Fast Food Failure: CEO-to-Worker Pay Disparity

Catherine RuetschlinDemos recently published a report by New School PhD Candidate in Economics, Catherine Ruetschlin, "Fast Food Failure: How CEO-to-Worker Pay Disparity Undermines the Industry and the Overall Economy."

The report studies CEO-to-worker compensation ratios across industries, finding Accommodation and Food Services to be the most unequal sector in the economy. This fact is driven by the extreme pay disparity of the fast food industry, which is also one of the fastest growing employers in the nation.

Demos' research supports the renewed call, started by Robert Reich's  Inequality for All and Thomas Piketty's Capital in the Twenty-First Century, among others, to question increasing inequality, it's link to economic instability and what is driving it.

Key Findings

• Accommodation and Food Services had a CEO-to-worker pay ratio of 543-to-1 in 2012. Over the period from 2000 to 2012 the average ratio was 332-to-1, 44 percent higher than the sector with the next-highest compensation ratio.
• In 2012, the compensation of specifically Fast Food CEOs was more than 1,200 times the earnings of the average fast food worker.
• Fast food CEOs are some of the highest paid workers in America. The average CEO at fast food companies earned $23.8 million in 2013, more than quadruple the average from 2000 in real terms.
• Pay disparity in the fast food industry is a result of two factors: escalating payments to corporate CEOs and stagnant poverty-level wages received by typical workers in the industry.
• Fast food workers are the lowest paid in the economy. The average hourly wage of fast food employees is $9.09, or less than $19,000 per year for a full-time worker, though most fast food workers do not get full-time hours. Their wages have increased just 0.3 percent in real dollars since 2000.
• The most unequal sectors are among those providing the greatest numbers of new jobs in the economy, replacing jobs in sectors with lower income inequality.

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