At A Minimum

Chicago recently saw protests aimed at McDonald’s and promoting a $15 minimum wage.

What are you worth?

That’s a humbling question for most, and one that our government does answer every day for wage earners at the bottom of the food chain.

Well, legally at the bottom anyway. And the answer for those workers earning minimum wage?

You’re not worth much.

This Thursday, there will be protests in Los Angeles at fast food chains. People are upset about the compensation received by workers that feed much of our society on a regular basis. Management of those fast food chains is trying to confront the reason for the protest with their PR muscle. Read the LA Times article (link below) for some perspective here.

After years of thinking that minimum wage rates should be kept low, I’ve begun to rethink my position. I believe the compensation rates should be raised, and here’s why:

McDonald’s recently moved to pay their employees with high-fee debit cards, igniting a firestorm of protest. Click on the image to visit one site helping to prepare a class action lawsuit.

1. Compensation at the minimum wage is not a living wage. $290 each week … assuming that you can get 40 hours of work in the week. The reality is the vast majority of minimum wage workers do not receive 40 hours in a week, because that violates many company policies requiring entry-level workers to never receive enough hours to be considered full time and qualify for benefits. So, it’s not just that minimum wage workers receive little hourly compensation … they don’t receive many hours of work, either. Stitching together multiple part time jobs in order to get more hours of work is very common. Bottom line: minimum wage workers don’t make enough to support themselves, much less their families.

2. Benefits for minimum wage workers are even lower than their wages. Part of the need to keep minimum wage workers from being full time workers is that they would then qualify for more employee benefits. No matter, US workers at the bottom of the wage ladder are given very few benefits, even when they do qualify for them. The United States is 30th among 30 industrialized countries in paying benefits to their workers as a percent of their compensation (check it out in the Business Insider link, below). The US is below Singapore, Brazil and Estonia. Bottom line: low wage workers get very few benefits.

3. The pay gap is widening between line workers and senior management. It’s well documented that senior management compensation is rising dramatically when compared to entry-level workers. The Huffington Post reports that the CEO of Walmart makes $11,000 per hour. Further:

American CEO’s are the highest paid in the world. As of 2011, Corporate CEO’s in America make 340 times what the average worker makes. As a comparison, in 1980, CEO pay was only 42 times more than the average worker. For decades now, the compensation packages of the top one percent have been steadily increasing — income inequality is a runaway train, with the divide between the corporate oligarchy and the average citizen growing larger and larger every year.

I reject the Wall Street perspective that the CEO is running the company and should richly benefit from his position, while line workers should be paid as little as possible without significant benefits.

Costco is an exception to that trend … their average hourly wage is over $20/hour, and 88% of their employees have company-paid health insurance. Does the Costco CEO get Wall Street pressure to lower the compensation his company pays to hourly workers? Absolutely.

Will he do it? No. He believes that if you pay people a decent wage, you get happy employees that perform better for the company and its customers.

Wouldn’t it be great if McDonald’s and Taco Bell believed that?