Advertisement

Millionaire CEOs should support a living wage for fast-food workers

Millionaire CEOs should support a living wage for fast-food workers
Dunkin' Brands Group President and CEO Nigel Travis. (Mario Tama / Getty Images)

Business leaders have every right to voice concerns about a $15-an-hour minimum wage. Anything that could cut into profits is a legitimate worry for companies.

But the spectacle of millionaire CEOs opposing a living wage for their workers serves only to highlight the obscene income gap between those at the top and everyone else whose contributions help keep the corporate wheels turning.

Advertisement

Sally Smith, chief executive of the restaurant chain Buffalo Wild Wings, said last week that a $15 minimum hourly wage would hurt teens seeking their first paying job. Restaurants, she said, would favor people with more experience.

Buffalo Wild Wings has two outlets in Los Angeles, which has approved raising the minimum wage to $15 over the next five years, and one in Pasadena.

Smith received compensation worth $4 million last year, making her one of the 10 highest-paid CEOs in the restaurant industry, according to the financial website the Motley Fool.

Maybe it's a bit of a cheap shot to cite Smith's pay in the same breath as presenting her thoughts on the minimum-wage issue. Because she's right: A $15-an-hour wage could prompt employers to favor more experienced workers over newcomers.

But that doesn't mitigate the perversity of someone in the top 0.5% income bracket actively trying to prevent her underlings from making enough to afford a one-room apartment and put food on the table.

Smith's comments came just a week after Dunkin' Donuts' CEO, Nigel Travis, was quoted as saying that a $15 minimum hourly wage for fast-food workers is "absolutely outrageous."

His compensation more than doubled last year to $10.2 million.

Christopher Faricy, an assistant professor of political science at Syracuse University, told me it's reasonable to set minimum wages at different levels in different parts of the country. But for CEOs making gobs of money, he said, "fighting against a living wage comes across as heartless."

Earnings have been largely stagnant for working stiffs. Wages and salaries rose a record-low 0.2% in the second quarter, the Labor Department said Friday, making the first quarter's 0.7% growth seem meteoric by comparison.

The typical CEO, on the other hand, made more than 300 times as much as ordinary workers last year, according to a recent report from the Economic Policy Institute.

It found that each of the heads of the largest U.S. companies was pulling down an average $16.3 million, which represented a more than 54% pay hike since the end of the financial crisis in 2009.

Since 1978, inflation-adjusted CEO pay has climbed — wait for it — nearly 1,000%, the report found. Wages for ordinary workers, meanwhile, rose just 11% over the same period.

The consulting firm Deloitte reported last year that the average German CEO made 147 times what the typical worker made, the average British CEO's pay was 84 times greater than workers', and Japanese CEOs scraped by with just 67 times what underlings earned.

The average American worker was paid $36,134 last year, according to the Bureau of Labor Statistics.

Advertisement

I reached out to both Buffalo Wild Wings and Dunkin' Donuts to see whether they wanted to walk back their boss' remarks or address how anyone could live on current minimum wages in pricey places like L.A.

A spokeswoman for Buffalo Wild Wings said Smith's comments "were about the unintended consequences on youth employment" and that "she did not discuss how workers in costly places like L.A. could get by on current wages."

A spokeswoman for Dunkin' said Travis supports "reasonable increases to the minimum wage at the state and local level." But she said Dunkin' Donuts is against "unfairly" targeting fast-food chains for higher wages, even though these are where many minimum-wage workers are employed.

The reality is that opponents of a higher minimum wage are being shortsighted. They forget that Henry Ford famously boosted his workers' pay in 1914 because he wanted them to afford his cars and he didn't want them leaving for better jobs.

They also overlook that, adjusted for inflation, the federal minimum wage peaked in 1968 at $8.54 an hour (in 2014 dollars), according to Pew Research. Since it was last raised in 2009 to the current $7.25 per hour, the federal minimum has lost about 8.1% of its purchasing power because of higher cost-of-living expenses.

In other words, minimum-wage workers are making less now than they did nearly half a century ago

"We have mounting evidence that raising the minimum wage won't increase unemployment," said Linda Rosenstock, dean emeritus of UCLA's Fielding School of Public Health. "If anything, it will create benefits for employers."

For example, she said, a living wage improves employee morale, which in turn boosts productivity and reduces costly turnover.

Rosenstock said recent research has shown that low pay can take a toll on workers' health by forcing them to hold multiple jobs or perform double shifts, and to not seek medical treatment when needed. This can result in higher absenteeism.

"Raising the minimum wage can address that," she said.

Millionaire CEOs need to take their focus off the next quarterly earnings statement and acknowledge that paying workers a living wage is good for long-term business. It makes for better, harder-working employees.

It also makes for more consumer spending because people have more cash in their pockets.

If I was in the chicken wings or doughnuts business, I'd think that's something worth supporting.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

Advertisement
Advertisement