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Saturday, May 17, 2014

quiz time: which industry pays CEOs 1,200 times more than their typical worker?

DemocracyNow! interviews author of the report, "Fast Food Failure: How CEO-to-Worker Pay Disparity Undermines the Industry and the Overall Economy."

Q: How do you respond to the companies saying, "All right, if they increase the workers’ wages, but then consumers have to be willing to pay more for the burgers"?
A: Well, firms have a lot of ways that they could pay for a raise. They don’t necessarily have to pass the cost on to customers. They could do that, but they could also use some of the ways that they’re redirecting their profits right now. Firms like McDonald’s spend billions of dollars a year buying back their own shares of company stock on the market in order to consolidate ownership and bump up earnings per share and meet these short-term benchmarks. But that’s really a short-term understanding of the interest of the firm, right? If they had a longer-term perspective, they would see that rather than investing in their share price, if they were investing in their labor force, they would generate returns—higher productivity, loyal workers with better knowledge of the company processes, you know, lower turnover rates, so lower costs associated with job search—and it would actually receive benefits through that investment that would pay off in the long run.

Q: And the issue of how these companies are subsidized, government-subsidized?
A: That’s right. A study came out recently that shows that fast-food employers like McDonald’s, Subway, Yum! Brands, which owns Taco Bell and KFC and Pizza Hut, Domino’s Pizza, are some of the highest-ranking employers in terms of working poor. So, if you look into who’s receiving healthcare benefits for their families and wage subsidies from the state agencies, from poverty alleviation programs, the highest-ranking firms are Wal-Mart and fast food. So, it’s the taxpayers who are actually paying the—for the ability for these firms to maintain a labor force at all.