In fast food, CEO pay rises far above all
A new study says that top bosses in the sector make 1,200 times as much as the average worker.
The news has not been kind to the fast-food industry over the past few years.
Now, a new report from New York-based think tank Demos has added fuel to the fire.
The study charts inequality between executive and worker pay across multiple industries, and finds that fast food overwhelmingly leads the nation. According to the Demos study, the average pay ratio between CEOs and employees working in "accommodation and food services" is 332-to-1, about 44 percent higher than retail, the next most unequal industry.
Most of this disparity comes from the fast-food industry, where in 2012 CEOs made 1,200 times as much as the average worker.
Catherine Ruetschlin, the author of the study, took care to note that her work tracked the relationship between executives and average, non-supervisory employees. Not only are fast food CEOs some of the highest paid in America, but their typical workers receive "stagnant poverty-level wages."
Fast-food workers are among the lowest paid in America, taking home an average $9.09 per hour. In real dollars, their wages have increased by 0.3 percent since year 2000, while CEO salaries in the fast-food industry have increased by 400 percent.
According to Ruetschlin, it's the relationship between these two findings, not just one, that drives the study's results. The study emphasized that growing inequality has repercussions for the economy overall, as the most unequal sectors are providing most of the new jobs at the expense of more equal ones.
"The kinds of problems that we're seeing in fast food are really a critical sign of how inequality can undermine the fundamentals of the firm," Ruetschlin said. "Things like declining customer satisfaction, litigation, and the class action lawsuits actually have associated costs . . . This research really does suggest that there is a payoff to investing in wages at the bottom when it mitigates the risks associated with that growing disparity."
That payoff may be harder to realize than equality advocates hope, however. Although Ruetschlin identified real challenges associated with long-term inequality, high-turnover shareholders often emphasize short-term profits over structural issues. Low wages and high corporate pay lead to immediate profits and the associated risks may not manifest until long after current decision makers have left.
"I think that the turn to increasingly short-term shareholding is one of the forces that are the undercurrent of this growing disparity," Ruetschlin said. "It's a question of how the firm allocates the resources that they have on hand, and we see these resources going to the executives at the top and less and less going to maintain the basic labor force and services."
Progress, even if slow, is being made, however. Ruetschlin cited examples like Whole Foods Market (WFM), which has a fixed worker-to-executive pay ratio, and programs by McDonald's to try and improve customer satisfaction.
Opponents argue that this week's report is simply propaganda in favor of a higher minimum wage. Labor unions have contributed heavily to Demos, donating over $200,000 to the group in 2013 alone, although the group does announce its alliances with the slogan "an equal say and an equal chance for all."
Many of you have no problem with a movie star, athlete or pop singer who makes 25 to 100 million per year - they do not run anything or create any jobs - BUT a CEO who makes 10 million per year and runs a company with 50,000 employee's is immoral in your world. The CEO is paid what the market says they should be paid. About 10 -15 years ago during the Clinton era people like you complained about executive salaries, so Clinton changed the tax law that capped the deductibility of CEO wages ( for the low information voter, wages are a legally deductable cost of doing business) as a result ( the left always forgets that there is cause and effect or consequences to their emotional policies that are not based on logic). The result was that there are only 500 people in the world who can run a Fortune 500 company - that is a pretty exclusive group of people with exceptional skills - so stock options were offered in place of salary - this means if the company prospers ALL employee's and shareholders ( the owners) and the CEO will prosper if the stock goes up. Our President was a community organizer ( activist) who has never managed or run anything - unbelievable.
"New York based think tank DEMOS" ? I'm going to have to call Capt. Obvious on this one.
All CEO's make tremendous amounts, why pick on fast-food companies? Could it possibly be politically motivated? YES!
On the flip side I do not think a fast food employee at McDonald's or Burger King should be getting $15 an hour to push a button for a Happy Meal & place it on my tray. This is a minimum wage job with about an 8th grade diploma required. These basic idiots with no education want to make as much as someone who spent thousands on College or a Trade school education. NO WAY!!!
Here is an idea for all the "management gets paid too much" crowd. Come up with an idea, take your own money and open your own business. Instead of whining about a 'problem' open a business and pay your managers and workers what ever you want.
Another progressive left/democratic party class warfare study - Us verses Them - There must be another election coming up.
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