Advertisement

Retail CEO Salaries Soar But Workers’ Hardly Budge

L Brands CEO Leslie Wexner (left) receives nearly $20 million in annual compensation CREDIT: AP PHOTO/JAY LAPRETE
L Brands CEO Leslie Wexner (left) receives nearly $20 million in annual compensation CREDIT: AP PHOTO/JAY LAPRETE

With nearly seven years elapsing since the last federal minimum wage increase, workers across the country have been pushing their states and localities to boost wages up to $15 an hour — a full-time salary of just $31,200 annually. But while such an increase has thus far remained elusive for working families in most of the nation, another group has seen its salaries explode over the same time period: executives at retail companies.

In an economy marked by growing gaps between those at the top and everyone else, the retail industry is a potent example of the growing stratification. Nearly five million Americans are working as retail salespeople and earning a median wage of about $10 per hour — while the largest companies’ executives often earn more than 400 times that amount.

Billionaire Leslie H. Wexner, who goes by “Les,” is the founder, chairman, and CEO of L Brands — the company that owns Bath & Body Works, Pink, Victoria’s Secret, and other retail chains. Though his annual salary was a mere $1.9 million between 2012 and 2014, his annual compensation total was more than $19.7 million with stock awards, incentives, and other compensation added in. In 2015, the total rose to more than $27 million.

With a federal minimum wage stuck at just $7.25 per hour, an employee making the lowest possible salary in many states would earn just above $15,000 annually — below the federal poverty level for a family of two. Retail cashiers in the U.S. have earned about $10 an hour average over the past three years according to the Bureau of Labor Statistics — less than the living wage in many states. L Brands did not respond to a ThinkProgress inquiry about whether it pays its cashiers above the legal minimum, but to demonstrate the astronomical rise in CEO pay, in 2009, Wexner made about 569 times the average national cashier hourly wage. In 2015, he made about 1295 times that amount.

Advertisement

A new report by the Center for American Progress Action Fund (CAPAF) finds a similar story for other Fortune 500 retail companies. ThinkProgress partnered with CAPAF to send inquiries to major retailers asking about the steps they take in support of their workers’ economic security. Some companies answered the inquires and volunteered that they pay all workers above minimum wage. However, most companies did not respond, declining to specify the minimum wage they pay to employees working at their companies, including whether the companies pay all their employees above the federal minimum wage of $7.25 an hour. (ThinkProgress is an editorially independent site affiliated with CAPAF and housed at the Center for American Progress.)

A minimum wage Virginia-based retail employee working full-time would make an annual salary of $15,080. According to the MIT Living Wage Calculator, the living wage necessary for a single adult without any dependents living in Virginia is $12.36 per hour. This would put them more than $10,000 below what they need for basic life expenses.

The average compensation for these top retail executives increased from about $7.8 million in 2009 to more than $10.7 million in 2015. The federal minimum wage has remained unchanged since 2009 and the average cashier salary has inched up only slightly — from $9.15 in 2009 to $10.09 in 2015.

CREDIT: Dylan Petrohilos
CREDIT: Dylan Petrohilos

As of 2014, over 4.8 million Americans were employed as retail salespeople, accounting for nearly 6 percent of the overall workforce — more people than in any other comparable job category.

Of the 36 publicly traded Fortune 500 retailers that are headquartered in the United States, just three responded to questions about their wage practices, each noting their lowest hourly wages exceed the federal wage floor: Costco, Gap, and Target. A handful of others, including Dollar General, TJX, Walmart, and Whole Foods, have previously announced publicly that their full-time employees all make above the federal minimum.

Advertisement

But most companies did not make wage information available, making it difficult to assess how much their workers receive for their work. The lack of transparency around wages can make it harder for workers to know where they can earn the most. Michael Madowitz, an economist at the Center for American Progress, said the number of companies that would not say whether they paid above minimum wage was “perplexing.”

“It only makes sense to me if you’re really just paying minimum wage,” he said. “If you’re paying above average in your sector, telling people that is a good way to tell them they could come to your company if you’re talented and make more money. It’s not rocket-science economics.” Moreover, companies that do pay the legal minimum often find “those workers are not super satisfied with their job,” and thus may be less loyal and motivated.

The gap is not just bad for the workers and companies, Madowitz said, but for the economy as a whole. “If we really are at a point where an awful lot of workers are not making enough to feel economically secure, making investments in the future, able to buy things they want instead of need, the American consumer is kind of the only thing going right in the world economy right now. The U.S. is doing better than almost all world economies right now, it’s all consumer spending driving that. Having stable consumer spending in our GDP is a real stabilizing force in what goes on in the U.S. economy. “

Lawrence Mishel, president of the Economic Policy Institute, told ThinkProgress “the retail industry is a very intensely low-wage industry. Much of it is non-union and when we have weak labor standards, like a low minimum wage or non-existing labor standards… you get the rise of on-call work, irregular work schedules. The employers have their way and that’s not good for the workers and ultimately not good for the nation.”

Mishel co-authored a report last year that found that the median CEO at top American companies of all types makes about 303 times as much as the median worker. “I think the main issue is that our nation has produced lots of income and wealth over the last four decades, but not much of it has gone to the vast majority,” he said. “I think this is the consequence of policy decisions being made on behalf of the most wealthy and powerful interests in society and it ends up sabotaging living standards and, I think, our democracy.

“The more we have inequalities of income and wealth, the more we allow those with the most income and wealth to have undue policies power, through their dollars speak very loudly, their voices are heard.”

Advertisement

Starting in 2017, companies will be required to provide information about the gap between the pay received by their CEOs and their rank-and-file employees. The Securities and Exchange Commission adopted a rule last year that will make it mandatory for companies to report the ratio of their CEO’s pay to that of the company’s average worker.