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The Year of the Low-Wage Worker

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Posted on Jan 3, 2014
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By Sonali Kolhatkar

(Page 2)

An examination of the wealth distribution in the U.S. reveals just how obscenely skewed it is toward the opulent. The richest 400 Americans now are worth more than the combined net worth of half of all Americans, and more than the annual GDP of some entire countries.

A recent report by the Institute for Policy Studies shows one specific way in which wealthy Americans redistribute wealth upward. The report’s author, Sarah Anderson, found that McDonald’s “CEO in 2011 and the first half of 2012, James Skinner, 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.”

What Anderson has found is that fast food companies like McDonald’s are deducting these forms of so-called performance pay from their taxes, which amounts to a government subsidy. In fact, finds Anderson, “CEOs of the top six publicly held fast food chains pocketed more than $183 million in fully deductible ‘performance pay,’ lowering their companies’ IRS bills by an estimated $64 million.”

Anderson told me in an interview that “there’s this crazy idea out there that we’re a country that’s broke and the only way to address our budget is to slash spending on things like Social Security and teachers and things that make a real difference for ordinary Americans, and the reality is we are such a rich country. The problem is we have so many of these loopholes and other tricks that have been used to put so much of our resources into the pockets of wealthy CEOs and other individuals.”

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There are some silver linings however. The Securities and Exchange Commission is now considering a new rule, part of the Dodd-Frank Act, requiring the reporting of how CEO pay compares to a company’s lowest-paid workers. While it won’t actually halt the upward redistribution of wealth, the rule will highlight the unbelievable fact that the average ratio of CEO-to-worker pay is about 350 to 1.

Lowering that ratio is not a pipe dream, at least on the international stage. France’s government, led by Socialist Francois Hollande, recently upheld a new law taxing millionaires at a de facto rate of 75 percent, up from an earlier rate of 66 percent. And a Swiss effort to cap CEO pay at 12 times the wage of a company’s lowest-paid worker inspired activists worldwide even though it failed after an advertising blitz by corporate opponents.

On the streets of American cities, low-wage workers are refusing to wait for policymakers in Washington, D.C., to address poverty and are taking matters into their own hands. On Dec. 5, a day after the president’s speech, workers from various fast food outlets walked out of their jobs in at least 100 American cities. The major coordinated action followed a similar effort in August and came less than a week after Black Friday labor protests by Walmart employees. The fast food workers want higher wages—specifically $15 an hour—and the right to form a union. Unions like the SEIU and Change to Win have been working behind the scenes to fund the workers’ actions and provide logistical support and guidance.

In Los Angeles, workers from various fast food outlets walked off the job and picketed outside a McDonald’s restaurant on Sunset Boulevard, holding signs saying “Fight for $15.” I went to the strike to speak with some of the workers and organizers and met Sonia Roldan, a young woman who works for McDonald’s. Roldan told me, “At first I wasn’t sure what this movement was all about, but then, when I got introduced to the organizer at our store, she began making sense of all the rights we as workers have. That’s what motivated me and other people who have been working there and receiving very low wages.” Roldan, who lives with her family, tries to contribute toward the rent and acknowledges that “I don’t have enough by the end of the month and sometimes I have to rely on my mother who has my two youngest siblings to take care of as well. ... It stresses me out.”

The most powerful piece of advice to fellow workers at the rally came from a young man named Leo Valdez who works for Office Max. Valdez had walked off his job to be there in solidarity with the fast food workers and because “I also make low wages.” Valdez told me, “I’m extremely excited. We need to get the message out to all low-paid workers that we need to organize because your companies want you demobilized, demoralized, misinformed and, most importantly, submissive.”

Valdez added defiantly, “They don’t want you being a disobedient worker so you need to disobey once in a while, to speak up.”


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