low wages, permanent performance pressure and short-term contracts.” Many have called for a boycott of Amazon among German consumers because of the company’s treatment of workers.

2012
Calls for a consumer boycott Amazon, as well as Starbucks and Google, throughout the UK started spreading in 2012, continued through 2013, and gained more traction in spring of 2014, with Margaret Hodge, chair of the public accounts committee in the UK, personally calling for consumers to avoid doing business with these companies.

Why? Due to a range of strategies employed by the companies, they pay relatively little in corporate taxes. Amazon, for instance, paid £4.2m in UK taxes in 2013, or 0.1% of its UK revenues. “It is an outrage and Amazon should pay their fair share of tax,” said Hodge. “They are making money out of not paying taxes. I no longer use Amazon. We should shop elsewhere.”

2013
In September, Boston-based author Jaime Clarke launched an odd website to help sell his new novel, Vernon Downs. The site’s url was PleaseDontBuyMyBookonAmazon.com. Clark said he was motivated to create the site because he wanted help independent publishers such as Roundabout Press, which published Clarke’s book.

“Most indie publishers rely on Amazon to sell their books, and to quote F. Scott Fitzgerald, the price is high,” Clarke said in a Q&A with CNET. “Indie publishers realize a fraction of the purchase price and are at the mercy of Amazon’s discounting policies.”

What’s more, Clarke just so happens to be the co-owner of Newtonville Books, which just so happens to be an independent bookstore—the ranks of which have been depleted during Amazon’s rise to power. “Independent bookstore owners loathe Amazon and its bald-pated founder, Jeff Bezos,” a Boston Globe story on Clarke explained.

2014
The most recent boycott Amazon push is related to the company’s ongoing battle with the Hachette Book Group. Essentially, Amazon wants to sell Hachette e-books at a lower price than the publisher wants, and to get its way, Amazon has stopped selling preorders of Hachette books, and it has slowed down the process of customers buying and shipping other Hachette books. For many, this clash epitomized the view that Amazon has too much power, is verging on a monopoly, and is perhaps just plain evil. And for many, this clash is what finally makes them feel that it is time to buy stuff elsewhere.

TIME Workers

What McDonald’s Really Owes Its Workers

Hiring
Simon Weller

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

At the McDonald’s annual shareholder meeting on May 22, CEO Don Thompson claimed that his company “has a heritage of providing job opportunities that lead to ‘real careers.'”

It’s true, former CEO Jim Skinner, who never graduated from college, joined the fast-food giant as a management trainee in 1971 and rose to the top spot in 2004.

But the McDonald’s of today does not seem like the same land of opportunity it must have been when Skinner got his start at the company.

You’d think time had stood still if you looked at the wages of Cherrie Velestine, 27, a 10-year veteran of the golden arches, who works in a North Charleston, S.C., restaurant. She started at McDonalds in 2004 at $7.35 an hour and despite putting in repeated requests for a raise, she has never received one in all the years she has worked there, she told me. Velestine is not the only fast-food worker with stagnant pay. A Demos report entitled “Fast Food Failure” found that fast-food “wages have increased just 0.3 percent in real dollars since 2000.”

Relying on workers like Velestine, from 2004 to 2013, McDonald’s has more than doubled its reported net income from $2.3 billion to $5.6 billion in its latest filing. If Velestine had received a pay boost at a percentage equal to McDonald’s rising net income, she’d be making $18.02 an hour right now and wouldn’t have had to travel to Chicago to ask for $15.

Velestine relies on food stamps and other family members’ help to survive and support her family. Although she has asked to work 40 hours a week, she only gets 28 – 29 hours, she told me.

MORE: What the future of work looks like

McDonald’s CEO Don Thompson, an electrical engineer by training who was born in 1963 and fortunate to have a grandmother who helped him through college, earned $9.5 million last year, the restaurant chain reported, more than double his earnings just two years ago. “The average hourly wage of fast food employees is $9.09, or less than $19,000 per year for a full-time worker, though most fast food workers do not get full-time hours,” Demos found.

Thompson’s pay for just one day (based on 365 days a year) in 2013 was 1.4 times the average annual rate of a full-time fast-food worker. McDonald’s did not respond to a request for a comment on worker pay issues. “‘We believe we pay fair and competitive wages,” Thompson said at the company’s shareholders meeting.

The Demos study found that the accommodations and food services sector, on average, has experienced higher levels of pay disparity than any other sector in the U.S. economy from 2000 to 2012 — and the CEO-to-average-worker pay ratio is highest in fast-food, having grown 470% over that time period.

The SEC has not yet finalized the Dodd-Frank requirement for disclosure of CEO-to-median-worker pay, so it’s impossible to compare McDonald’s CEO pay to the median or average McDonald’s worker pay, said Catherine Ruetschlin, the Demos study author.

Velestine says a raise to $15 an hour would mean a lot to her. “It would mean they appreciate me, and it would help me provide for my family without other people’s help,” she told me. She is determined to get her due: “We will never quit fighting until we get $15. We’ll be back until we get what we want.”

When Adriana Alvarez, 22, who has completed one year of college, joined a Cicero, Ill., McDonald’s in 2010, she says she was earning $8.50 an hour. Now, her pay is up to $9.15, a 7.6% increase. Meanwhile, the company’s earnings rose 13% from 2010 to 2013, and Thompson’s pay has risen 130% during that time.

A cashier and runner who also handles the drive-thru, Alvarez relies on government assistance and says $15 an hour would help her “provide a better future for her two-year-old son, a better place to live, with better schools.” Thompson no doubt knows the importance of such opportunities. “His grandmother, fearing growing gang activity … moved him to Indianapolis,” when he was 10 years old, the Chicago Tribune reported in 2012.

Alvarez and Velestine were both arrested at the protests on May 21, along with Dre Sinley, 24, who works part-time at a McDonald’s in the Tampa, Fla. area to supplement his full-time job at Arby’s and support his wife and five-year-old daughter. Sinley has an associate’s degree in criminal justice, but police jobs in Tampa are scarce. Despite working two jobs, his family must rely on food stamps. He had scholarships and grants to attend college, he says, but he also has student loans to pay off.

“Fifteen dollars an hour would allow me to provide for my family,” he says, “to not worry about paying the rent, buying clothes, or paying the electric bill. Today if the car breaks down, I can’t pay to fix it because I won’t be able to pay the other bills. There’s constant worry.”

Studies have shown that chronic, prolonged stress like the kind endured by the unemployed and low-wage earners leads to serious health problems and shortens lives. All three of the McDonald’s workers I talked to told me they do not receive company benefits like health insurance.

MORE: Millennial job applicants rejecting your offers? Here’s why.

Despite Thompson’s assertion that the home of the Big Mac offers fair pay, some restaurant analysts consider the issue a major risk for the industry. In an April 15 note, Barclays predicted wages “will be top of mind as we look to 2015.” An April 9 note by Citi analysts suggests that win-win wage solutions may be possible: “several franchisees … have raised prices to offset [an] increase [in labor costs] with no noticeable consumer pushback.”

Looking at the broader economy, minutes from the Federal Reserve’s meeting at the end of April show “the share of workers employed part time for economic reasons moved up” and “slack in labor and product markets [are] anticipated to diminish slowly.”

On April 23, a Citi analyst report using data from marketing firm MWW, showed that McDonald’s holds a very prominent position in social media, as measured by both “total audience strength” and “engagement.” As we roll into summer, this could be a boon or a blessing depending on how McDonald’s chooses to respond to millennial workers like Velestine, Alvarez, and Sinley. If employees are willing to engage in civil disobedience at corporate headquarters, can disruptive social media campaigns be far behind?

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://thevaluealliance.com), a board education and advisory firm.

TIME Unions

5 States With the Absolute Toughest Unions

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Tetra Images—Getty Images/Tetra images RF

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This post is in partnership with 24/7Wall Street. The article below was originally published on 247wallst.com.

The percentage of American workers in unions remained effectively unchanged last year. This marks a departure from the nation’s long-term trend. In the past 30 years, union membership has dropped from 20.1% of the workforce in 1983 to 11.2% last year.

Despite this long running decline, some states remain union strongholds, while others have almost no union presence. In New York, Alaska and Hawaii, more than 22% of workers were union members last year. Conversely, in five states, less than 4% of all employees were union members.

A number of factors help determine whether unions have a significant or negligible presence in a state, including industry composition, labor laws and political atmosphere. Based on data collected by the Bureau of Labor Statistics and calculations by Unionstats.com, 24/7 Wall St. identified the states with the highest and lowest shares of workers who are union members.

With the addition of Michigan in 2012, nearly half of all states have so-called “right to work” laws. These laws prohibit employers from requiring union membership as a prerequisite for employment. As a result, employees often elect not to pay union fees. All 10 of the states with the lowest proportional union membership have right to work laws. Conversely, just two of the 10 states with the highest rates of union membership — Michigan and Nevada — have such laws.

MORE: 10 Companies Paying Americans the Least

However, according to an email from Unionstats founder Barry Hirsch, while these laws can weaken a union’s financial base, the impact may be smaller than some suggest. “Right to work is important symbolically as a sign of a pro-business [or] anti-union environment,” Hirsch added.

The number of union workers in a state depends in large part on the representation of government employees. Although the public sector is far smaller than the private sector in terms of total employment, public sector workers are far more likely to be members of a union. Nationwide, more than 35% of public sector employees — which include teachers, firefighters, police officers and postal workers — were union members last year.

As a result, states where public employees were more likely to be in unions had higher rates of overall union representation. In New York, the nation’s most unionized state, 70% of public sector employees were union members, the highest percentage in the nation. By contrast, in North Carolina, the nation’s least unionized state, slightly less than 10% were union members.

In contrast to the public sector, unions are far less prevalent in the private sector, where just 6.7% of the workforce was unionized. However, because the private sector is far larger, it still accounts for a large share of union membership. In fact, most of the top 10 states for overall membership were also among the top 10 for percentage of private sector workers who were union members.

In recent decades, the private sector has accounted for the majority of the decline in the union workforce, while the share of public sector workers in unions has remained relatively constant, Hirsch wrote. “Public sector members now account for half of all members despite being only [one-sixth] of the workforce,” he added.

Often, high levels of union membership in a state were due to the presence of industries where unions traditionally held considerable influence, most notably construction and manufacturing. As of 2013, 14% of all construction sector workers, and 10% of all manufacturing workers, were union members.

MORE: The Most Polluted Cities in America

In the past decade, the share of private sector workers in unions fell in all but a handful of states. From 2003 to 2013, the number of private sector union members dropped by more than 1 million, from just less than 8.5 million to 7.3 million. In the same time, manufacturing union membership slipped by 34%, from just under 2.2 million to 1.4 million.

In addition to sector composition, Hirsch also noted that history played a role in determining unionization rates. “States that historically had high unionization in manufacturing are now more likely to have high unionized hospitals and grocery stores, and vice-versa,” he explained. In turn, when young workers have not been exposed to unions through friends and family members, “these workers are far less likely to support union organizing.”

Based on figures published by Unionstats.com, an online union membership and coverage database, 24/7 Wall St. identified the states with the highest and lowest union membership as a percentage of total employment. The database, which analyzes Bureau of Labor Statistics’ (BLS) Current Population Survey, provides labor force numbers and union membership in both the public and private sector, including manufacturing and construction. Additionally, 24/7 Wall St. reviewed annual average unemployment rates for each state from the BLS, as well as income and poverty data from the 2012 American Community Survey, produced by the U.S. Census Bureau.

These are the states with the strongest unions:

1. New York
> Pct. of workers in unions: 24.3%
> Union workers: 1,982,771 (2nd highest)
> 10-yr. change in union membership: 2.4% (14th highest)
> Total employment, 2013: 8,144,204 (3rd highest)

Nearly one-quarter of New York’s workers — close to 2 million people — were union members in 2013, the highest percentage in the country. Union representation was relatively strong both in the private sector and in government jobs. In the private sector, 15.1% of workers were union members, the highest percentage in the country. Nearly 70% of public sector workers belonged to unions, the highest percentage in the country. However, even in New York, unions have been forced to make concessions so that their members could keep their jobs. In 2011, the state struck a deal with New York’s largest public employees union, the Civil Service Employees Association, to freeze wages in order to avoid mass layoffs.

2. Alaska
> Pct. of workers in unions: 23.1%
> Union workers: 70,692 (16th lowest)
> 10-yr. change in union membership: 19.6% (3rd highest)
> Total employment, 2013: 306,322 (3rd lowest)

More than 23% of Alaska’s relatively small workforce, or 70,692 workers, were union members in 2013, more than in any state except for New York. Additionally, more than one in 10 private sector workers were union members, among the higher rates in the nation. Unlike many highly unionized states, union membership increased in Alaska — by nearly 20% — between 2003 and 2013. This was the third largest increase in union members among all states. Membership across the nation, by contrast, fell by 8% over that time. Alaska residents had among the nation’s highest incomes as of 2012, when a typical household earning more than $67,000. Also, just slightly more than 10% of people lived below the poverty line that year, among the lowest in the country.

3. Hawaii
> Pct. of workers in unions: 22.1%
> Union workers: 121,357 (23rd lowest)
> 10-yr. change in union membership: -0.3% (18th highest)
> Total employment, 2013: 549,219 (9th lowest)

As is the case in many states with strong union membership, a large proportion of Hawaii’s manufacturing workers — 18.3% — were union members as of last year, more than in all but two other states. More than 32% of private construction workers were also union members, among the highest percentages nationwide in 2013. By many measures, Hawaii is a good place to work, with high median incomes and low unemployment helping to offset the state’s exceptionally high cost of living last year. A typical household made more than $66,000 in 2012, more than in all but a handful of states. And the unemployment rate was just 4.8% last year, also among the best rates.

4. Washington
> Pct. of workers in unions: 18.9%
> Union workers: 544,986 (8th highest)
> 10-yr. change in union membership: 8.7% (8th highest)
> Total employment, 2013: 2,880,935 (14th highest)

Washington’s total employment rose by nearly 104,000 workers, or 3.6%, between 2012 and 2013, one of the highest increases in the country. Washington is one of the most unionized states in the private sector, with 11.7% of all employees union members. Nearly one-quarter of the state’s private construction workers were union members in 2013, among the highest in the country. Similarly, 24.2% of all manufacturing workers held union membership, the most in the nation. There were 52,000 fewer public sector employees in 2013 than in 2012, as the state continued to follow through on the budget cuts it initiated during the recession. Despite this, union membership in the public sector held steady, at more than 261,000 workers, or 57% of all public employees.

5. Rhode Island
> Pct. of workers in unions: 16.9%
> Union workers: 77,367 (18th lowest)
> 10-yr. change in union membership: -7.9% (25th highest)
> Total employment, 2013: 458,494 (8th lowest)

Like several other states with strong union presence, nearly two-thirds of Rhode Island’s public sector belonged to a union last year, second only to New York. Labor initiatives appear to be a recent priority for policy makers. The state raised its minimum wage to $8 an hour at the beginning of last year, affecting more than 10,000 workers at the time. Wages may increase even further if the labor union-backed legislation introduced in January is passed. The bill aims to increase the minimum wage to $10 per hour by 2016. While union membership may benefit many Rhode Island workers, high wages could potentially also limit new employment opportunities. Rhode Island’s unemployment rate of 9.5% last year was higher than that of any other state except for Nevada.

Visit 24/7 Wall St. to see the remaining states on the list.

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