Fast food CEOs now earn about 1,200 times more than their workers and taxpayers are helping to make that possible, according to a pair of new reports on the industry’s pay practices.
Earnings for fast food executives have increased by more than 300 percent since 2000 while their workers’ wages have increased by 0.3 percent over the same period, Demos reports. The think tank’s work shows that food and lodgings services “is the most unequal sector in the American economy, driven by extreme inequality within the fast food industry,” and that the fast food industry’s current status as the primary center of job growth in the U.S. will drive economic inequality wider across the whole economy. The average fast food CEO got $23.8 million last year, while the hourly wage for the average fast food worker was so low that a full-time, year-round worker takes home less than $19,000 before taxes.
These companies rarely schedule people for full-time hours, Demos notes, and nine out of 10 fast food workers also experience wage theft. While many people still picture a teenager with a blank resume when they imagine who works fast food jobs, the reality is that the vast majority are grown-ups, many with families to support and college degrees but no career opportunities.
There has always been a disparity between the front office and the fry cooks, of course, but it was far smaller at the turn of the century. “Among the fast food companies in this study, CEO average pay since 2000 more than quadrupled, while workers’ incomes rose just 0.3 percent,” according to Demos. As a result, the ratio of CEO compensation to worker compensation in the industry hit 1,203-to-1 in 2012. That is more than quadruple the 273-to-1 ratio in the overall economy and more than double the 543-to-1 ratio in the broader accommodation and food services sector.
And taxpayers are underwriting the inequality Demos found in fast food pay, according to a second study from the Institute for Policy Studies (IPS), with a price tag of nearly a quarter-billion dollars over the past two years. CEOs at the 20 largest companies in the National Restaurant Association received a combined $662 million in “performance pay” in 2012 and 2013. Because performance pay is tax deductible, those 20 companies were able to write two-thirds of a billion dollars in CEO pay off on tax day, reducing their tax bill by $232 million combined. Previous research has shown that the public is also subsidizing low fast food wages through government assistance programs that workers rely on because they are paid so poorly for their labor, and taxpayers also fund these companies and CEOs directly through federal contracts.
The IPS report also notes that the public is helping fast food titans cash out at the same time that “restaurant executives are fighting living wages for their workers,” as IPS puts it. Mass strikes over the past couple years have produced minimum wage hike campaigns in more than 30 states, but stories of fast food chains that pay well voluntarily remain the exception to the rule.
The executive pay tax loopholes that IPS targets have also drawn fire from a handful of lawmakers who want to change the rules. Those efforts have not yet born fruit, however, despite a mountain of evidence that the “performance pay” system is so broken that executives are effectively guaranteed to walk away wealthy even if they oversee horrible outcomes.