Menu Bar

Home           Calendar           Topics          Just Charlestown          About Us

Monday, May 9, 2016

You pay so McDonald’s doesn’t have to

McDonald's, the Corporate Welfare Moocher

A recent New York Times editorial — accompanied by the catchy headline, "At McDonald’s, Fat Profits but Lean Wages" — noted precisely what its title implies: That a company posting large profits is still failing to pay its workers a livable wage.

This, of course, is nothing new: In fact, Fight for $15 began, as the movement's website notes, "with just a few hundred fast food workers in New York City, striking for $15 an hour and union rights."

The movement has since become a nationwide force, pressuring state governments, along with the federal government, to contend with wage inequality that, as the Economic Policy Institute reported earlier this year, has been steadily rising for over 35 years.

The Times begins its editorial by noting that McDonald's "has reported a 35 percent increase in profits for the first quarter of 2016, an unexpectedly large gain driven in part by its recent decision to sell Egg McMuffins all day long."

This is great news for "executives and shareholders," the piece observes, but "when, if ever, will it be good news for McDonald’s employees and for taxpayers?"

McDonald's, of course, is not the only culprit here. Throughout the United States, productivity has grown while wages have leveled off — a scenario that leads inevitably to greater profits for the few while everyone else works longer hours with little to show for it.

"From 1973 to 2014, net productivity rose 72.2 percent," the Economic Policy Institute has found, "while the hourly pay of typical workers essentially stagnated—increasing only 9.2 percent over 41 years (after adjusting for inflation)."

CEO pay, in contrast, has continued to soar:  As Lawrence Mishel and Alyssa Davis have observed, "From 1978 to 2014, inflation-adjusted CEO compensation increased 997 percent, a rise almost double stock market growth and substantially greater than the painfully slow 10.9 percent growth in a typical worker’s annual compensation over the same period."

But the Times noted another interesting and crucial point, one that is seldom discussed: Namely, the issue of what is often called corporate welfare.

While the conservative right is content to shame poor mothers for receiving federal assistance, rarely do they dare call, say, General Electric or Walmart "welfare queens," despite the fact that they receive enormous direct and indirect taxpayer subsidies year after year.

This is true for McDonald's, as well: The Times observes, "Through it all, taxpayers continue to pick up the difference between what fast-food workers earn and what they need to survive. An estimated $1.2 billion a year in taxpayer dollars goes toward public aid to help people who work at McDonald’s."

What is highlighted here is a kind of indirect subsidy McDonald's enjoys because of its refusal to pay workers a livable wage. Why raise the wages of these workers or provide them with benefits, the argument goes, if the taxpayer is there to provide "the difference between what fast-food workers earn and what they need to survive"?

And why reward workers of little stature when you can reward influential executives and fat-cats instead?

study by the National Employment Law Project, released last year, uncovered the disparity between executive compensation and average worker pay that has been the result of such an approach.

"The fast-food industry is marked by two extremes," the study begins. "On the one hand, the leading companies in the industry earn billions in profits each year, award chief executives generous compensation packages, and regularly distribute substantial amounts of money in the form of dividends and share buybacks."

Then there's the other extreme: "At the same time, the overwhelming share of jobs in the fast-food industry pay low wages that force millions of workers to rely on public assistance in order to afford health care, food, and other basic necessities."

As many others have noted, this amounts to a kind of corporate welfare: Taxpayers step in to provide the benefits and survival necessities that are not provided by employers, which then allows companies like McDonald's to post higher profits and pay their executives lavish salaries.

Steve Easterbrook, following his promotion from chief brand officer to CEO of McDonald's, saw his pay increase by 368% — while, as Laura Bult observes in the New York Daily News, "McDonald’s workers have joined other low-wage workers nationwide in their demands to raise the minimum wage."

It's obscene, but it's characteristic of a system dedicated to maximizing profit for the few, no matter the societal or economic costs

"The largest, wealthiest, most powerful organizations in the world are on the public dole," writes David Brunori. "Where is the outrage? Back when I was young, people went into a frenzy at the thought of some unemployed person using food stamps to buy liquor or cigarettes. 

Ronald Reagan famously campaigned against welfare queens. The right has always been obsessed with moochers. But Boeing receives $13 billion in government handouts and everyone yawns, when conservatives should be grabbing their pitchforks."

Well, the outrage is brewing at the grassroots level thanks to movements like Fight for $15 and the newly prominent Democracy Spring, a coalition of progressive groups fighting to get money out of politics. And the campaign of Bernie Sanders has energized many young people and motivated millions to get involved with these causes, which transcend any single presidential campaign.

These groups recognize that a nation with such profound levels of income and wealth inequality, combined with a slow-growth economy that favors those already at the top, can never be genuinely democratic.

"I say to the Walton family, get off of welfare. Pay your workers a living wage," Bernie Sanders has demanded on the campaign trail.

And the same can be said for McDonald's. As the Washington Post reported last year, "Americans are spending $153 billion a year to subsidize McDonald’s and Wal-Mart’s low wage workers."

"Let that sink in," writes Ken Jacobs, "American taxpayers are subsidizing people who work...because businesses do not pay a living wage."

Jake Johnson is an independent writer. Follow him on Twitter: @wordsofdissent