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Obscure Clause Limits Fast-Food-Worker Job Opportunities

Burger King workersTwo well-known Princeton labor economists have zeroed in on a clause that they feel could be having a major effect on pay growth and job opportunities for fast food workers. The clause is not found in any agreements the workers sign, so they are presumably mostly unaware of its existence and the limitations it places on them. It is buried in franchise agreements made between franchisors and their franchisees and, according to Alan B. Krueger, one of the Princeton economists, affects over a quarter of fast food restaurants.

As economists try to understand why wages have stagnated across the country’s economy, they are examining the cheap labor part of the equation closely. A few have zeroed in on an obscure clause buried in many fast-food franchise agreements as a possible contributor to the problem.

Some of fast-food’s biggest names, including Burger King, Carl’s Jr., Pizza Hut and, until recently, McDonald’s, prohibited franchisees from hiring workers away from one another, preventing, for example, one Pizza Hut from hiring employees from another.

The restrictions do not appear in a contract that employees sign, or even see. They are typically included in a paragraph buried in lengthy contracts that owners of fast-food outlets sign with corporate headquarters. — Rachel Abrams, The New York Times [via myAJC]

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