New Demos Study Reveals Fast-food Industry with Greatest CEO-to-Worker Pay Disparity in Economy

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Alex Amend, Demos
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New Demos Study Reveals Fast-food Industry with Greatest CEO-to-Worker Pay Disparity in Economy

WASHINGTON - As shareholders prepare for annual meetings, Demos released a new study today that finds that the fast-food industry has the greatest CEO-to-worker pay disparity in our economy, with ratios exceeding 1,000-to-1. The study finds that the growing disparity within fast-food threatens economic growth and shareholder investment.

READ THE REPORT: http://demos.io/1twtwMq

Fast Food Failure: How CEO-to-Worker Pay Disparity Undermines the Industry and the Overall Economy analyzes the latest proxy statements from the largest publicly traded fast-food companies to reveal how soaring executive compensation and stagnant wages for front-line workers in the fast food industry drives this overall inequality in the Accommodation and Food Services sector.

Key findings include:

  • The average CEO at fast food companies earned $23.8 million in 2013–more than quadruple what was earned by fast food CEOs in 2000.
  • The average hourly wage of fast food employees has only increased 0.3% since 2000.
  • Accommodation and Food Services had a CEO-to-worker pay ratio 44% higher than the sector with the next-highest compensation ratio over the period from 2000 to 2012.

The report also points to the serious costs for the economy overall and for individual fast food firms, including long-term performance corrosion due to disinvestment in human capital and legal risks brought on by renewed scrutiny for the industry’s pay practices and working conditions.

“Rising pay inequality has dire consequences for workers in New York City and beyond,” said Scott M. Stringer, New York City Comptroller. “As a fiduciary, I am also concerned with the impact of pay disparity on the City’s pension funds, which have long recognized that excessive pay disparities pose a risk to shareowner value. Demos’s report is an important guide to the implications of this issue in the fast food industry, where the CEO-to-worker pay disparity is particularly acute.”

“The fast food industry is leading the trend of pay disparity in the US, and the negative consequences are surfacing as operational issues, legal challenges, and diminishing worker and customer satisfaction,” said Catherine Ruetschlin, Demos Policy Analyst and author of the report. “Even the industry leader McDonald’s has acknowledged that rising inequality is a risk to their bottom line. These performance issues can manifest in reduced shareholder returns, but the problems extend beyond fast food to the rest of the economy. It is important for shareholders, executives, and workers that companies address the practices that drive income inequality at both the top and bottom halves of the CEO-to-worker ratio and lead to misallocated resources and a widening gap.”

While the repercussions of income inequality have drawn the attention of consumers and policy makers, companies have yet to reconcile the issue. Fast Food Failure argues that companies need to do more in order to arrest the damage from pay disparity and restore the focus on long-term interests of the firm.

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A multi-issue national organization, Demos combines research, policy development, and advocacy to influence public debates and catalyze change. We publish books, reports, and briefing papers that illuminate critical problems and advance innovative solutions; work at both the national and state level with advocates and policymakers to promote reforms; help to build the capacity and skills of key progressive constituencies; project our values into the media by promoting Demos Fellows and staff in print, broadcast, and Internet venues; and host public events that showcase new ideas and leading progressive voices.

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