The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.

Friday, September 5, 2014

Income Disparity: Food Fast Style (How About Some Higher Wagers With That CEO Pay?)

One of the nation's leading fast food chains offers the perfect case of income disparity.  In 2012,  Bloomberg published a piece with a 44 year old 20 year MacDonald's employee as its underlying human story. 

Photographer: Daniel Acker/Bloomberg
Tyree Johnson, a 20-year McDonald's employee making minimum
wage, stands for a photo outside of his home, the Wilson Men's Hotel, 
in Chicago. 

Johnson would need about a million hours of work -- or more than a century on the clock -- to earn the $8.75 million that McDonald’s, based in the Chicago suburb of Oak Brook, paid then-CEO Jim Skinner last year. Johnson’s work flipping burgers and hoisting boxes of french fries, like millions of other jobs in low-wage industries, helps explain why income inequality grew after the 2007-2009 recession ended.

The Fast Food industry lobbies against raising the minimum wage while lavishly compensating CEOs in ever spiraling ratios (to employees). 

If you need a visual I remind of a photographs that went viral as the owner of Papa John's Pizza went public with support for Mitt Romney and publicly threatened employees against support for the Affordable Care Act.
 In April of this year DEMOS Dot Org reported study results that should alarm any American.  Alarm that would be exasperated if we think in terms of the jobs base associated with fast food and other minimum. 

Key Findings
Analysis of US company-level pay disparity shows that Accommodation and Food Services is the most unequal sector in the American economy, driven by extreme inequality within the fast food industry. 
  • Accommodation and Food Services had a CEO-to-worker pay ratio of 543-to-1 in 2012. Over the period from 2000 to 2012 the average ratio was 332-to-1, 44 percent higher than the sector with the next-highest compensation ratio. 
  • In 2012, the compensation of fast food CEOs was more than 1,200 times the earnings of the average fast food worker. Proxy disclosures recently released by fast food companies reveal that the ratio remained above 1,000-to-1 in 2013.
Pay disparity in the fast food industry is a result of two factors: escalating payments to corporate CEOs and stagnant poverty-level wages received by typical workers in the industry.  
  • Fast food CEOs are some of the highest paid workers in America. The average CEO at fast food companies earned $23.8 million in 2013, more than quadruple the average from 2000 in real terms. 
  • Fast food workers are the lowest paid in the economy. The average hourly wage of fast food employees is $9.09, or less than $19,000 per year for a full-time worker, though most fast food workers do not get full-time hours. Their wages have increased just 0.3 percent in real dollars since 2000.
The DEMOS article is literally a must read for anyone interested in the depths and scope of growing income disparity. It is particularly germane for those interested in industry-to-industry worker to CEO pay ratios. 

Let's take a look at Food Service and then move to a more comprehensive table for the DEMOS piece.

A table that spans industries: linked.

We will closet out linkage to DEMOs via this last graphic.
Corporate shareholders and Board directors will ensure the CEO is compensated as the data reflects. There is no rollback of "compensation opulence." Moreover, I have not read one author or publishing team that espouses executive compensation rollback. The salient point is why not allow fast food workers to unionize and why not pay base level workers at a much higher rate of pay? It is a simple proposition that once established will assimilate into business operations as well as profit and loss considerations as readily as a new menu item.

While the major shareholders and board of directors ensure financial rewards of the CEO, who is looking after the bottom 30% (ers) who service as the basis of our economy? Relief for the everyday worker will have to come from the Democratic Party and American progressive and left leaning independents.

I posit disparity in income between the CEO and workers is yet another manifestation of Supply-side/Trickle-down economics (AKA Reaganomics). Reaganomics: the very backbone of all GOP economic policy and yet another danger of handing the GOP the US Senate, and worse yet the presidency in 2016.

More On Topic Information: Huffington Post

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