Hampus Elofsson, 24, recently finished his 40-hour workweek at a Burger King in Denmark, where he earns the equivalent of $20 an hour. This is two and a half times what many fast-food workers earn in the United States. After paying his rent and bills, and stashing away savings, Elofsson still had the money for nights out with friends. This has prompted labor activists and liberal scholars to ask if Danish chains can pay $20 an hour, why can’t those in the United States pay the $15 an hour that many fast-food workers have been demanding? “We see from Denmark that it’s possible to run a profitable fast-food business while paying workers these kinds of wages,” said John Schmitt, an economist at the Center for Economic Policy Research, a liberal think tank in Washington.
American economists and business groups have asserted that a comparison between Denmark and the United States is flawed due to the differences between the two countries. These differences include Denmark’s high living costs and taxes, universal health care, and a collective bargaining system. Furthermore, fast-food restaurants in Denmark are less profitable than those in the United States.
Steve Caldeira, president of the International Franchise Association, a group based in Washington, stated that trying to compare the business and labor practices of the two countries is like comparing apples to autos. He pointed out that Denmark is a small country with a much higher cost of living and that unions dominate the employment system.
Despite the differences, economists like Mr. Schmitt see Denmark as a potential model for how companies can adapt in countries that demand a living wage. Denmark does not have a minimum-wage law, but the fast-food industry must pay a minimum of $20 an hour under an agreement between the 3F union and the Danish employers group Horesta.
A recent study from the University of California, Berkeley found that half of all fast-food workers in the United States rely on some form of public assistance due to the low wages they earn. Anthony Moore, a shift manager at a Burger King near Tampa, Florida, is one of them. With an hourly wage of $9 and 35 hours of work a week, Moore takes home around $300 weekly, which is not enough to cover his monthly rent of $600. He is also the single father of two young daughters and receives $164 a month in food stamps.
“Sometimes I ask, ‘Do I buy food or do I buy them clothes?’” Moore said. He added that he is uninsured because he cannot afford Burger King’s coverage, so he often goes to work sick. Burger King declined to comment on wages or benefits but said that its restaurants provide an entry point into the workforce for many Americans.
Economist John Schmitt acknowledged that it will take some time for the American fast-food industry to adjust to higher wages. “We’ve created a low-road economy, and it’s going to take us some time to build up the speed to get onto the high road,” he said.
In Denmark, fast-food workers are guaranteed benefits that are far superior to those of their American counterparts. Under the industry’s collective agreement, employees are entitled to five weeks paid vacation, paid maternity and paternity leave, and a pension plan. Moreover, they must be paid overtime for working after 6 p.m. and on Sundays, and they are given the benefit of receiving their work schedules four weeks in advance. Furthermore, they cannot be sent home early without pay just because business slows.
Mr. Elofsson, a Burger King employee in Copenhagen, expressed his hope to make his career with the company and work his way up to restaurant manager. While the Danish industry does not keep data on worker retention, HMSHost Denmark, which runs the fast-food operations at Copenhagen Airport, estimates that 70 percent of the workers at its Burger King and Starbucks franchises stay for more than a year. This is in stark contrast to the average tenure of American fast-food workers, which was nearly eight months according to an internal study done several years ago by McDonald’s, although the National Restaurant Association said American fast-food workers averaged 20 months on the job.
Danish law does not require fast-food companies or their franchisees to adhere to the wages required by the agreement with the 3F union. However, they do so in exchange for employees and unions pledging not to engage in strikes, demonstrations, or boycotts. “What employers get is peace,” said Peter Lykke Nielsen, the 3F union’s chief negotiator with McDonald’s. This was a lesson McDonald’s learned the hard way when it entered the Danish market in the 1980s. After nearly a year of union-led protests, the company finally agreed to join the employers association and adopt collectively bargained agreements.
Danish employees of McDonald’s, Burger King, and Starbucks have revealed that despite Denmark having one of the world’s highest costs of living, their wages of $20 make life affordable. A Big Mac in Denmark costs $5.60 compared to the $4.80 in the United States, but Danes are willing to pay the price. According to Soren Kaj Andersen, a University of Copenhagen professor who specializes in labor issues, “We Danes accept that a burger is expensive, but we also know that working conditions and wages are decent when we eat that burger.”
Orley C. Ashenfelter, a Princeton economics professor, and Stepan Jurajda, an economics professor at Charles University in Prague, conducted a study which found that McDonald’s workers in Denmark earn the equivalent of 3.4 Big Macs an hour, while their American counterparts earn 1.8. This, combined with the similar prices of Big Macs in both countries, suggests that US McDonald’s are far more profitable. The higher wages and menu prices in Denmark explain why there are 16 McDonald’s per million inhabitants in Denmark, compared to 45 McDonald’s per million in the United States, according to Mr. Jurajda.
McDonald’s refused to provide detailed financial information for its restaurants. In a statement, the company said that the countries in which it operates “have distinct cost structures, economic climates, and competitive frameworks.” McDonald’s and its franchisees, it added, “support paying valued employees a fair wage that is in line with the competitive marketplace.”
The National Restaurant Association’s executive vice president, Scott DeFife, warned of a wave of hardship if wages were to increase to Danish levels. He said that raising the minimum wage to $15 would “restrict employment opportunities” as fast-food restaurants would be reluctant to hire, due to the “drastic” increase in costs in an industry with “very slim” margins.
