Research group criticizes taxpayer subsidy of restaurant industry
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 at
This story was originally published April 21, 2014 at 11:00 PM with the headline "Research group criticizes taxpayer subsidy of restaurant industry."