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If one wants a good illustration of how immoral corporate America has become one need look no further than McDonald's. Leslie Patton of Bloomberg wrote a profile of McDonald's employee, Tyree Johnson, who is paid the minimum wage in Chicago, $8.25 per hour, while his boss, Jim Skinner, took home a cool $8.75 million last year.

Imagine that. If Mr. Johnson works 40 hours a week he will make $16,830 a year. At that rate it would take Mr. Johnson more than 520 years of cooking and serving burgers and fries to make what CEO Skinner takes home for attending meetings, making big decisions and riding around in his limousine. And the only reason why it's only 520 years rather than 600 or more years is that Mr. Johnson is paid the minimum wage in Chicago, which is a dollar more than the federal minimum wage.

For all those folks who think that fast food workers are high school kids or college students trying to make an extra buck think again. Tyree Johnson is 44 years old and has work for McDonald's for 20 years.

Mr. Johnson is not the exception, but is increasingly becoming the rule.

Older workers like Johnson are staffing fast-food grills and fryers more often, according to data from the U.S. Census Bureau’s Current Population Survey. In 2010, 16- to 19-year-olds made up 17 percent of food preparation and serving workers, down from almost a quarter in 2000, as older, underemployed Americans took those jobs.

“The sheer number of adults in the industry has just exploded” because fast-food restaurants “not only survived, but thrived during the economic recession,” said Saru Jayaraman, director of the Food Labor Research Center at the University of California at Berkeley.

This situation exists for many reasons but there are two significant ones at play here. First, the minimum wage has less purchasing power then at any time since 1968. That reduction in purchasing power is due in large part to the efforts of men like Mr. Skinner who, with his fellow travelers in the upper echelons of corporate America, has managed to effectively suppress efforts to increase the minimum wage. And lest there be any doubt, every increase in the minimum wage has the effect of increasing the wages of wage earners whose salaries have risen above the minimum.

The second factor is the explosion of CEO income over the last 30 years when compared with the stagnation of employee income. As noted in this article,

CEO pay spiked 725 percent between 1978 and 2011, while worker pay rose just 5.7 percent, according to a study by the Economic Policy Institute released on Wednesday. That means CEO pay grew 127 times faster than worker pay.

Income inequality between CEOs and workers has consequently exploded, with CEOs last year earning 209.4 times more than workers, compared to just 26.5 times more in 1978 -- meaning CEOs are taking home a larger percentage of company gains.

As pointed out in Ms. Patton's article numbers from the American Federation of Labor  suggest an even greater disparity,
McDonald’s is part of a larger trend of Standard & Poor’s 500 companies, according to data from the American Federation of Labor-Congress of Industrial Organizations. The pay gap between the average S&P 500 CEO and the average U.S. worker, which was 42 times in 1980, widened to 380 times in 2011 from 325 times in 2010, the umbrella group of 56 unions said.
Regardless of what numbers you look at the disparity between CEO and worker pay is well beyond obscene. It is positively immoral. And we know that the economy would not suffer, but rather would see greater prosperity, if the inequality was reduced to levels that existed thirty or forty years ago.

Beyond the numbers this disparity has a real face and that face is exemplified by Mr. Tyree Johnson.

A pay stub of Johnson’s shows that he earned $8,518.80 through Sept. 9 this year at the store that gives him most of his hours. He was able to work only 52 hours during the two- week pay period ending that date because the restaurant was being remodeled, he said. A statement of earnings from his other McDonald’s job shows that he worked fewer than 12 hours over two weeks, earning $95.45 before taxes.

* * *  *

Johnson begins most days the same way: picking cigarette butts out of the shower drain of a shared bathroom, using a tissue so he doesn’t touch them. While there’s a “No Smoking” sign posted inside the hotel where he lives, that doesn’t stop the other occupants who share the showers, sinks and toilets.

His rent at the hotel in Chicago’s Uptown neighborhood is $320 a month. Johnson usually can’t cover it all at once, so he’s allowed to pay $160 every two weeks, or even $80 a week, for his first-floor room. He’s late on November rent and owes about $100 -- some of it a late-payment fee, he said.

Originally posted to September 17, 1787 on Wed Dec 12, 2012 at 12:37 PM PST.

Also republished by In Support of Labor and Unions.

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Comment Preferences

  •  In Other Sectors, Remembering That Much Labor is (1+ / 0-)
    Recommended by:
    Gary Norton

    now done offshore, the true CEO modern pay gap across some of the same jobs that have now moved offshore reaches into the 10,000 to 1 range.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Wed Dec 12, 2012 at 12:43:42 PM PST

  •  I have an MBA and use it (2+ / 0-)
    Recommended by:
    Gary Norton, citizen dan

    mostly to write satirical novels from a decidedly business/progressive perspective, which I call an altruistic-flavored Capitalism.

    I couldn't ride around in a limo and earn that kind of cash, knowing how little the workers make.  I just couldn't fuckin' do it.

    Meanwhile, to call the pay disparity true Capitalism is to call a unicorn a horse.

    Buy Aldus Shrugged : The Antidote to Ayn Rand, and tear Ayn and the GOP new orifices. Plus, I get a small royalty, and Jeff Bezos and his employees get the rest. Not a bad deal, as CEO Bezos is not much of a dick, relatively speaking. @floydbluealdus1

    by Floyd Blue on Wed Dec 12, 2012 at 12:56:38 PM PST

    •  Hear you. I'm a lawyer, worked (0+ / 0-)

      for the Federal Government. Held very high and very well paying positions (for the government) and never made more than four or five times what any of my employees made.

      Further, affiant sayeth not.

      by Gary Norton on Wed Dec 12, 2012 at 01:01:40 PM PST

      [ Parent ]

  •  That works out to (2+ / 0-)
    Recommended by:
    ConfusedSkyes, Gary Norton

    a gap of 3 months to one hour.  40 hours x 13 weeks.

    I think that, or worse, is typical in many industries, based on my informal math.

  •  It is easy to paint these individuals (3+ / 0-)
    Recommended by:
    Gary Norton, vahana, zinger99

    as monsters, easy, and perhaps not unfair, unkind, or even wrong. But what is the process that makes these people, who might be like you and me (at the age of, let’s say, nine or ten) into this kind of monster? Do they grow up on different worlds? Are they raised by machine overlords from the thirty seventh century? How does it happen?
    It is our culture. OUR culture that creates these monster and we are every bit a part and party to our culture. It is American Imperialism. It is the drive of every teenage boy to grow up and sleep with two women at the same time. It is the middle income household with seventy five thousand dollars in credit card debt. It is the narcissistic, “I deserve all I desire” culture. We made this culture. We support this culture and only we can change this culture and at this point the change might just have to be painful, not just for the monsters, but for all of us. We must change ourselves, and then demonstrate that we are not afraid to insist on change in others.

  •  Gary - just a nit (1+ / 0-)
    Recommended by:
    Gary Norton

    You should edit your sentence that reads "....took home a cool $8.75 million." It should read "had total compensation of $8.75 million". The CEO actually took home $4.5 million, the rest was equity and other non-cash compensation.  

    "let's talk about that"

    by VClib on Wed Dec 12, 2012 at 02:16:03 PM PST

    •  that's a lot of (1+ / 0-)
      Recommended by:
      Gary Norton

      McDoubles

    •  Actually, compensation is compensation. It all (1+ / 0-)
      Recommended by:
      zinger99

      is an expense to McDonalds just as Jonson's $8.25/hour.

      Further, affiant sayeth not.

      by Gary Norton on Wed Dec 12, 2012 at 03:32:54 PM PST

      [ Parent ]

      •  Gary - it's definitely compensation (1+ / 0-)
        Recommended by:
        nextstep

        but it's all not take home pay. How the SEC requires compensation to be displayed in annual proxy statements is more confusing than informative. I understand why the compensation schedules are required to be structured in the manner we see them in the proxy so that it tracks with the GAAP treatment in the financial statements. However, so many people, including journalists, confuse the numbers with actual cash compensation even using terms like "took home" or "take home pay". I would like to see the SEC require a second compensation chart just based on cash. Then people would have accurate numbers on how much cash someone actually took home. In years when executives cashed in equity awards you would see it in the cash chart. Then if journalists wanted to report on cash compensation the number would be there in black and white. The only thing we know about the compensation amounts in the current schedules is that the totals are wrong because they base the value of options on a forecast of the future.

        Just another nit - Johnson's pay isn't a McDonalds Corp expense at all. He is an employee of the franchisee.

        "let's talk about that"

        by VClib on Wed Dec 12, 2012 at 06:45:26 PM PST

        [ Parent ]

        •  He took it home but it was not salary. Look (0+ / 0-)

          I used a colloquialism on purpose. The simple point is that he is paid through various forms, whether salary, options, grants, perks, benefits and every other means that CEOs manage to enhance their net worth and the quality of their lives, 500 times more than the guy on the line.

          Oh yes, I was one who pushed for companies to value options. Is it done as well as it could be? No. But here's the rub. If you compensate someone with something of indeterminate value how do you know if you paid too much or too little. The day that we stop all stock compensation, options or otherwise, will be a better day for corporations, their shareholders, and the country.

          Further, affiant sayeth not.

          by Gary Norton on Wed Dec 12, 2012 at 07:47:19 PM PST

          [ Parent ]

          •  Gary, the rise in equity compensation was a direct (1+ / 0-)
            Recommended by:
            nextstep

            result of Clinton's push to have a limit on how much executive compensation could be deducted for tax purposes and the resulting adoption of Sec 162 (m). Before 1993 a much larger portion of CEO compensation was in base salary. After the $1 million limit for tax purposes was initiated it caused compensation committees to look much closer at total compensation and making a larger portion of the compensation variable, and subject to performance standards. In theory all of that was positive. However, if you had a CEO who was making $3 million a year, with $2.5 as salary and a potential for a $500,000 bonus, the thought was that if the base was going to be $1 million then the high end of the potential bonus had to be much higher than $2 million and just take the CEO to a break even, there should be significant upside above the total of $3 million. It the company exceeded its annual targets the CEO should have a $4 million bonus and it shouldn't all be in cash. And that's what happened.

            I think equity compensation has gotten out of hand for senior executives but I like it as a concept, particularly with four year vesting and clawback provisions. It costs the issuing company no cash and creates an ownership stake within the senior management. If senior management has little ownership it can make a company a more likely target to a private equity offer.  

            "let's talk about that"

            by VClib on Wed Dec 12, 2012 at 08:49:36 PM PST

            [ Parent ]

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