We Can Talk About Muffins, Or We Can Talk About The Real Problem Facing Millennials

A federal parliamentary inquiry into franchising has heard allegations that Muffin Break franchisees were encouraged to underpay some staff by Foodco, the company that owns the chain.

Foodco denies these allegations. But Muffin Break’s General Manager Natalie Brennan added fuel to the fire when she complained that young workers today are too entitled because they won’t accept unpaid internships and other volunteer positions: "There’s just nobody walking in my door asking for an internship, work experience or unpaid work, nobody."

Muffin Break’s tone-deaf response elicited widespread condemnation and ridicule on social media. Many commentators vowed to visit their local Muffin Break franchise to demand free muffins -- as a way of helping the firm gain ‘valuable business experience.’

But there’s much more to this story. When young people refusing to work for free is seen as a sign of “entitlement” it is clear there’s a structural imbalance in power between employers and workers. The power imbalance is especially lopsided for vulnerable groups of workers, like young people and immigrants. Therefore, finding a solution to wage underpayment requires us to equalise that imbalance of power.

READ MORE: Maybe Millennials Just Don't Want To Work At Muffin Break

We are now all too familiar with multiple instances of underpayment by employers. From 7-Eleven, Rebel Sport, Lush, and the Merivale Group, the list of employers violating minimum wage laws and other obligations is long and growing.

Wage underpayment occurs across the economy -- but the retail and hospitality sectors are repeat offenders. In fact, underpayment has become a normal business practice in these industries.

When it comes to the underpayment of staff, the retail and hospitality sector has been a serial offender. (Image: Getty)

The Fair Work Ombudsman (FWO) has conducted numerous investigations, repeatedly finding that close to half of restaurants, cafes, and fast food outlets contravene wage laws. Another audit found 84 percent of fast food franchises engaged in some type of underpayment. Temporary foreign migrants are especially vulnerable: one study found one-third of them earn less than $12 per hour, and almost half under $15 per hour.

The Muffin Break scandal confirms that the practice is now so common, employers are puzzled that anyone would even complain about it. Many employers even have the gall to publicly advertise work at below-minimum wages: for example, a Unions NSW investigation found 78 percent of foreign-language ads for restaurant workers explicitly offered wages below the legal minimum. In short, underpayment has become a normal business practice.

READ MORE: Millennial Slackers Have Got Muffin Going For Them If They Won't Work For Free

Vulnerable and marginalised workers are less likely to know their legal rights -- and few are confident enough to stand up for them, without active support from regulators, unions, and advocates. Young people and migrant workers, in jobs that are insecure at the best of times, are especially vulnerable to this kind of exploitation. After all, one-third of retail workers and two-thirds of workers in hospitality work on a casual basis.  How many will be brave enough to complain about underpayment, knowing they could lose their jobs as a result?

Temporary foreign workers may be the most vulnerable to underpayment. (Image: Getty)

The personal costs of wage underpayment are obvious. But there are also broader economic costs. Average real wages in Australia have not grown at all since 2012, retail sales remain sluggish and the problem of wage stagnation has been highlighted as a source of macroeconomic weakness.  Ubiquitous underpayment can only compound these negative trends. It also contributes to a general attitude of pessimism and fear in the labour market, that encourages employers to go further in violating established norms and legal minimums.

The problem is so widespread that even the Australian Chamber of Commerce and Industry has called for an additional 50 workplace inspectors to crack down on underpayment of workers.  This proposal should be welcomed, but it’s a small step in the right direction. The FWO certainly needs greater resources and enforcement powers to get employers to take their legal obligations seriously.

READ MORE: What Can Australia Do About Dodgy Internships Exploiting Young People? 

But we must go beyond more Fair Work cops on the beat to tackle such a pervasive and damaging practice. Proposals in Victoria and NSW to criminalise wage underpayment could help. Restoring unions’ rights to visit workplaces, request pay records, and take quick action to ensure correct wages are being paid would be another step forward. Speaking of unions, more collective representation for vulnerable workers would both help them to detect wage theft, and then stand up to it without fear of reprisal: it’s no coincidence that underpayment occurs most often in the least unionised industries.

Harsher laws and enforcement combined with better educating workers on their rights would go a long way to eliminating wage underpayment. (Image: Getty)

And we should systematically educate young people (starting in high school) and migrant workers (through migrant services, universities and adult education) about their rights in the workplace. They need to know what they are entitled to, and how to take action if they are being ripped off. Once upon a time unions were invited into schools to do precisely that -- but in the current climate of union-bashing, they are no longer welcome in most states.

READ MORE: Abusing The Rights Of Casual Staff Is Becoming The Full-Time Job Of Big Business

In sum, underpayment  cannot be blamed on just a few “bad apple” bosses doing the wrong thing. It’s become part of the business model in far too many low-wage firms.

Underpayment of wages is a systemic issue rooted in a growing imbalance in bargaining relationship between workers and their employers.  Stamping it out requires that all workers win back the power to make sure they get paid for the work that they do.