Workers at a Frito-Lay factory in Topeka, Kansas made national headlines when they went on strike to protest dismal labor conditions including forced overtime and 84-hour workweeks. (Frito-Lay’s parent company, PepsiCo, made $10.5 billion in profit last year.) The strike ended after 19 days on July 26th, but it’s an important part of a national conversation about labor and corporate profits. Kansas state Representative Jason Probst joins the show to explain the details of the strike and how these insidious labor practices affect his state’s economy.
Jason Probst serves in the Kansas House of Representatives.
Twitter: @thatguyinhutch
Substack: https://thatguyinhutch.substack.com/
News clips from: India Yarborough, KSNT News, and IEN Magazine
Kansas Frito-Lay workers end strike: https://www.washingtonpost.com/business/2021/07/26/frito-lay-strike-topeka/
Striking information – what PepsiCo’s annual report tells us about the Frito Lay strike: https://thatguyinhutch.substack.com/p/striking-information
The Backbreaking Work That Goes Into a Bag of Chips: https://nymag.com/intelligencer/2021/07/frito-lay-workers-on-their-strike.html
Website: https://pitchforkeconomics.com/
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Speaker 1:
More than 500 Frito-Lay, union workers striking for the first time ever in the company’s history.
Speaker 2:
This strike comes after union workers complained of poor working conditions and a lack of pay raises despite other plants raising wages.
Speaker 3:
Those of us who are out here every day, is a sacrifice we are making.
Speaker 4:
I’m tired, but at Frito, it was a totally different tired, you just wanted to shut it down.
Speaker 5:
After being on strike for nearly three full work weeks, the strike at a Topeka, Kansas plant is over.
Speaker 6:
From the home offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, the best place to get the truth about who gets what and why?
David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures.
Last week workers at a Frito-Lay plant in Topeka, Kansas settled a three-week strike, a rather remarkable occurrence in an anti-union state like Kansas. And with me to talk about the horrendous working conditions at the plant and the terms of the settlement is State Representative Jason Probst, a Democrat from the state of Kansas. Welcome to the podcast, Jason.
Jason Probst:
Thank you for having me.
David Goldstein:
Let’s start off, why’d the workers there go on strike?
Jason Probst:
Well, what we started to learn over time, was just how awful the working conditions were there. We heard about 84 hour work weeks, people weren’t getting any time off, working seven days a week. Doing these suicide shifts where they worked 12 hours, get a few hours off, and have to come back for another 12 hours, just unconscionable work conditions. And then when they try to negotiate the contract, they couldn’t get time off, they couldn’t get pay raises, and I think the employees had finally had their fill of that.
David Goldstein:
How unusual is it for a strike like this in Kansas? We don’t often hear about it in the national news, I assume it’s not often going on.
Jason Probst:
We don’t see strikes very often in Kansas, we’re a right-to-work state, we’re very tilted in favor of employers in this state. So we just don’t see a lot of… There’s some bargaining that happens, but we don’t typically see a full-on strike like this with hundreds of workers saying we’ve had enough and we’re going to leverage our collective ability to force change.
David Goldstein:
When you say a right-to-work state, that’s the other side’s language. That actually means that it’s very hard to organize a union in a state like Kansas. In a state like Washington, if the shop unionizes, everybody has to join the union and pay their union fees. In the so called, right-to-work states, you can opt out of the union and basically people freeload, why pay your union fees? It’s much harder to organize it, it’s much harder to fund a union. So, it’s an anti-union state, let’s put it that way.
Jason Probst:
That’s accurate and every year in the legislature, the business and industry lobby comes to us trying to make it a union. They’ve made the argument in the last couple of years that taking dues from people and having a union is unconstitutional and violates free speech, which is nonsense, but every year they come and try to make it harder for workers to organize and unionize.
David Goldstein:
Right, so let’s be clear, we talk about Frito-Lay, it’s actually owned by PepsiCo, a giant conglomerate.
What was the reaction locally to the strike there, was there general support from people, a criticism in the press, surprise?
Jason Probst:
I think there was a little bit of surprise, but once employees started talking about the conditions there and what they had been dealing with for years. A fun thing that the company did is instead of giving raises, they were giving one time bonuses and trying to pass that off as equal. Of course, no one’s wages is going up at that point, but they said, “Oh, well, we’ll give you this one-time bonus.”, but there are some employees that have been there over 10 years without a substantive raise. I think when people started hearing that, started hearing some of the stories about the long hours, seven day a week shifts, people were really supportive. I think they understood that this was another example of people, workers, just being kind of crushed into the ground in the daily grind and the company making loads of money and not really caring about the actual lives of the people that work for them.
David Goldstein:
Since it is so hard to organize in a state like Kansas, and it is so unusual for there to be a strike, and this lasted 20 days, how much do you think the pandemic had to do with inspiring the workers to fight for better conditions in the working place and more pay?
Jason Probst:
I think quite a bit, and I think one of the things that I saw come out of this is the real difference between white-collar workers and blue-collar workers. These are on the line, these are the people actually making your potato chips, and your Cheetos, and things like that. And they have no choice but to be physically present at the production facility, meanwhile, all the managerial staff and everybody is working from home and doing Zoom meetings or whatever. And I think that, that during the pandemic kind of led to some of this frustration that they were being asked to work more, it was probably harder to find additional staff during the pandemic. And so they had to do this work regardless of what was going on in the world, as it relates to the pandemic, and not being treated fairly for the work that they did, that still allowed this company to make huge amounts of money during the pandemic.
David Goldstein:
So workers walked out on July 1, was there any idea, at the time, that it would go on for this long?
Jason Probst:
I think nobody knew, at that point, what would happen or how long it might last. The union and the workers seemed to be prepared for a long strike, at least a month long strike, and longer if necessary. But, I think at that point there was still some hope that there’d be a resolution reached pretty early on.
David Goldstein:
Yeah, and to be clear, it wasn’t easy for the workers. Of course, they had to go without pay, but also, this is America, so they had to go without health insurance as well.
Jason Probst:
Yeah, the first thing that the company did after the strike was announced, they said they were cutting off health insurance benefits for all the striking workers. So, now people who were striking and willingly saying, “I’m going to sacrifice my financial wellbeing.”, suddenly found themselves faced with no health insurance. No idea how many of them may have had chronic conditions or their children had chronic conditions, but that was certainly a piece of leverage the company had over all the employees, by being able to yank their health insurance on day one.
David Goldstein:
So, do you have any idea what the final settlement was? I heard that there was a vote and union leader said it was close, but they agreed to ratify the contract, do you know what the broad terms are of the contract?
Jason Probst:
Broadly, it looks like the employees will get a four percent pay increase over the next two years, they’ll get at least one guaranteed day off each week, and they will not have to work these suicide shifts anymore. So those are the things they were able to secure from the company. What I’ve read, it looks like there still aren’t limits on overtime, so they will be able to work people overtime, they may have to structure it a little bit differently than they have in the past, but that seems to be the final agreement. And we haven’t seen a final vote count on this, but there is indication that it was fairly close.
David Goldstein:
Yeah, I’m sure it’s a little disappointing for some of these workers, four percent, that’s two percent a year, that’s not even inflation right now. And from all accounts, I’ve heard wages haven’t gone up much over the past decade. The suicide shifts, that seemed to be the symbol of this strike, and they did win on that point.
Jason Probst:
Yes, that was the big issue, where they talked about, that was leading to people not having any quality of life, that they were missing holidays, they were missing family time, they were missing kids’ events. When you work those kinds of shifts, in a production setting, it just doesn’t leave any time for any other part of life, really.
David Goldstein:
So, it’s funny, I was reading Pepsi’s press releases on this, and one of the things they did to make their case, was to say that they had hired like 220 new workers already this year. And at a plant, which from what I understand, has about 850 workers, so we’re looking at like a 40 to 50 percent turnover, annually, that tells you it’s a pretty terrible place to work. So, if it’s so bad, if they haven’t had raises for so long, they’re working these terrible suicide shifts, there’s all this turnover, why would somebody work at a place like that Frito-Lay plant? How hard is it to find other work in Kansas?
Jason Probst:
I think there are a number of things that factor into that, I used to work production and manufacturing years ago, and my takeaway from my time in that field was they pay you just enough to not get another job. If you’re there any length of time, you get even modest raises, you’re making enough money that you’re able to get by, you’re not really thriving. And the nature of the work keeps you there physically for long periods of time, so you can’t even take time off to go look for another job.
But, some of the other reasons is, it’s kind of like, the devil you know or the devil you don’t know. You work somewhere, you make your money and you kind of build your life around that. And people can endure an awful lot, and it’s kind of like boiling a lobster in a pot, right? It’s slowly killing them, it’s slowly consuming all the best years of their life. And then at some point, they’re near enough retirement age, they don’t know what else to do, and there aren’t a ton of other jobs out there. If you don’t have a specific skill or you don’t have a degree, or you don’t have technical training in a field, these jobs are all pretty much the same, from one place to another, there’s not a ton of difference. And so you don’t feel like there’s a lot of incentive for you to leave, upset your life, take on the financial and the health questions that you may encounter from a job change, and kind of make those changes.
David Goldstein:
Right, just even the health insurance issue, even if it’s a company that provides health insurance, say you quit, you start a new job someplace else, there’s always like that three month period. So you’ve got your job search period, you’ve got the three months before you qualify for benefits, it’s really hard to get through those transitions. And I think Jason, this speaks to one of the huge imbalances in the labor market, which a lot of people lose sight of. If you read your econ 101 textbook, they actually use the labor market as an example of the supply demand curve. It’s like the classic example of supply and demand, if you raise the cost, employers buy less of it, if there’s a huge demand, then wages have to go up.
But, it doesn’t actually work that way because as you pointed out, it’s hard to switch jobs. And workers, we can all think about this ourselves, we’re often very reluctant to switch jobs. A big part of our social life are the friends we make at work, it’s part of our daily routine. When you switch jobs, you have to change your commute, sometimes you might have to move entirely. And so we’re much more likely, as workers, to stick with the job we have, the devil we know then the devil we don’t.
And that gives a huge advantage to employers because, well, they treat us like commodities. They know that you’re not actually one, and you’re not going to behave the way the market says you would, which is just rational self-interest and get up and go for the highest wage you can get, no matter what. And that, on top of the huge power imbalance, especially in a so-called right-to-work state, I wish I could do air quotes in a podcast but it doesn’t work that way, where it’s so hard to organize. And my understanding is that this union represents about 650 workers, and about 300 were crossing the picket line and still working.
Jason Probst:
Yeah, there were several people, I don’t know the numbers specifically, but I know there were people who just reached a point where they couldn’t go without the pay anymore.
David Goldstein:
Right.
Jason Probst:
They couldn’t go without the health insurance, so they were willing to go back in and go to work.
David Goldstein:
So what broader lesson do you think we take away from this?
Jason Probst:
Well, I think certainly to me, the standout thing is there’s not a better example to me of why your health insurance needs to be separated from your employer. I mean, the fact that they were able to initially weaponize health insurance coverage for their employees who decided to advocate for themselves, that demonstrates to me, far too much power in the hands of our employers.
The other is, I think that certainly in this environment, employees have more strength than they’ve realized and probably more strength than they’ve had in a number of years. That they were able to stop production or slow production and force the company to make at least some concessions, indicates to me, that employees do have some power.
And probably a third is that employers are going to have to acknowledge this and adapt to this, or they’re going to. In Kansas, we have a lot of complaint about workforce and we can’t find enough workers and whatever, well, this is going to continue. I think people have had their fill and they’re tired of giving up their lives for substandard wages, and sacrificing their quality of life so that somebody else can make outsize profits, and then being told that they should just be happy about that. I think that if people will keep that in mind and recognize the power they have, we’ll start to see some adjustments on the employer end.
David Goldstein:
And as shitty as the conditions in pay are for the workers at the Frito-Lay plant, the CEO of PepsiCo he’s doing fine, right?
Jason Probst:
Oh yeah, he’s making 21 and a half million dollars a year, depending on the stock price, so he’s doing great. The board’s doing great, they get paid, in stock, and compensation, so yeah the top level executives are doing great. The median PepsiCo employee gets about $46,000 a year, and the CEO to employee pay ratios, 462 to one.
David Goldstein:
And did the CEO have to go on strike to get those high wages or?
Jason Probst:
Yeah, I’m guessing not, he got that and probably has a couple of other incentives built in there, that I wasn’t even able to find out about.
David Goldstein:
Right, so that CEO to median pay, 462 to one, which is more than twice even, the ridiculous national average of, in my notes here, it says it’s 227 to one right now.
Jason Probst:
That’s right, even by ridiculous standards, it’s more ridiculous.
David Goldstein:
Right, so if this two percent a year raise over two years has to come out of his paycheck, he’s still doing fine.
Jason Probst:
He’ll be okay. You know, one of the things I think that is important to talk about here is, we have these CEOs making this kind of outrageous money and all this money is being, kind of, siphoned out of the state. And in the legislature, we have lobbyists and $5,000 suits coming to lobby lawmakers to lower their tax rate again. The last four years companies like Pepsi came in and asked for income reduction, or basically free money that they’ve been hiding offshore, and finally this last year, they were able to get that through. They get that money, but it doesn’t translate at all to the employees, the employees are still struggling, employees are still dealing with rising costs of basic goods, and a lot of that came before some of the slight inflation we’re seeing now.
But, medical care costs, educational costs, utility costs, have all been going up in this state well before any of the more common things that we’re seeing now. So, to me, it’s a lot of money being siphoned out of our state, not routed back to employees, and I think our local economies and our state economy would be doing much, much better if that money was coming to employees.
David Goldstein:
Right, so you said those stagnant wages at this Frito-Lay plant, over the past decade. That’s a drag on Kansas state growth, almost every penny that goes into those paychecks are being spent right there in Kansas.
Jason Probst:
Absolutely, and that helps your local mom and pop businesses and it just happens locally, and that money’s being recirculated. But when these companies are taking this money out of state, not paying enough into the state tax coffers. The stat that I found that was interesting, the average Pepsi state tax rate, income tax was 1.2 percent. Well, in Kansas, if you make $30,000, your tax rates 5.2, 5 percent, so we have individuals paying a much higher tax rate on their income than PepsiCo and its CEO and its executive team is paying.
David Goldstein:
So, obviously, Jason, this isn’t the last strike that’s going to happen. There’s been several other high profile strikes over the past few weeks, it’s over now, but if our listeners wanted to help out, the next time we hear about one of these strikes, what do you think they could do?
Jason Probst:
Well, I think one thing is some kind of consumer consciousness, since the strikes been going on, a number of people have refused to buy Frito-Lay products. I’ve not purchased any Frito-Lay products and probably won’t resume that. But one thing that happened locally that I thought was really interesting is a local magazine, 785 Magazine out of Topeka, set up a utility fund and basically said, ” Can you donate? What would be the equivalent of a water bill for each of these striking workers? We’ll raise the money and route that out.”. So any opportunity to financially support, or I guess, emotionally support the workers and understand that you can help them out by helping with some of the costs, routing it through funds that will help the workers make it through the strike, I think ultimately gives the employees a little more leverage for a longer period of time.
David Goldstein:
Yeah, and most unions do have strike funds that you can contribute to during strikes, so that’s something that people can do with their wallet. And of course, just the emotional support, the publicity pressure on these giant corporations, they’re very sensitive to their public image. That’s really useful, bashing them and their CEO’s on Twitter and Facebook and all that, you can see their PR bots going into high gear to respond to that, so people can always do that.
And folks should remember, we’re all in this together, that’s the big lesson that we have on this podcast. You grow the economy from the middle out, when workers are making higher wages, it’s better for everybody. And when your neighbors are doing better, they’re spending money in the community, it’s good for your community. So when these workers went on strike, in a sense, we were all out on the picket line, if we knew what was good for us.
Jason Probst:
Absolutely.
David Goldstein:
Well, thanks for your time, Jason, and thank you for being a progressive champion from the great state of Kansas.
Jason Probst:
Well, thanks for having me. I really enjoyed talking with you, and I’m glad to be a progressive Stalwart in Kansas, it’s not an easy job, but somebody needs to do it.
David Goldstein:
And here’s hoping we get more of you.
Jason Probst:
Thank you, I’d love that.
David Goldstein:
Next week on Pitchfork Economics, we’ll be answering more of your questions in another, Ask Me Anything.
Speaker 6:
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As always, from our team at Civic Ventures, thanks for listening. See you next week.