By Sarah Anderson
The fast
food industry is notorious for handing out lean paychecks to their burger
flippers and fat ones to their CEOs. What’s less well-known is that taxpayers
are actually subsidizing fast food incomes at both the bottom — and top — of
the industry.
Take,
for example, Yum Brands, which operates the Taco Bell, KFC, and Pizza Hut
chains. Wages for the corporation’s nearly 380,000 U.S. workers are so low that
many of them have to turn to taxpayer-funded anti-poverty programs just to get
by.
The National Employment Law Project estimates that Yum Brands’ workers
draw nearly $650 million in Medicaid and other public assistance annually.
Meanwhile,
at the top end of the company’s pay ladder, CEO David Novak pocketed $94
million over the years 2011 and 2012 in stock options gains, bonuses and other
so-called “performance pay.” That was a nice windfall for him, but a big burden
for the rest of us taxpayers.
My new Institute for Policy Studies report calculates the cost to taxpayers of
this “performance pay” loophole at all of the top six publicly held fast food
chains — McDonald’s, Yum, Wendy’s, Burger King, Domino’s, and Dunkin’ Brands.
Combined,
these firms’ CEOs pocketed more than $183 million in fully deductible
“performance pay” in 2011 and 2012, lowering their companies’ IRS bills by an
estimated $64 million. To put that figure in perspective, it would be enough to
cover the average cost of
food stamps for 40,000 American families for a year.
After
Yum, McDonald’s received the second-largest government handout for their
executive pay. James Skinner, as CEO in 2011 and the first half of 2012,
pocketed $31 million in exercised stock options and other fully deductible
“performance pay.” Incoming CEO Donald Thompson took in $10 million in
performance pay in his first six months on the job. Skinner and Thompson’s
combined performance pay translates into a $14 million taxpayer subsidy for
McDonald’s.
What
makes all this even more galling is that these fast food giants are pocketing
massive taxpayer subsidies for their CEO pay while fighting to keep their
workers’ wages at rock bottom. All of the big fast food corporations are
members of the National Restaurant Association, which is aggressively working
to block a raise in the federal minimum wage to a level that would let millions
of fast food workers make ends meet without public support.
There’s
an easy solution to the perverse “performance pay” loophole. A bill introduced
by Senators Jack Reed (D-RI) and Richard Blumenthal (D-CT) would simply set a
firm $1 million cap for executive pay deductions — with no exceptions.
Corporations could still pay their CEOs whatever they choose, but at least
taxpayers wouldn’t be subsidizing anything above $1 million.
The Joint
Committee on Taxation estimates this legislation would generate more than $50 billion over 10 years.
It makes
no sense for employees of highly profitable giant corporations to have to rely
on government assistance for basic needs. It makes even less sense for ordinary
taxpayers to subsidize the CEOs who are benefiting most from the fast food
industry’s low-road business model.
With
Congress again mulling deficit-reduction strategies, it’s high time that
Washington stopped letting fast food giants gorge on both of these absurd
subsidies.
Sarah
Anderson directs the Global Economy Project at the Institute for Policy Studies
and is the author of the new report Fast Food CEOs Rake in Taxpayer-Funded Pay.
IPS-dc.org
Distributed via OtherWords (OtherWords.org)
Distributed via OtherWords (OtherWords.org)
