Low Wage Workers Driving Big Business Profits
July 20, 2012 10:17 am
A new report from the National Employment Law Project (NELP) indicates that the majority of low-wage workers toil at hugely profitable businesses that have over 100 employees. The NELP report clearly demonstrates that the lobby against the minimum wage is in place to preserve a culture of excessive executive compensation — not the interests of small businesses, as is often claimed.The report’s central finding is as follows:
“America’s lowest‐paid workers are employed by large corporations, not small businesses, and … most of the largest low‐wage employers have recovered from the recession and are in a strong financial position.”
The NELP defines low wage workers as those making under ten dollars an hour. Low-wage workers are heavily concentrated in the following industries: Food Services (57.4% are low wage), Accommodation (40%), Retail trade (36.5%), Arts, Entertainment & Recreation (34.2%) and Administrative Services (33.2%).
The restaurant lobby, in particular, has thrown considerable money and energy behind keeping the minimum wage low. In an interview with Unionosity, Restaurant Opportunities Center Communications Director Meghana Adams said, “The National Restaurant Association (NRA) is one of the largest lobbying groups against the NYC minimum wage increase – Darden [Olive Garden, Red Lobster, Capital Grille] is listed separately (as one of the largest corporations opposing the increase). It’s a massive lobbying sector and arguably, they’re the ones keeping standards low for everyone.”
The NELP report breaks down the post-recession financial condition of the nation’s 50 largest low-wage employers. Refusal to pay a living wage isn’t all the 50 employers have in common:
- The 50 largest employers of low‐wage workers have largely recovered from the recession and most are in strong financial positions: 92% were profitable last year; 78% have been profitable for the last three years; 75% have higher revenues now than before the recession; 73% have higher cash holdings; and 63% have higher operating margins (a measure of profitability).
- Top executive compensation averaged $9.4 million last year at these firms, and they have returned $174.8 billion to shareholders in dividends or share buybacks over the past five years.
Opponents of a higher minimum wage point to a potential strain on mom and pop businesses, yet the NELP report indicates that the companies employing the lion’s share of low-wage workers are multinationals swimming in profits. In addition, the employers on the list read like a who’s who of businesses under investigation for wage and hour violations, anti-union practices and employment discrimination: Walmart is the largest low-wage private employer in the nation, with 1.4 million associates making an average of under $9.00 an hour. Other companies who achieve the ignominious trifecta of low-wages, labor abuses and outsized profits include Darden, Panera Bread, and Sodexo.
With one in four private sector jobs paying under $10 an hour, a minimum wage raise would certainly be one way to jump start our struggling economy. President Obama campaigned on raising the federal minimum wage from $7.25 to $9.50 an hour by 2011, yet bills raising the minimum wage stalled in both the House and Senate. The current NELP statistics render economic arguments against an increase laughable. The corporations paying low-wages have left this recession in the dust — it’s time to pull their workers up from poverty.
Image from here