U.S. taxpayers are subsidizing pay for restaurant company executives at they same time they’re subsidizing public assistance for low-paid restaurant workers, according to a report released today by the Institute for Policy Studies.
The research group, which advocates for workers’ interests and a smaller pay gap, targeted some of the nation’s largest restaurant companies that oppose raising the federal minimum wage for workers.
Institute researchers looked at executives’ performance-based pay in the 20 largest corporate members of the National Restaurant Association. The association was targeted for research because it is a principal lobbyist against raising minimum wages for workers.
The federal minimum wage for tipped workers has been $2.13 an hour for 22 years. The federal minimum for wage earners who don’t earn a substantial part of their income in tips is $7.25 an hour, where it’s been since mid-2009.
The institute’s report looked at restaurant industry profits, which reached $660 billion in 2013. Authors said that boosted chief executives’ performance-based pay but left about 60 percent of restaurant workers at low wage, causing more than half of the nation’s fast-food workers to use at least one form of taxpayer-subsidized assistance such as food stamps, Medicaid or other programs.
The report said the 20 companies saw their combined federal tax bills lowered by $232 million over the past two years because of tax-code loopholes regarding pay-for-performance executive pay granted in stock and option awards instead of salary.
Also, the report said, the CEOs of those companies “pocketed more than $662 million in fully deductible performance pay.” The Starbucks CEO alone had $236 million in exercised stock options and other performance pay in 2012-2013, the report said.
“That translates into an $82 million taxpayer subsidy for Starbucks — enough to raise the pay for 30,507 baristas to $10.10 per hour for a year of full-time work,” wrote authors Sarah Anderson and Betsy Wood.
The report said other restaurant companies that are big beneficiaries of the CEO “pay subsidy” were: Chipotle; Yum Brands (owner of Taco Bell, KFC, and Pizza Hut); McDonald’s; Dunkin’ Brands; and Darden (owner of Olive Garden, Red Lobster, LongHorn Steakhouse and Capital Grille).
The full report is available from the institute atwww.ips-dc.org.