Kansas City Southern to scrap CP deal after revised US$33.6-billion offer from CN

Kansas City Southern Inc. says it is terminating its merger agreement with CP Rail after determining that rival Canadian National Railway's revised US$33.6-billion offer was superior.

© Provided by The Canadian Press

Under terms of the agreement announced Thursday evening, Montreal-based CN Rail will pay US$200 cash and 1.129 shares of CN stock for each of Kansas City's 90.9 million shares and assume US$3.8 billion of KCS debt.

"We are delighted that KCS has deemed CN’s binding proposal superior, recognizing the many compelling benefits of our combination and expressing confidence in CN’s ability to obtain the necessary approvals and successfully close the transaction," stated CN chief executive JJ Ruest.

"Our proposal offers a clear path to completion and is structured in a way that gives KCS shareholders both greater immediate value and the opportunity to participate in the future upside of the combined company."

The sum includes a US$700-million break fee payable to Calgary-based Canadian Pacific Railway.

The offer represents a 45 per cent premium over KCS's closing stock price on March 19.

Kansas City shareholders are expected to own 12.6 per cent of the combined company.

The U.S. railway said it has notified CP Rail that it intends to terminate its agreement after determining that CN's revised proposal constitutes a "superior proposal."

CP Rail now has the right to amend its offer, with the KCS board determining if any new proposal constitutes a better one than CN's.

Canadian Pacific downplayed the change of circumstances.

"This doesn’t make it any more likely that the CN proposal can close into a voting trust," the railway said after rumours of a revised deal emerged Thursday afternoon.

"We believe that CP’s negotiated agreement with KCS is the only true end-to-end Class 1 combination that is in the best interests of North American shippers and communities. CP-KCS is a once-in-a-lifetime opportunity to not only protect all existing shippers options but to inject new competition and capacity into the North American transportation system.

"Our mutually negotiated agreement with KCS represents compelling short term and long term value for shareholders that is achievable.”

CP Rail chief executive Keith Creel said two weeks ago that his company had no plan to increase its offer because he believed its offer is more likely to be approved by regulators.

However, transportation analysts expected the smaller of Canada's two main railways will have to increase its bid.

Either transaction would connect ports and railways in the United States, Mexico and Canada.

CN's updated transaction is subject to approval by KCS shareholders, approval by the U.S. railway regulator of a voting trust and other regulatory approvals.

CN Rail said it is seeking approval from the Surface Transportation Board for a voting trust and trustee that is identical to the one approved by the regulator for CP's proposed acquisition.

It said the CN voting trust is expected to close in the second half of 2021, with the total transaction expected to be completed about a year later.

This report by The Canadian Press was first published May 13, 2021.

Companies in this story: (TSX:CNR, TSX:CP)

Ross Marowits, The Canadian Press

NATIONALIZE THEM

Greyhound Canada to cut all routes, end operations

Greyhound Canada is permanently cutting all bus routes across the country, shutting down the intercity bus carrier’s operations in Canada after nearly a century of service.

© Provided by The Canadian Press

The motor coach company said its remaining routes in Ontario and Quebec will cease permanently on Thursday.

Its American affiliate, Greyhound Lines, Inc., will continue to operate cross-border routes to Toronto, Montreal and Vancouver once the border reopens.

The decision comes a year after Greyhound Canada temporarily suspended all service due to a sharp decline in passengers and mounting travel restrictions amid the first wave of COVID-19.

The bus carrier has struggled for years with declining ridership, increasing competition and deregulation.

But the complete loss of so-called farebox revenue during the pandemic has forced the company to permanently cease operations, said Greyhound Canada senior vice-president Stuart Kendrick.

“It's been a very tough decision and one we've taken with a heavy heart,” he told The Canadian Press in an interview. “It's been a lifeline for many Canadians for more than 90 years. This will have a massive impact.”

The decision is a blow to rural and remote areas that rely on a patchwork of private intercity bus companies for transportation.

The service has long been part of a network linking smaller communities and big cities, offering an affordable and convenient mode of travel for everyone from essential workers and students to the elderly and backpackers.

Yet the rise in car ownership, ride sharing, discount airlines and urban migration has slowly eroded bus ridership, leading Greyhound Canada to gradually reduce the frequency of some services and cut other routes altogether.

"Private carriers are relying on the farebox revenue to maintain these rural routes," Kendrick said. "When ridership declines, we have a decision to make. We either cut the frequency, exit the rural markets or look for some help."

Citing declining ridership, deregulation and subsidized competition, Greyhound Canada suspended all operations in Western Canada in 2018.

Yet despite the ongoing challenges with its remaining routes, nothing could have prepared the company for the dramatic 95 per cent drop in passengers at the outset of the pandemic, Kendrick said.

Multiple coach bus companies teamed up and approached the federal and provincial governments for financial aid amid mounting COVID-19 restrictions. But Kendrick said they were referred to existing pandemic supports — what he called “negligible” for the beleaguered passenger transportation industry — prompting Greyhound Canada to temporarily suspend all service last May.

“There’s really been a lack of support," Kendrick said. “We don’t get subsidies."

Intercity bus carriers are also competing with publicly funded train and transit systems, he said, putting private companies at a disadvantage.

The Ontario government has also promised to deregulate the intercommunity bus industry starting in July, a move that would end Greyhound Canada’s control of certain routes.

“We have had exclusive private bus service on certain corridors,” he said, noting that it provided passengers with safe, frequent and affordable service.

"Greyhound Canada's tough decision today is going to have a massive impact on customers, especially those riding in the rural network."

About 260 employees were laid off after Greyhound Canada temporarily ended its passenger service last May. An additional 45 employees will be laid off as a result of the permanent closure, Kendrick said.

The Amalgamated Transit Union lamented the impact of the shutdown on workers and said it will leave thousands of people without transportation options.

"This is devastating news for the thousands of Canadians, especially those from Indigenous and First Nations communities, who have relied on Greyhound for transportation,” said the union's international president, John Costa, in a statement.

Greyhound plans to sell the bus stations it owns, Kendrick said. As for its leased properties, some of the agreements have expired or have an “out clause,” while it will honour the terms of leases it's obliged to continue paying, Kendrick said.

The company said tickets for travel after Thursday will be refunded. Customers with a valid travel voucher can also request a refund.

All Ontario and Quebec routes that were temporarily suspended in May 2020 will permanently end as of midnight on Thursday. The routes are:

- Toronto-Ottawa-Montreal

- Toronto-London-Windsor

- Sudbury-Ottawa/Toronto

- Toronto-Kitchener/Guelph/Cambridge

- Toronto-Niagara Falls

- Ottawa-Kingston

Riders across Canada said they were disappointed by Greyhound's closure, such as 68-year-old Robyn Brown, who used to take the Greyhound bus to travel to Toronto when she lived in Niagara Falls, Ont.

Now living in Vancouver, Brown has also used Greyhound bus routes to visit friends from smaller towns in British Columbia that aren't serviced by other forms of public transit.

Before the pandemic, she and her husband planned to take a Greyhound from Vancouver to Winnipeg to save on travel fare.

“I’m really sad to see that it’s going, I really am,” she said, adding that she would now fly to Winnipeg or Toronto if she wanted to travel between provinces.

Lisa Baril in Calgary said she has childhood memories of taking a Greyhound bus to visit her grandparents in Kelwood, Man.

As an adult, Baril said she would pick up her grandmother from the Greyhound station in Calgary whenever she’d visit.

“She would say (Greyhound’s closure) is a shame,” said Baril about her late grandmother. “She would probably get frustrated and say ‘well how am I going to see you guys now?’” Michael Clark, 35, from Waterloo, Ont., said that in college, he used to take the Greyhound bus almost every month to visit his parents in Kingston, Ont., from Ottawa.

“When I moved back to Kingston, I would take day trips into Toronto on weekends by catching the earliest and latest buses in and out,” he said, adding that he found the train too expensive and the Greyhound bus was an easy direct route for him.

He said the closure is “such a horrible loss” for smaller towns in Ontario, where the only way to travel outside the community is by car.

The pandemic has had a debilitating impact on Canada’s struggling intercity bus industry.

Coach bus companies have reduced service frequency or cut routes due to the precipitous drop in ridership, threatening to erode the country’s transportation network.

In January, senators from the Maritimes sent a letter to federal Transport Minister Omar Alghabra urging Ottawa to provide financial assistance to Maritime Bus.

The Charlottetown-based company had warned that without funding, it would have to cut routes.

The senators said that with Via Rail service suspended and airlines slashing flights to the region, the bus was needed for essential travel, such as transporting blood products or patients to health appointments across the region.

In January, the New Brunswick government stepped in to provide $720,000 to the private regional bus operator to maintain service to Edmundston and Campbellton in the province’s north.

This report by The Canadian Press was first published May 13, 2021.

Brett Bundale, The Canadian Press

BEZO'S OTHER BUSINESS
Whole Foods plans layoffs as part of reorganization involving merchandising, operations, HR, and tech teams
tsonnemaker@insider.com (Tyler Sonnemaker) 5 hrs ago

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© Alex Tai/SOPA Images/LightRocket 

Whole Foods is laying off some corporate employees as part of a reorganization, the company confirmed.

In a press release, it said the restructuring would impact merchandising, operations, HR, and tech teams.

Amazon-owned Whole Foods has seen an explosion of business during the pandemic.

Whole Foods is planning layoffs as part of a larger restructuring of its business, the company confirmed to Insider on Thursday.

Whole Foods told Insider that it expects the layoffs to impact a small, but at this point unknown, number of corporate employees, and that employees who work at its stores and distribution centers will not be impacted.

In a press release, the Amazon-owned grocery chain said it's planning changes involving its merchandising and operations, team member services, and technology teams in order to sustain its pandemic growth.

"These changes are designed to improve support for our stores and distribution centers as we remain committed to delivering an exceptional customer experience in stores and online," Whole Foods said in the release.

The company said it plans to merge its global and regional merchandising teams, "realign" its team member services group, and shift its technology team "to focus more on skills required for software engineering and technical product and program manager roles."

Whole Foods has seen explosive growth during the pandemic, with online grocery sales tripling during its second quarter of 2020 as the pandemic forced Americans to stay home.

The company has also faced pushback from its front-line store and warehouse employees, some of which who say it hasn't done enough to keep them safe from COVID-19 and have criticized its hazard pay and healthcare policies.

Mexico union was losing scrapped GM worker vote - report
By Daina Beth Solomon 

© Reuters/REBECCA COOK FILE PHOTO: Logo of GM atop the company headquarters

MEXICO CITY (Reuters) - General Motors Co workers in Mexico were on track to defeat one of the country's biggest unions in a contract vote last month that has prompted U.S. action under the countries' trade deal, a Mexican government report shows.

The Biden administration on Wednesday called for a probe into allegations that worker rights were denied at GM's Silao pickup truck plant during the vote to ratify workers' collective contract with the Confederation of Mexican Workers (CTM).

The CTM, which is aligned with the Institutional Revolutionary Party (PRI) that ruled Mexico for decades, is one of several traditional unions accused by workers and activists of putting business interests over workers' rights.

Mexico's labor ministry said on Tuesday it had found "serious irregularities" in April's union-led vote by the plant's 6,000 union workers and ordered a new vote within 30 days. Officials have said some ballots were destroyed.

A ministry report into the vote, reviewed by Reuters, shows that 1,784 workers had cast ballots against keeping the CTM contract, while 1,628 workers had voted to maintain it.

Allegations of interference - including the ministry's findings that some blank ballots in union possession were cut in half - have raised suspicions among some activists and experts that the CTM could have been in store for a deeper defeat.

A follow-up vote to be held within a month could yield a wider margin against keeping the current contract, especially if more workers who were apathetic or scared of voting turned out the second time, said labor scholar Alfonso Bouzas at Mexico's National Autonomous University.

"This whole new opportunity is going to awaken conscience and interest," Bouzas said.

The ministry document showed that just over half of the 6,494 people eligible to vote did so in the first of two voting days, before labor inspectors found the destroyed ballots and halted the process.

Many collective contracts in Mexico consist of deals between unions and companies without worker approval, one factor that has kept Mexican hourly wages at a fraction of those in the United States.

Ratification votes are now required under Mexico's 2019 labor reform, which underpins a renegotiated free trade pact with the United States and Canada, to ensure workers are not bound to contracts that were signed behind their backs.

GM did not immediately respond to a request for comment, but has said it respects the rights of its employees to make decisions over collective bargaining, and that it was not involved in any alleged labor violations.

Workers at other plants have also protested against the 85-year-old CTM, which represents 4.5 million workers, including in the border city of Matamoros and at Goodyear Tire & Rubber Co.

The CTM's Miguel Trujillo Lopez union at GM is run by PRI politician Tereso Medina.

Medina and other CTM representatives did not reply to requests for comment. Medina told newspaper La Jornada last month that the organization was following rules to ensure a fair process.

If GM workers scrap their contract, either the CTM or a new union could negotiate new collective terms.

(Reporting by Daina Beth Solomon; Editing by Christian Plumb and Richard Pullin

MLB players union seeks $500 million in grievance filed against the league

Bob Nightengale, USA TODAY 

Just in case there was any hope of optimism that the cold war between Major League Baseball and the players union might be thawing, along comes the news that the union has filed a grievance against MLB in response to their shortened season of a year ago.

© Charles Rex Arbogast, AP The 2020 MLB season was shortened to 60 games.

The Major League Baseball Players Association, just as they threatened last year, officially filed a grievance against MLB seeking about $500 million in damages, two persons with direct knowledge of the grievance told USA TODAY Sports.

The persons spoke on the condition of anonymity because they were not authorized to speak publicly.

The grievance was first reported by the New York Post.

The union stated in the grievance that MLB did not act in good faith negotiating the pandemic-shortened 2020 season.

The union had originally proposed a 114-game season after the COVID-19 shutdown, and later an 89-game season. MLB originally proposed an 82-game season with a sliding salary scale. Their proposal was reduced to a 76-game season at 75% prorated pay, and then to a 72-game season at 80% prorated pay.

The two sides failed to reach an agreement until commissioner Rob Manfred stepped in. He imposed a 60-game season, with the players receiving full pay, which amounted to players receiving 37% of their full salary. The teams wound up losing $3 billion, Manfred said.

The union, which vowed to file a grievance last summer, argues that MLB did not make the “best efforts to play as many games as possible’’ as required by their March agreement.

MLB, which filed a counter-grievance, said that the reduced schedule became necessary because of the pandemic, citing safety and health reasons.

The grievance, which is held by a three-person arbitration panel, could play a potential factor in their upcoming negotiations on their collective bargaining agreement which expires Dec. 1. The two sides have yet to engage in any serious negotiations, with their first meeting last month consisting of little more than slide-show presentations.

MLB could argue that any grievance could be a detriment in their economic proposals while the union could debate that it should play no factor given that MLB had dismissed any potential grievance as “frivolous’’ last summer.

MLB has asked that the grievance to be fast-tracked and resolved as quickly as possible to remove the cloud from negotiations.

It's the latest wrinkle in the strained relationship between the owners and players.

There are just 202 days remaining before their deadline. If no agreement is reached Dec. 1, and there is no deadline extension, there’s the distinct possibility of a work stoppage.

MANITOBA UFCW 

Grocery stores chided for poor mask enforcement

Manitoba's largest private-sector union is accusing the province and grocery store chains of “mass and catastrophic failure” for poor enforcement of the use of masks by customers, thereby putting workers at risk.

The United Food and Commercial Workers Local 832, which represents more than 9,000 Manitoba grocery store employees and 2,000 security guards at retailers, is going public for the first time during the COVID-19 pandemic.

In a May 13 letter obtained by the Free Press, the union says worker safety has not been a top priority at several stores across the province, which are owned by Loblaw, Sobeys and Red River Co-op.

The letter does not mince words, beginning with: “If I were to show up to any of your stores today with no shirt, or no shoes on, I would be escorted out of the store immediately and refused service. But if I show up with no mask, I can still freely shop and get my groceries at most of your stores.”

It continues: “Every day we receive notifications about COVID cases within your stores, and thankfully these cases are mostly individual. Our members (and your employees) are telling us that now, more than ever, customers are showing up without masks. They are a safety hazard to our members and your customers. Our members feel unsupported — some have even quit because you, as their employer, are not doing enough to ensure they are safe.”

The letter is not the only correspondence between the union and retail employers, or even the first to the province.

“It’s just the first letter that the media has received and will thus be made public,” said Jeff Traeger, president of UFCW Local 832, in an interview Thursday.

“During the entirety of the pandemic, we’ve tried our best to communicate and get answers internally about why the Pallister government or retail employers won’t enforce rules about masking among customers,” Traeger said, adding the union has sent numerous emails and letters, and has made calls on behalf of workers. It received either a one-line response or no response.

“The fact is, now we’re getting pressure for immediate action from our members because they feel completely unsafe when so many people keep showing up unmasked and are allowed to do so, with these record-high case counts and new variants emerging.”

On Thursday, Manitoba reported 560 new COVID-19 cases — its highest daily count since the pandemic began.

On average, at least a dozen people show up maskless every day at Manitoba locations of the Real Canadian Superstore, Extra Foods, No Frills, Safeway, FreshCo, Sobeys and Red River Co-op, Traeger estimated.

In some cases, such as at two Superstores in Winnipeg, that can rise to as many as 30 maskless people a day. It’s worse in communities such as Carman, Steinbach, Morden and Winkler — where “it’s so common that public-health enforcement has stopped interjecting or mandating masking measures altogether,” said Traeger.

Manitoba’s public-health orders don’t give a retail store the right to deny service to customers who don’t wear a mask.

The only mention under provincial orders close to mandating masks requires the operators of an “indoor public place” to “ensure that every person who is not wearing a mask while in the indoor public place is given a reminder to do so as soon as practicable.”

Traeger says that puts the onus on retailers. “And because government is not at all — and I mean, not all — enforcing mask measures at big-box stores, why would businesses want to lose business over a mask policy?” he said.

“Loblaw is thinking Sobeys isn’t enforcing the mask rules, and so their customer — maskless or not, making workers unsafe or not — would just walk over to Sobeys and they’d lose them. That’s terrifying for other customers, yes, but especially the workers.”

In a statement, the province said, “Manitoba takes the enforcement of public health orders very seriously and has worked with many municipalities and agencies to enforce these orders and protect the public.”

The province declined to answer specific questions about enforcement. “It would not be appropriate to discuss the operation or the frequency of enforcement visits for obvious reasons,” a provincial spokesperson wrote.

“But at the same time, we rely on the public to be aware and follow these orders because it’s the right thing to do, not because there is an enforcement presence. Our regular reporting on the number of tickets handed out shows that there is an enforcement presence and we count on Manitobans to continue to do what is best for all of us.”

Sobeys and Red River Co-op did not respond by press time.

In a statement, Loblaws, which owns Superstore, said: “We believe that everyone has a role to play in keeping one another safe. The government requires that masks be worn in all indoor public places unless they have a valid exemption, a policy with which we are both legally obligated and happy to comply with, and expect our customers to do the same. To that end, we are pleased that the vast majority of customers comply, and our teams work with local authorities in the rare cases that they don’t.”

Temur Durrani, Local Journalism Initiative Reporter, Winnipeg Free Pres

Bernie Sanders urges Biden administration to keep jobless benefits flowing to gig workers on verge of losing stimulus aid in red states

insider@insider.com (Juliana Kaplan,Joseph Zeballos-Roig) 

© Provided by Business Insider Sen. Bernie Sanders (I-Vermont). Melina Mara/The Washington Post via AP, Pool

Sen. Bernie Sanders is calling on the Labor Department to continue providing PUA benefits to workers.

In 14 GOP-led states, governors are ending their participation in federal unemployment benefits.

But Sanders and other experts say Biden's Labor Department is required by law to still pay out PUA.

Sen. Bernie Sanders urged the Biden administration on Thursday to prevent the loss of jobless benefits for unemployed Americans in the 14 GOP-led states that are on the verge of ending their participation in federal unemployment benefits next month.

Governors in red states such as Georgia, Montana, and South Carolina have cited a so-called labor shortage as necessitating fewer benefits, so that unemployed residents will be compelled to return to work. As soon as next month, hundreds of thousands - if not millions - of workers will experience a sharp cut in their jobless benefits.

But Sanders is arguing that the Labor Department is mandated to provide Pandemic Unemployment Assistance (PUA) to all workers, even those in states that are moving to halt it. In a letter to Labor Secretary Marty Walsh, Sanders said "it is critical that the Department of Labor does everything in its power to ensure that jobless Americans continue to receive this aid as the law intended."

PUA is a federal pandemic-era unemployment expansion that allows more workers - including gig workers and part-time workers - to become eligible for UI benefits. Sanders and other progressive lawmakers have argued that the widespread adoption of PUA by workers shows the need to permanently reform and expand UI eligibility.

"As Secretary, you are obligated to ensure this aid gets to workers," Sanders wrote in his letter to Walsh. "To ensure that obligation is met, I urge you to commit to holding states accountable for their role in administering PUA benefits."

If states end PUA, those newly eligible workers would lose all of their benefits, not just the additional $300 a week. Also at risk are workers on long-term benefits.

Sanders is joining lawmakers like Sen. Ron Wyden and progressive think tank National Employment Law Project (NELP) in calling on the Labor Department to step in. NELP sent a letter to the Labor Department outlining potential ways to continue the distribution of PUA benefits; the Labor Department told Insider it had received the NELP's memo and was reviewing it, but did not immediately respond to a request for comment on Sanders' letter.

The action may not provide immediate aid to the unemployed - and instead spark a time-consuming legal battle with GOP-led states hostile to the federal government administering aid at the statewide level.

"A months-long process would not be surprising," Andrew Stettner, an unemployment expert at the left-leaning Century Foundation, told Insider. "We're still at the very beginning of this. There's been this shocking move by these 14 states and we're trying to push back and say they shouldn't have the authority here to end these benefits."

Stettner projected the step could provide jobless aid to at least 400,000 people on PUA in the affected states. He expressed concern that other states such as Florida and Texas may be next to terminate the federal coronavirus relief programs.

"Secretary Walsh and the Biden Administration have been doing all they can to take concrete action to prevent anyone from falling through the cracks as we know unemployment benefits have served as a vital lifeline for workers throughout the pandemic - to help them buy food, pay rent and remain healthy," Egan Reich, a Labor Department spokesperson, said in a statement to Insider.

SUPPLY & DEMAND

Amazon is hiring 75,000 workers with starting pay of more than $17 and $1,000 signing bonuses - plus another $100 for proof of vaccination

dreuter@insider.com (Dominick Reuter) 

© Photo by Martin Schutt

Amazon is hiring 75,000 people in its fulfillment and logistics network across the US and Canada.

The positions offer an average starting wage of $17 and signing bonuses of up to $1,000.

New hires who can show proof of vaccination against COVID-19 will receive a further $100 bonus.

Amazon announced Thursday that hiring is underway for more than 75,000 positions in the company's fulfillment and logistics network across the US and Canada.

The jobs offer an average starting pay of more than $17 per hour, plus signing bonuses of up to $1,000, the company said. In addition, new hires who can show proof of vaccination against COVID-19 will receive a further $100 bonus.

Amazon employees receive a number of benefits in a package that includes paid parental leave and tuition credits, on top of medical, dental, and retirement matching.

The move is likely to add further strain to an already tight job market that has workers leaving customer-facing jobs in retail and foodservice for better paying jobs elsewhere.

Miami Chef Phil Bryant singled out Amazon for causing many of his colleagues to reconsider their options, telling the Washington Post, "If I can make $17 per hour at an Amazon warehouse, but only $14 per hour as a line cook, a notoriously hot, stressful, intense job, why would I do that?"

Data from Glassdoor show that restaurant servers searched the job site for "Amazon" seven times more frequently last spring than they did before the pandemic, and that searches for warehouse jobs had tripled.

Meanwhile, Chipotle raised wages across its workforce this week, and outlined an accelerated promotion path for crew members to earn an average salary of $100,000 as restaurant managers.

Amazon says its locations with the most open roles are based in Arizona, California, Colorado, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, Pennsylvania, Tennessee, Washington, and Wisconsin.

Candidates can apply at the company's hiring website.

McDonald's is raising wages, but 95% of its US workers will not be impacted by the change

ktaylor@businessinsider.com (Kate Taylor) 13/5/2021

 

REUTERS/Lucy Nicholson Protesters gather outside McDonald's in 2013.

McDonald's announced on Thursday it is raising workers' pay at all company-owned locations.

Just 5% of McDonald's US locations are owned by the company, meaning 95% will not be impacted.

McDonald's encouraged franchisees to make similar investments "in ways that make the most sense."

McDonald's is raising wages - but only roughly 5% of restaurants will be impacted by the change.

On Thursday, McDonald's announced that it is rolling out pay increases, averaging 10%, at all corporate-owned stores. The increases will shift minimum pay to at least $11 for crew members and at least $15 for managers.

According to the company, the changes will impact more than 36,500 employees. But, what about the rest of the chain's more than 800,000 employees?

Because McDonald's is a franchise, the corporate office only directly controls issues such as hiring, firing, and pay at the roughly 650 company-owned locations in the US. Meanwhile, franchisees dictate pay at McDonald's roughly 13,000 franchise-owned locations in the US.

McDonald's has not signaled that franchisees will be making any similar announcements, though there has been extensive discussion within the system about how best to hire and retain workers.

Read more: McDonald's franchisees blame hiring challenges on unemployment benefits and say an 'inflationary time bomb' will force them to hike Big Mac prices

"As we said in our recent System webcast, we encourage all owner/operators to make this same commitment to their restaurant teams in ways that make the most sense for their community, their people, and their long-term growth," McDonald's US president Joe Erlinger said in a message sent Thursday to US employees and franchisees seen by Insider.

Erlinger said in the message that the raises are intended to ensure restaurants are able to compete for employees, as well as recognize employees' hard work.

"Together with our franchisees, we face a challenging hiring environment, and staying ahead means we must constantly renew our commitment to offer one of the leading employment packages in the industry," Erlinger said.

Labor groups, such as the Service Employees International Union-backed Fight for $15 movement, have pushed for a $15 minimum wage and a union at all McDonald's locations. On May 19, McDonald's workers still plan to strike in 15 cities, calling for a $15 minimum wage.

"We know McDonald's can afford to raise pay to $15/hr for every single employee, not just some employees at corporate-owned and operated stores," Fight for $15 said in a statement on Thursday. "We're ready to continue our fight to win $15 for every worker across the country. "
Franchisees say 'one size doesn't fit all' on workers' pay and benefits

The board of the National Owners Association, a group of independent McDonald's franchisees, discussed recent hiring struggles in a letter on Sunday, obtained by Insider. According to the letter, McDonald's has been working with franchisees on how to offer competitive benefits, without a standardized pay raise across the system.

"We want to be the employer of first choice in our industry," the letter reads. "The proposal allows for Owner control and discretion. One size doesn't fit all."

If franchisees invest more in pay and benefits, the letter says, they can balance out the costs in two ways: reducing turnover and raising prices.

"The ability to raise prices is something new," the letter reads. "Our industry has always been competitive, and we have been in a knife fight for years regarding price. That is no longer the case. Now the winning strategy is simply being open and giving fast service. Our competitors are literally not open due to staffing shortages."

Ultimately, the NOA board posits, a "Big Mac will get more expensive." But, right now, customers do aren't phased by price increases, as long as restaurants are actually able to stay open and serve food, the board said.

Franchisees are already adding new incentives as restaurants scramble to staff stores. An organizer with Fight for $15, the SEIU-backed fast-food workers movement, shared a photo with Insider of a $500 signing bonus at a McDonald's restaurant in Fayetteville, North Carolina. Blake Casper, a franchisee in Florida, told Insider he was offering $50 for anyone who was simply willing to come in for an interview.

Casper told Insider in April that he was trying to win over workers with a number of new benefits, including referral programs and signing bonuses. He was also considering raising starting pay from $12 to $13.

"At this point, if we can't keep our drive-thrus moving, then I'll pay $50 for an interview," said Casper.

McDonald's raises minimum pay at corporate-owned stores across the US, as the battle for workers heats up
ktaylor@businessinsider.com (Kate Taylor) 17 hrs ago

© Provided by Business Insider McDonald's is raising its minimum wage at company-owned restaurants. Spencer Platt / Getty Images

McDonald's is going to start paying workers more.

The move comes as restaurants struggle to hire workers.

"Together with our franchisees, we face a challenging hiring environment," said executive Joe Erlinger.

McDonald's is raising its minimum wage in corporate-owned stores, as fast-food chains struggle to hire employees.

On Thursday, the fast-food giant announced it is rolling out pay increases at corporate-owned locations, which will shift entry level pay for crew to at least $11 to $17 per hour. The starting range for shift manager will be at least $15 to $20 per hour, based on restaurant location.

According to the company, the pay increases - which have already started and will roll out over the next several months - will boost workers' pay by an average of 10 percent. The company is aiming to hire 10,000 employees in the next three months at company-owned locations.

Ultimately, the company said average hourly pay will reach $15 per hour, using a "market-by-market approach." In a press release, the company said some restaurants have or will reach an average hourly minimum wage of $15 per hour this year, with average hourly wages expected to reach $15 an hour by 2024.

The higher pay will impact employees at corporate-owned locations, which make up roughly 5% of total US restaurants or about 650 locations. At the vast majority of locations, franchisees decide workers' wages, along with other policies related to hiring and firing.

"Together with our franchisees, we face a challenging hiring environment, and staying ahead means we must constantly renew our commitment to offer one of the leading employment packages in the industry," McDonald's US president Joe Erlinger said in a message sent to U.S. employees and franchisees seen by Insider.

"The existing programs at company-owned restaurants, and these moves, are intended to ensure our company-owned restaurants continue competing for the talent we need, while also recognizing the hard work of our crew and managers," Erlinger continued. "Simply put: putting our people first and doing the right thing for them will drive continued growth for our business."

McDonald's executives hinted that the company was considering increasing pay in a recent call with investors, when discussing what CEO Chris Kempczinski called a "very tight labor market."

"We're working through what some changes in our company-owned restaurants might look like from a wages-and-compensation perspective," said Joe Erlinger, the company's US president.

"We think the external environment is right to do this," Erlinger continued. "We think the internal environment is also right to do this. And we think it's actually a great business decision for us."

McDonald's workers recently announced plans to strike in 15 cities on May 19, demanding that employees make a minimum of $15 per hour. The fast-food giant has been a frequent target of the Service Employees International Union-backed Fight for $15 movement since 2012.

"Last year, in the middle of a global pandemic, McDonald's made $5 billion and gave billions to its shareholders - all while workers like me risked our lives to keep stores running for less than $15/hr," Hakim Dumkia, a worker in St. Louis, recently said. "I can't afford to wait any longer for a raise."

"I plan to go on strike to say to McDonald's: don't wait for politicians in Washington to pay us what we need to survive," Dumkia continued. "We supported McDonald's through the pandemic, and now you need to pay us enough to support our families and our communities."
The pressure is on for fast-food giants to raise wages

Employers across the industry are being forced to add new benefits and raise wages as restaurants struggle to hire employees. On Monday, Chipotle - which is not a franchise - announced it is raising wages to an average of $15 per hour. Starbucks announced in December that it would raise its minimum across the US to $15 per hour over the next three years.

In a recent letter to members, the board of independent McDonald's franchisee group National Owners Association wrote that McDonald's has been working with franchisees to discuss how to best retain workers.

Read more: McDonald's franchisees blame hiring challenges on unemployment benefits and say an 'inflationary time bomb' will force them to hike Big Mac prices

"We want to be the employer of first choice in our industry," reads the NOA letter, which was obtained by Insider. "The proposal allows for Owner control and discretion. One size doesn't fit all."

The NOA board wrote that higher wages would likely translate to more expensive menu items, a common practice in the restaurant industry.

"Inflation is the flip side to all of these changes," the letter said. "Price increases are happening everywhere you look and will continue as employers pass along these added costs. We will do the same. A Big Mac will get more expensive."
Read more:

McDonald's franchisees blame hiring challenges on unemployment benefits and say an 'inflationary time bomb' will force them to hike Big Mac prices

There's a simple solution for companies struggling to hire: Pay workers more

A labor shortage is forcing chains like Subway and Dunkin' to cut hours, close dining rooms, and push employees to work harder than ever

Some McDonald's investors renew efforts to oust chairman over ex-CEO sexual misconduct investigation

A Florida McDonald's is paying people $50 just to show up for a job interview, and it's still struggling to find applicants

Read the original article on Business Insider

THIRD WORLD USA
Walmart sales soared, essential workers got scant protection

COLLEGE PARK, Md. (AP) — Sandra Kunz had been worried for her safety while working as a cashier at a Walmart in Aurora, Colorado, during the pandemic, said her sister, Paula Spellman.

The 72-year-old had lung disease, Spellman said. She was “uncomfortable because so many people (were) coming in with coughs.”

But Kunz didn’t complain to the government agency tasked with protecting workers, the Occupational Safety and Health Administration.

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This story was produced by the Howard Center for Investigative Journalism at the University of Maryland’s Philip Merrill College of Journalism in conjunction with investigative journalists at Boston University, the University of Arkansas and Stanford University. The Howard Center is an initiative of the Scripps Howard Foundation in honor of the late news industry executive and pioneer, Roy W. Howard.

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“Sandy’s not a complainer,” Spellman said. “She went out and just purchased her own mask and her own gloves.”

It wasn’t enough. On April 20, 2020, Kunz died from COVID-19 following an outbreak linked to the Aurora Walmart. At least 18 employees got sick and one other worker at Walmart, Lupe Aguilar, died. So did Kunz’s husband, Gustavous, who Spellman said fell ill after she did.

The Walmart where Kunz worked was one of at least 151 Walmart facilities in 10 states with available data where multiple COVID-19 illnesses were recorded, a reporting consortium led by the Howard Center for Investigative Journalism found. On average, one quarter of the company’s stores and distribution centers in those states were affected. In New Mexico, COVID-19 hit nearly every store.


Walmart, the nation’s largest private employer, provides a window into OSHA’s performance during the pandemic. Many of the retailer’s nearly 1.6 million U.S. workers are vulnerable to COVID-19 due to income disparities, racial discrimination or language barriers. They depend on OSHA to guarantee safe and healthy workplaces.

But the worker-safety system is fragmented, reporting from the University of Maryland, Boston University, the University of Arkansas and Stanford University found.

Responsibility is splintered among federal OSHA, state agencies and even local boards of health. As a result, there is little accountability for the failure of government watchdogs to keep workers safe from COVID-19.

The consortium documented that worker safety oversight rarely results in meaningful consequences for companies that aren’t protecting workers. In Massachusetts, Walmart challenged OSHA’s investigation into the death of a worker. The company cited OSHA’s pledge to “use discretion” in holding certain employers responsible for COVID-19 cases in the workplace, and wasn’t penalized.

When workers submit COVID-related complaints to OSHA, only a fraction lead to inspections, and even fewer result in a citation.

As of late March, 3% of closed COVID-19 complaints to federal OSHA offices deemed valid by the agency resulted in an inspection, 12.5% of which led to citations. The average penalty was $13,000; OSHA reduced over a third of the fines.

For Walmart, slightly fewer complaints resulted in inspections — 2.6%. No inspections led to a citation.

The Biden administration proposed an emergency temporary standard April 26 that would give OSHA greater power to enforce COVID-19 workplace-safety rules. Meanwhile, the cost of the 14-month delay since the pandemic began can be tallied in deaths and thousands of worker illnesses.


In Grants Pass, Oregon, in 2020, Walmart workers and customers filed over 24 complaints about the lack of COVID-19 safeguards with the state worker-safety agency.Yet between December and March, at least 18 people were infected in an outbreak linked to the Walmart.

Karla Holman worked customer service at that Walmart until late January and heard about cases through workplace rumors, never from her employer. Walmart “was silent about it,” Holman said.

Workers in other states also said Walmart concealed COVID-19 cases from employees.

Walmart spokesperson Scott Pope said “we communicate with associates in stores where there has been a confirmed case.’’

“Any time you operate more than 5,000 facilities across the country there is the opportunity for variance in how a recommended process is executed,” he said.

Since April 2020, OSHA has released an updated list, including company names, of complaints related to COVID-19 that the agency has deemed valid. In Colorado, approximately 98% of workplaces with reported COVID-19 outbreaks did not appear on that list as of March.

Twenty-one states have their own OSHA plans overseeing private businesses. They must meet all the federal standards but can impose stricter rules if they choose.

In those states, the rate of complaints was five times higher than in states where the federal government exclusively oversees workplace safety.

More complaints don’t guarantee more inspections. In Oregon, which is among the states with the most COVID-19 complaints for Walmart, only one complaint led to an inspection. As of March 24, at least 10 Walmart locations in the state were linked to outbreaks with over five cases, including a Hermiston distribution center linked to 124 recorded cases, the consortium found.

A study in Occupational & Environmental Medicine, a peer-reviewed journal, found that infection rates were significantly higher at a grocery retail store than the surrounding community. Moreover, it said store workers who had direct contact with customers were five times more likely to contract COVID-19 than workers who did not.

Rebecca Reindel, the AFL-CIO’s director of occupational safety and health, said the public-health response focused on “cheaper measures,” such as masks and hand sanitizer, which shifted the burden of protection onto workers themselves.

It is difficult to know the full extent of COVID-19 in Walmart stores. The company tracks, but does not publicly disclose, COVID-19 cases. Federal OSHA does not track COVID-19 outbreaks. And state agencies responsible for tracking outbreak data rarely disclose it.

When they do, state practices vary widely. Only some release names of companies with COVID-19 outbreaks, and there is no consistent definition of how many cases constitute an outbreak.

Walmart spokesperson Casey Staheli said the company instituted a range of policies, including mask requirements for associates and customers, limiting store hours and capacity, deep cleanings, screening associates’ health, installing plastic guards and implementing social distancing in all facilities.

Workers said what’s on paper often doesn’t match the real world.

Of 10 Walmart employees in five states interviewed by the Howard Center, just three said they felt safe from COVID-19 exposure at work.

Some workers said they face retaliation if they complain about safety conditions.

Lorinda Dudley was fired from a St. Albans, Vermont, Walmart in March 2020 after asking her manager for protective gear, according to a lawsuit she filed against Walmart in February. She was frightened after a customer coughed repeatedly at her checkout station.

Dudley said her manager rejected her requests, then terminated Dudley when she said she would need to buy her own protection before returning to the register. Walmart tried to block Dudley’s unemployment claim, saying she quit, Vermont Department of Labor records show.

“I just wanted to be safe,’’ Dudley said.

Walmart denies Dudley’s allegations and plans “to defend the company in court,” said Pope, Walmart’s spokesperson.

Federal OSHA has “no consistent means” to determine if violations reported by state plans are COVID-related, a U.S. Department of Labor spokesperson, who would not be quoted by name, told the Howard Center.

As a result, there is no detailed national picture of how well the agency is protecting workers during the pandemic.

OSHA’s inaction has shifted some enforcement responsibilities onto local health departments, many of which are already overwhelmed.

“It just became the theater of the absurd,’’ said Shaun McAuliffe, director of the Hopkinton, Massachusetts, Board of Health. “They were just dumping onto the local health directors. We didn’t have the time... We didn’t have the training.’’

The Department of Labor spokesperson said OSHA investigates every complaint, but has modified its approach to allow “remote inspections and informal methods of enforcement” during the pandemic.

A February report from the Department of Labor’s Office of Inspector General compared OSHA results from 2019 to 2020, finding “OSHA received 15% more complaints in 2020, but performed 50% fewer inspections.’’

In lieu of on-site workplace inspections, “OSHA calls the employer, describes the alleged hazard(s), and then follows up with a fax, email, or letter,” the report said.

Lani Eklund said her mother, Yok Yen Lee, was scared of contracting the virus. Lee, a 69-year-old Chinese immigrant, was a greeter outside the Quincy, Massachusetts, Walmart store, state workers’ compensation records show.

During the second week of April 2020, Lee wasn’t feeling well, Eklund said. On April 20, her daughter said Lee was found unresponsive in her apartment, then was rushed to the hospital and put on a ventilator. She died May 3.

OSHA records from May 7 show at least 16 other workers there also contracted COVID-19.

Walmart denied responsibility for Lee’s death and contested her family’s claim for workers’ compensation, according to state records. Pope said “there isn’t a way to scientifically show that the conditions of any facility definitively led to confirmed cases.’’

Eklund said the company settled months after her mother’s death for an amount that barely exceeded her funeral costs.

Lee’s death also triggered an on-site OSHA inspection beginning May 8, 2020 at the Quincy store, which Walmart challenged, according to OSHA inspection records obtained by the Howard Center consortium.

The records show phone interviews were “interrupted and stopped prematurely” by Walmart officials when OSHA asked questions about Lee’s death.

In response to a subpoena issued by regional OSHA investigators, Walmart cited OSHA headquarters’ own COVID-19 guidance in objecting to any investigation into whether coronavirus cases were work-related, the records show.

That guidance, part of an April OSHA enforcement memo, applied to private employers not involved in health care, emergency response nor corrections.It said the employers may face difficulty in determining whether employees with COVID-19 caught it at work, and so OSHA would exercise “enforcement discretion.”

On Dec. 30, 2020, OSHA closed its investigation of the Quincy Walmart. A Department of Labor spokesperson said “the inspection identified no violations of OSHA standards” and declined further comment. Records show no citation was issued.

In a February note to associates, John Furner, CEO and president of Walmart U.S., boasted about the company’s “amazing’’ increased sales.

“Thank you for an incredible year!” he wrote.

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Also contributing to this story were Victoria Daniels, Gabriel Pietrorazio, Aadit Tambe, Carmen Molina Acosta, Elisa Posner, John Kwak, Nicole Noechel, Rachel Logan, Jummy Owookade and Manuela Lopez Restrepo from the University of Maryland; Jackson Ripley, Nathan Lederman and Alaina Mencinger from Boston University; Abby Zimmardi, Mary Hennigan and Rachell Sanchez-Smith from the University of Arkansas; Cade Cannedy from Stanford University.

Gracie Todd, Molly Castle Work, Natalie Drum, Nick Mcmillan, Kara Newhouse, Jazmyn Gray, Aneurin Canham Clyne, Jack Rasiel, Sahana Jayaraman And Haley Chi-sing/the Howard Center For Investigative Journalism, The Associated Press