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Burger King has embraced the Canadian icon, doughnut and coffee chain Tim Hortons; an acquisition valued at $11bn that creates the world’s third largest fast-food chain.
In Canada, the deal is ruffling nationalist feathers: never, ever, underestimate the significance of any national icon, whether it’s the maple leaf, the beaver, the Mounties or the addictive, crumbly doughnut hole known as the Timbit.
“The Americans of all people should understand what it’s like to live under the occupation of strange foreign people with offensive culinary customs,” harumphed the National Post’s editorial board – a strangely backhanded remark, considering that the “offensive culinary customs” America rebelled against were those of the British, whose queen is on Canadian money.
South of the border in the US, the controversy is of a different order: the Burger King-Tim Hortons merger is the latest in a series of so-called tax inversions, transactions that, by shifting the new corporation’s domicile to Canada, will cut Burger King’s tax burden. Burger King insists that its actual tax rate won’t change much after the deal; left unsaid is that Canada only taxes its corporate citizens on their Canadian income, whereas the US taxes global income.
Burger King has made it clear where it thinks it will be better off doing business: with its domicile in Canada.
But where do the company’s employees find themselves better off? The cross-border merger highlights the stark differences in workers’ rights in the US, Canada and the UK. Employees get different wages, vacation time, and leave depending on where they live – even if they all work for the same global company.
With fast-food workers south of the border gearing up for another round of strikes and protests in more than 100 cities on Thursday, arguing in favor of an hourly wage of $15 an hour, we took a step back to examine the kind of salary and benefits that a Burger King employee in the United States, in Canada and in Britain might be able to collect.
Burger King declined to provide data on its workers’ rights and wages across the globe after calls and emails seeking specifics. It’s possible to estimate the differences, however, by examining minimum wage levels and other benefits mandated in each country.
Below, our report card on workers’ rights.
Wages
Minimum wages in both Canada and the UK look considerably more attractive than they are in the United States – and yes, most fast-food workers collect minimum wage, or something slightly higher. The federal minimum wage in the US is $7.25 an hour; three states now pay north of $9 an hour and a fourth, Connecticut, has passed legislation to boost it to more than $10 by 2017.
In Canada, the minimum wage is set by the provinces, and has a very narrow range of between C$10.20 (which has just come into effect in Alberta) and C$11 in Alberta. That translates to between $9.34 and $10.07 in US dollar terms, and probably somewhat less after taking into account purchasing power parity. In Britain, the minimum wage for someone over 21 is now 6.31 pounds, rising to 6.50 pounds next month (or $10.39 to $10.70). How far those salaries go, of course, depends on which part of these countries you live in.
Winner: Canada and the UK
Individual tax rates
It also depends on how much your income is taxed. Let’s assume that we’re talking about a single individual (so as not to get overly complicated). In Canada, the federal tax rate is 15% of the first $49,593 of taxable income; in the United States, you pay 10% of the first $8,925, 15% of the sum between that and $36,250, and then 25% – until you hit $87,850, which our hypothetical fast food worker isn’t likely to see. A lot depends on how much you can cut down your taxable income. In the UK, your first 10,000 pounds of income (or $16,000) is completely tax-free, a big boon for a low-income worker; after that, you pay 20% on the next 21,865 pounds.
Winner: For those with the smallest incomes, the UK.
Healthcare
In Canada and the UK, this is fairly straightforward: you’re covered by the single-payer system. In the United States, it’s a mess. Some fast food companies have begun offering health insurance companies as they are required to do, but many have found that their employees find the combination of high deductibles, low lifetime reimbursement limits and the need to still pay premiums (absent from the Canadian system, which only requires people to pay for prescriptions, which then are tax-deductible) out of their minimum wages deterred many from signing up. Then there’s the temptation to simply cut employees’ hours so that the company doesn’t have to offer to insure them at all.
Winner: Canada, where access problems of the kind reported by Britain’s National Health Service are still infrequent.
Maternity leave
Occasionally, the United States finds itself in company that it would rather not keep, and this is one of those times. Along with Lesotho, Liberia and Papua New Guinea, the United States is one of a handful of countries that does not offer paid maternity leave; it wasn’t until 1993 that federal law required employers (those with more than 50 employees) to give a new mother 12 weeks of unpaid leave following the birth or adoption of a new child.
However, if you work in the US get paid vacation and maternity leave, it’s because your employer has decided you’re valuable enough to want to hang on to. If you’re a single mother-to-be in a fast-food job, you’re on your own.
In Canada, depending on their work history and the hours they have worked, women are entitled to a minimum of 17 weeks of leave and as much as 52 weeks, and are entitled to return to their jobs (or the equivalent) at the same salary and seniority. The employment insurance plan provides for 15 weeks of paid leave, with benefits maxing out at $485 a week. In the UK, women get 26 weeks of “ordinary” level and are entitled to up to another 26 weeks, and can collect pay for 33 of those weeks, with the first six weeks being 90% of their salary.
Winner: UK
Unemployment benefits
In all three countries, Burger King employees would be eligible for government-funded unemployment benefits if they are laid off -- but the Fair Labor Standards Act requires no severance payments from the company.
If you’re laid off in Canada, you’re entitled to collect up to 55% of your average weekly earnings, up to $514 a week, for as long as a year. It depending on factors that include how long you worked and contributed to the Employment Insurance system and how high the unemployment rate is in your region, as well as whether you were part of a mass layoff.
In the United States, benefits range from 40% to 50% of their previous pay, depending on the state, and typically last for six months. Britain has slashed its Jobseekers’ Allowance; not available at all to anyone with savings of more than 16,000 pounds, benefits are capped at $116.90 a week.
Winner: Canada
Vacation time
Canada’s labor code requires employers to give employees two weeks of paid vacation (or vacation pay) each year, rising to three weeks after six years of employment. In the UK, you get 28 days paid annual leave, and it’s calculated pro-rata if you work part time; so, if you work three days a week, you might still get 16 or 17 days’ paid vacation. The US? The law states employers aren’t required to pay for time that isn’t spent at work.
Winner: UK
Retirement benefits
In all three countries, Burger King is required to pay into state pension plans – the Canada Pension Plan, Britain’s State Pension and the social security system in the United States – for the benefit of its employees. In the United States, it also offers its employees access to a 401k savings plan, offering a 4% match on contributions. Similar private pension plans are available in Canada and the UK, but the company doesn’t disclose whether these are available to hourly employees in those countries.
Winner: Unclear
If life in the US as a minimum wage, fast-food services worker looks unappealing relative to what it might be in the same job in another country, well, that might explain some of the impetus behind Thursday’s planned protests.
In the United States, research has shown that more than half of fast-food workers rely on at least one taxpayer-funded program to support their families; overall, the National Law Employment Project pegged the cost to taxpayers of providing food, health care and other necessities that minimum wages in the United States don’t cover come to about $3.8bn annually.
“In the United States, employers have been able to socialize costs of doing business by diverting them to the government and thus to other taxpayers,” says Susan Ursel, a Toronto-based attorney, and a senior partner at Ursel Phillips Fellows Hopkinson LLP.
“In Canada, we socialize them across everybody”, with both corporations and employees paying on a pro rata basis.
That doesn’t mean that a fast-food worker is going to find it easy to make ends meet in any jurisdiction.
And in Canada, “unionization attempts to further improve working conditions and wages have been viciously fought at tribunals and labor boards by large multinationals,” notes Ursel.
But the ability to take a paid vacation now and again, or not to have to worry about the cost of taking your child to the doctor, can make a big difference. So far, at least, no Canadian Walmart store has had to run food drives for the benefit of their own employees.
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