Inside Story America

Fast food: High profits and low wages

As companies make record profits, we ask what is behind the resistance to increasing pay for those earning the least.

Fast food employees in New York City demand higher pay amidst a national debate over increasing the minimum wage.

“I think what’s clear is that they have made a decision to drive their profits overwhelmingly by paying low wages because we know that employers have a choice even within the fast food industry …. If they were to imitate … other fast food chains, other high road employers like Costco, what we know is that they could remain profitable, actually earn very strong profits, be more productive and still pay their employees fairly.

– Jack Temple, a policy analyst

Last week in New York City, hundreds of fast food workers walked off their jobs, demanding higher wages and improved benefits. Many of them earn the federal minimum wage of $7.50 an hour.

New York state recently approved an increase in the minimum wage to $9 an hour by the year 2016. But for a full time worker that still would only mean a yearly income of $18,000 in a city where the living wage for one adult is estimated at $26,500.

In response to the protests, McDonald’s issued a statement saying it treats their employees with dignity and respect while offering competitive wages.

Employees, however, say the company is simply ignorning their demands. And there is quite a disparity between worker pay and company profits.

According to Bloomberg, the median earnings for a fast food worker are approximately $18,000 a year.

Meanwhile McDonald’s has seen 135 percent profit increase between 2007 and 2011. And in 2011, their highest paid executive made $8.8m.

Yum! brands, which operates several fast food restaurants, including Taco Bell and Pizza Hut saw a 45 percent increase in profits between 2007 and 2011. And their highest paid executive made $20.4m in 2011.

“One of the problems … is that every now and then Congress does increase the minimum wage but they have failed to link it to inflation so it just keeps falling further behind right after they pass. 

– Nicole Woo, Center for Economic and Policy Research


The protests come at a time when there is a wider debate across the United States over whether the federal minimum wage should be increased. Opponents to any rise say it would be a job killer.

But supporters say it is necessary to help the country’s lowest-paid climb out of poverty and get the US economy moving again.

So, as companies make record profits, what is behind the resistance to increasing pay for those earning the least?

Inside Story Americas, with presenter Shihab Rattansi, discusses with guests: Jack Temple, a policy analyst at the National Employment Law Project, an organisation which advocates for the rights of lower-wage workers; and Nicole Woo, director of domestic policy at the Center for Economic and Policy Research.

“We are becoming an economy of low-wage service sector work, when many of the manufacturing jobs used to be some of the best paying jobs for middle class folks are leaving this country and being shipped out overseas. The jobs that are left in this country now are service sector jobs [and] the only people that can do these jobs are the people here in this country.

“And I think what we see is workers understanding that if these jobs don’t continue to elevate you and get you out of poverty and there’s nothing else that’s out there then we have to create some change and I think that’s what workers have been demanding and that’s what a lot of this worker movement has been in the country over the past several months.”

Jonathan Westin, New York Communities for Change