Report: Restaurant CEOs Make 721 Times More Than Their Minimum-Wage Employees

Report: Restaurant CEOs Make 721 Times More Than Their Minimum-Wage Employees

A new report from the Economic Policy Institute highlights the widening earnings gap between minimum-wage workers and restaurant CEOs.

According to the EPI, a full-time employee making minimum wage will earn $15,080 — below the 2013 and 2014 federal poverty lines for a two-person household — over the course of a full year.

Compare that number to the average $10,872,390 that a top restaurant CEO earned in 2013. As the report explains, this means that a restaurant CEO, on average, earned 721 times more than the average minimum-wage worker.

Alarmingly, that 721-1 ratio is much higher than that of just eight years ago. Back in 2006, the ratio of restaurant CEO pay to the minimum wage was 609-1. That gap actually narrowed dramatically just two years later, when Congress passed the most recent minimum-wage hike; that left the ratio at approximately 250-1. After 2008, however, it continuously widened, and peaked between 2011 and 2012.

As demonstrated in the chart below, 2013’s 721-1 ratio is among the largest gaps of the last decade.

EPI Minimum Wage Restaurant CEO chart

One of the first steps towards narrowing the gap would be raising the minimum wage again. CEOs’ pay — which relies more heavily on other economic factors — may continue to rise, but a minimum-wage hike would drastically improve the lives of restaurant employees who often depend on federal safety net programs to provide for themselves and their families.

Many economists and lawmakers — most of whom lean left, such as President Barack Obama — continue to argue for a higher minimum wage to combat the negative economic and social implications of income inequality in the U.S.

Among opponents of a minimum-wage increase, however, is the National Restaurant Association, which represents the CEOs included in the EPI study.

According to the group, a federal minimum-wage hike would force restaurateurs to “limit hiring, increase prices, cut employee hours or implement a combination of all three to pay for the wage increase.” And as several states and even cities across the nation increase their minimum wages on their own — Seattle just passed legislation that will increase its minimum wage to $15 an hour over the next seven years — franchise restaurants warn that the measures are detrimental to businesses and jobs.

But the U.S. Department of Labor calls those claims “myths,” pointing out that employers in California “are required to pay servers the full minimum wage ($9 per hour beginning July 1) – before tips,” and “even with a minimum wage boost coming this summer, the National Restaurant Association projects California restaurant sales will outpace the U.S. average in 2014.” Also, while “employers in San Francisco must pay tipped workers the full minimum wage of $10.74 per hour — before tips,” the Bureau of Labor Statistics still finds that the San Francisco restaurant industry has “experienced positive job growth over the past few years.”

A Congressional Budget Office report also finds that while 500,000 jobs may be lost, a federal wage increase could lift 900,000 Americans out of poverty.

Speaking on the wage hike passed in Seattle, McDonald’s CEO Don Thompson reluctantly gave the increase his stamp of approval.

“McDonald’s will be fine. We’ll manage through whatever the additional cost implications are,” Thompson said in May. If other restaurant CEOs could accept that, they too would “manage,” even if they had to pay their employees just a few dollars more.

Photo: The All-Nite Images via Flickr

Chart via Economic Policy Institute


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