Recent weeks have seen strikes in at least eight cities across America, with restaurant and retail workers claiming they deserve more than minimum wage. Their common refrain has been that if those greedy CEOs would only take a pay cut, low-paid workers could make a living wage to support themselves and their families.
It’s “We Are the 99 Percent,” second edition, and behind the shilling stand the usual suspects.
The AFL-CIO has an entire section on its website, complete with flashy infographics, condemning CEO pay, which it claims “has skyrocketed while the average worker’s pay has stagnated despite increases in productivity. . . . The middle class is dwindling and more and more working people are living hand-to-mouth.”
The Service Employees International Union includes a blog from Joshua Williams, a fast-food worker who says that by speaking out for a pay increase, “I’m taking a big risk.” Nonetheless, he publicly decries the fact that, “last year, the CEO of Wendy’s took home $16.5 million dollars [sic] while I barely scraped by on $16,000,” and he urges readers to “tell the CEOs of Wendy’s, McDonald’s, Pizza Hut, Domino’s, KFC, Taco Bell, Papa John’s and Burger King to pay hard workers like me a living wage.”
Big Labor has been joined by Representative Keith Ellison, of Minnesota’s Democratic-Farmer-Labor Party, who picketed with striking fast-food workers last month and commented that it’s “funny how the economy is not too fragile for CEOs to be paid like $4.9 million in four months,” apparently a jab at Wendy’s.
But while comparing CEO pay to the wages of fast-food workers may be a catchy talking point, the math behind it is terrible.
Minimum-wage workers, who currently make roughly $7.25 to $10.55 an hour (residents of a particular state or city can vote to increase the minimum wage there in excess of the federally mandated one) are striking in pursuit of $15 an hour. But eliminating CEO cash compensation would add less than a penny to their hourly pay, according to a new report by the Employment Policies Institute.
According to the most recent available data, the CEO of McDonald’s makes $5,370,666 in cash compensation. Divide that by 420,000 employees (and that excludes employees at the 80 percent of McDonald’s restaurants globally that are franchises), and workers would get an average hourly increase of 0.0061 cents per hour, the institute calculates. At Walmart, workers would get 0.0014 extra cents per hour, and at Starbucks, the study reveals, they’d make out big with 0.0114 — a tenth of a penny more.
With these numbers crunched, it becomes clear that the attack on CEO pay is nothing more than demagoguery. Big Labor has teamed up with the picketing little guys at burger joints and clothing shops, but don’t look to altruism for a motive.
As the Center for Union Facts has reported, minimum-wage increases often trigger raises for union workers, thanks to provisions in many collective-bargaining agreements that link base-line pay to the minimum wage. In other instances, when the minimum wage goes up, unions get to reopen wage negotiations with the companies that employ their members.
Low-skill fast-food and retail workers are the ones who stand to lose. They’re unlikely to get the $15 they’re asking for — which is double the current minimum wage in many states — but even a lesser wage hike will cost jobs. Already, labor costs consume about a third of a typical fast-food restaurant’s revenue. And numerous studies show that when the minimum wage goes up, employers make do with fewer workers, and low-wage employees lose their jobs.
So much for supersizing.
— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity.