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In 2013, McDonald’s generated some ghastly publicity when it came out that the fast-food giant was advising burger flippers to go on food stamps. Why didn’t McDonald’s, a multinational corporation that generates more than $26 billion in annual revenue, simply pay its burger flippers a living wage? The answer in most (but not all) cases was that, appearances to the contrary, most McDonald’s burger flippers don’t work directly for McDonald’s. They work for McDonald’s franchisees—independent, mostly small businesses that contract with McDonald’s Corporation to lease and operate one or more McDonald’s restaurants according to a mind-bogglingly specific set of rules that guarantees every McDonald’s will be indistinguishable from every other McDonald’s. McDonald’s is not an isolated example. Over the past half-century, corporate America has systematically shed low-wage workers, either by offshoring them, contracting out their work, or designating them as independent contractors. Only rarely today will a large corporation employ someone earning less than $30,000. That’s not because corporations have gotten more generous but because they’ve gotten more wary of assuming responsibility for low-wage workers. Off-loading them spares corporations bad publicity, and in effect allows them to delegate routine labor violations to much smaller companies that can easily liquidate and/or rename themselves if they run into serious legal trouble.The contractors don’t try very hard to disguise the nature of the service they provide. In a Pulitzer-winning series on migrant child labor for The New York Times, Hannah Dreier reported that Packers Sanitation Services Inc. pitched itself on its website as being able to “take the liability and risk off your facility’s record.” Packers was as good as its word when the Labor Department in February 2023 fined it $1.5 million for assigning migrant children to overnight shifts in 13 meatpacking plants in eight states. Packers took nearly all the heat, while most of the Fortune 500 companies that owned the plants involved—Tyson, Cargill, etc.—went unpunished. Packers then “rebranded” itself as Fortrex and moved its corporate headquarters from Kieler, Wisconsin, to Atlanta. Problem solved.The Brandeis economist David Weil labeled this phenomenon “the fissured workplace,” in an influential 2014 book of that name whose thesis was that changes in the structure of corporate hiring that are typically thought of as efficiencies are actually a conscious effort to evade union drives and government-guaranteed labor protections, such as child labor prohibitions and payment of minimum wage, overtime, Social Security tax, and unemployment tax. Weil did his best to reverse that trend when he ran the Labor Department’s Wage and Hour Division under President Barack Obama. But when President Joe Biden renominated Weil for that post, the International Franchise Association, or IFA, a lobby group founded by franchisors and still dominated by them, campaigned against Weil and won sufficient support from the Senate GOP and three Senate Democrats (Kyrsten Sinema and Joe Manchin, who later became independents, plus Senator Mark Kelly) to defeat Weil.The IFA has had a much easier time during President Donald Trump’s two terms in office, as demonstrated by a proposed Labor Department regulation severely limiting the circumstances under which a corporation can be held accountable for work done on its behalf under the 1938 Fair Labor Standards Act, or FLSA, which governs minimum wage and overtime. (A separate joint-employer standard under the 1935 National Labor Relations Act governs union organizing and other concerted activity, and is enforced by the National Labor Relations Board.) The nonprofit Economic Policy Institute, in a public comment sent last week to the Labor Department, estimates that the proposed rule would affect about 15 million workers in “fissured establishments,” of which about 10 million would be the employees of franchisees, and that the rule would cost these workers almost $1 billion annually.Prior to Trump, the Labor Department followed a guidance document on joint employment drafted in 2015 by Weil. Regarding “vertical joint employment,” wherein an employee works for Company B, which in turn is contracted to Company A, Company A would be designated a joint employer when “the economic realities show that” the worker is “economically dependent on” Company A. This was less an interpretation than a description of what the FLSA actually says. Weil noted that the FLSA defined an employer very broadly as “any person acting directly or indirectly [italics mine] in the interest of an employer in relation to an employee.” (You can look it up.) But after Trump came into office in 2019, his Labor Department tore up Weil’s guidance and issued a regulation that defined an employer as interacting only directly with an employee. If Company A did not hire and fire a worker for Company B, or schedule that worker’s time, or dictate that worker’s specific work conditions, or set that worker’s wages, or maintain that worker’s employment records, then Company A was not a joint employer. This departed quite blatantly from the statutory language—so much so that a federal court later threw the Trump rule out.Now the second Trump administration is taking another whack at a Labor Department joint-employment rule, and if any substantive difference exists between Trump’s earlier version and this new one, I can’t see it. Once again, the regulation contradicts the language of the Fair Labor Standards Act by saying that indirect control over employees isn’t good enough to establish that Company A is a joint employer.The best case the business lobby can make in defense of Trump’s proposed rule is that although it contradicts the statute, it captures the federal government’s past reluctance to enforce it, especially with respect to franchising. In what follows, I rely heavily on an excellent new book, Chains of Command: The Rise and Cruel Reign of the Franchise Economy, by Brian Callaci, chief economist at the nonprofit Open Markets Institute.When fast-food franchising took off in the 1960s and 1970s, it was often judged in violation of antitrust law, which did not permit collusion between Company A and Company B. The franchisors answered that prohibitions on such “vertical restraint” did not apply because Company A and Company B were essentially the same company. Judges didn’t always buy that, but it was kind of true. Indeed, for a long time the Small Business Administration refused to give loans to Company Bs on the grounds that these weren’t small businesses at all but rather the equivalent of branch offices for Company As.Unfortunately, franchisors simultaneously contested responsibility for labor violations at Company B by arguing, no, actually, these are two separate companies … which was kind of not true. Yes, Company B signed a licensing agreement to run a fast-food joint for Company A on certain (quite extensive) terms. But Company A could later change that contract’s terms without requiring any sign-off from Company B. It was essentially sharecropping (Callaci more politely likens it to tenant farming), wherein Company B, after being sucked dry by Company A, eked out razor-thin profit margins by squeezing employees. Company A didn’t have to care very much about whether Company B was profitable because it took its money off the top.Granted, there have been a few franchisee success stories wherein Company B purchased multiple franchises and scaled up sufficiently to earn a real profit. But most Company Bs are single-restaurant operations that barely get by. Callaci quotes one franchise consultant describing the sort of franchisee Company A was looking for:An entrepreneur makes the worst franchisee. You might think that they would do well, but it is just the opposite. For one thing, they’ll never listen to you.… You don’t want any creative thinkers, either. Again, these people will not follow your system, and instead they’ll look for ways to do their own thing. You want someone who follows the rules.Ouch.Fast-food franchising became the behemoth it is today because of an FTC rule in 1979 that gave Company A a get-out-of-antitrust-jail-free card so long as Company A was fully transparent to Company B up front about what a terrible deal it was agreeing to. Franchising also got a boost from the adoption of the “consumer welfare standard,” which said antitrust violations occurred only if consumers were harmed. If franchisees or burger-flippers were harmed, it didn’t matter.Today the consumer welfare standard is on its way out, but that transition is not happening quickly. Fast-food franchisors used to argue that it didn’t matter how much Company B abused its workers because they were just kids working after-school jobs. But that stopped being true some time ago. Now fast-food employees are mostly grown-ups, often with families, and their best recourse, if they can’t make ends meet, is to go on welfare. Trump’s proposed joint-employer rule will impoverish these workers even more.

For most people, one of the highest-funded police departments in the country suing its own city for $67.6 million would sound absurd. In St. Louis, it is reality. This spring, the state-controlled St. Louis Board of Police Commissioners filed a lawsuit claiming that tens of millions of dollars from the city’s settlement with the National Football League over the departure of the Rams should be diverted to the police department. The board argued that the settlement funds, along with city reserves, should count as “general revenue” under Missouri law, which would require the city to divert 25 percent of the settlement to policing under a 2025 law.Earlier this month, a judge rejected that argument, ruling that money received and accounted for in prior years does not suddenly become current-year revenue simply because the police department wants access to it. But the board, joined by Missouri Attorney General Catherine Hanaway, intends to appeal the ruling.After the unexpected windfall from the Rams lawsuit, city officials and residents spent years debating how to use the money. Under Board Bill 22, which is advancing through the city’s Board of Aldermen, the funds would go to repairing homes damaged by last year’s tornado, helping displaced residents find housing, demolishing unsafe buildings, rebuilding North St. Louis neighborhoods, repairing sidewalks and streets, upgrading aging water infrastructure, redeveloping vacant properties, and supporting small businesses. The settlement is a rare opportunity to make investments that cities often struggle to afford through ordinary annual budgets, but the police board’s position is that tens of millions of those dollars should be diverted to policing instead. The consequence of a board win in the lawsuit would be less money for rebuilding neighborhoods and more money for an institution that already consumes nearly a third of the city’s general revenue—and generates millions more in legal liabilities, settlements, judgments, and overtime costs.The details are specific to St. Louis, but the underlying dynamic is far more widespread. The lawsuit offers a revealing look at the extraordinary fiscal and political power police departments enjoy in U.S. cities. At a time when local governments are struggling to fund schools, parks, housing programs, public health initiatives, transit systems, and basic infrastructure, a police department that already consumes a substantial portion of municipal resources is attempting to use the courts to suck even more funding away from other city services.The board is pursuing this funding shift even as taxpayers already bear an enormous range of police-related costs that rarely appear in discussions about police budgets. When politicians and police advocates talk about police spending, they usually mean appropriations. They point to the department’s annual budget and argue that officers need more personnel, more equipment, or higher salaries. But policing’s true price tag extends far beyond the amount formally allocated to a department each year.Cities also pay for police misconduct settlements. From judgments entered against officers and departments for excessive force to outside counsel hired to defend misconduct suits, to litigation arising from unconstitutional arrests, wrongful imprisonment, and protest crackdowns, the public bears the consequences of police misconduct long after the underlying incident has faded from public attention.In St. Louis, those costs have been substantial. The city has paid millions of dollars in police misconduct settlements and judgments over the last decade. For example, it paid approximately $5 million to undercover officer Luther Hall after he was beaten by fellow officers during protests following the acquittal of former officer Jason Stockley. Hall was a St. Louis police officer working undercover when members of the department’s notorious “Civil Disobedience Team” attacked him, leaving him with serious injuries. A jury later awarded Hall nearly $24 million in damages against one of the officers involved. The city also paid millions more to settle claims arising from an infamous “kettling” operation in which officers indiscriminately arrested protesters, journalists, legal observers, and bystanders. Publicly documented misconduct settlements and judgments alone amount to tens of millions of dollars.The department has other significant expenses outside of its annual budget. Recent city budget records show policing already consumes close to 30 percent of St. Louis’s general revenue. Meanwhile, police overtime spending has repeatedly blown past budgeted amounts, costing taxpayers millions more than anticipated. Yet none of those costs seem to matter when police officials describe the department’s financial situation. The board’s position is effectively that no matter how much policing already costs the public, the police department is entitled to more. That attitude has become even more striking since Missouri restored state control over the St. Louis Metropolitan Police Department in 2024.Supporters of state control argued that local officials could not be trusted to prioritize public safety, and claimed the solution was to exclude key decisions from the oversight of the majority-Democrat city government and place them in the hands of a board appointed by the majority-Republican state government. Under this arrangement, local taxpayers fund the police department but have little control over how that money is spent. When disputes with the city government arise, the board can turn to state officials and the courts to extract additional resources. This current litigation is an example of that dynamic in action.Taxpayers are effectively paying both sides of the dispute, funding the police board’s effort to obtain more money while simultaneously financing the city’s effort to defend itself. At the same time the board has been pursuing $67.6 million from the Rams settlement, it has also proposed double-digit raises for command staff. The proposal includes raises of 16 percent for lieutenants, 18 percent for captains, 20 percent for majors, and 22 percent for lieutenant colonels. City officials have warned that because of pay-parity requirements, the proposal could trigger nearly $6 million in additional spending when corresponding raises for firefighters are included.Every dollar directed toward one function of government is a dollar unavailable for another. That reality applies to housing departments, health departments, libraries, schools, sanitation services, and parks; but in cities across the country, police institutions are often treated as exempt from the tradeoffs that govern every other part of municipal government.Across the country, police unions and departments operate as political actors whose primary objective is securing ever-greater fiscal protection from democratic accountability. When cities attempt to reallocate funds or increase oversight, police organizations mobilize and aim the familiar “weak on crime” rhetoric unrelentingly at any politician who threatens their dominance. Nearly every other public institution is expected to justify its spending, but police budgets are often treated as presumptively legitimate and perpetually insufficient.Public school teachers pay for basic classroom supplies out of their pockets, libraries have to scrape and beg for every scrap of funding, and public infrastructure wastes away, while any attempt to rightsize the police budget is treated like a five-alarm fire. This political asymmetry helps explain why police budgets have often remained resilient even in periods of fiscal stress. It also helps explain why a police board could look at a major municipal settlement and conclude that the money should belong to them.The fight over this $67.6 million is about much more than a budget formula. The lawsuit is a test of whether city residents can decide how to spend their own money or whether the police’s trump card will continue to drain communities of vital services. And the implications are nationwide. For years, debates about policing have focused on questions of crime, accountability, and public safety. The St. Louis lawsuit highlights a different question that deserves equal attention: How much public money is enough?The answer from the police board is pretty simple. Whatever the city has, the police should get more of it. Everyone else can go without.

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