As millions of fast-food workers protest and fight for livable wages, some companies are getting ready to reveal how little their employees make compared to their CEOs. That’s because 2017 marks the first year the Securities and Exchange Commission is requiring public companies to publish the ratio of CEO compensation to median worker compensation: For the fast-food industry in particular, the new rule will highlight the pay gap between top executives and service workers demanding higher wages.
CEOs will have to disclose the ratio on next year’s financial reports, but Eater wanted to know just how wide the gap is between fast-food bosses and their lowest-paid workers, right now. We looked at 2016 financial disclosures (which already reveal CEO salary) and crowd-sourced data from PayScale and Glassdoor, which track compensation in the U.S., to probe the gaps. On average, the CEOs at the six top fast-food companies we examined earn in base pay 66 times as much as their cashiers, baristas, and delivery drivers. (“Base pay” doesn’t include additional income from bonuses.)
The $66 to $1 ratio represents just the average. Specifically, Chipotle and Starbucks CEOs earn $75 to their cashiers’ and baristas’ single dollars. In 2016, McDonald’s CEO Steve Easterbrook made $1.26 million as a base salary, or 74 times as much as the company’s lowest-paid workers: the average McDonald’s cashier made $17,000. This might enrage people who are demanding a national increase in minimum wage and have already targeted the burger giant due to its lack of support for the movement. In 2015, McDonald’s struck back, suing the city of Seattle when the town raised its minimum wage from $9.47 to $15.
The pay gap is narrower when comparing the CEOs on our list to an average American fast-food worker instead of their own workers, showing many of their workers may be making less than average salary. The average fast-food worker makes $19,900 a year, according to the Bureau of Labor Statistics. That means that for every dollar he or she makes, CEOs of the chains we analyzed make about $62.
On a smaller scale, things are not as drastic. The pay gap between the six fast-food CEOs and their workers is much wider than the gap between an average restaurant CEO in the restaurant industry and the average fast-food worker in the United States. Chief executives at American restaurants, according to the Department of Labor, make $153,000 on average, meaning that for every dollar the average fast-food worker makes, the average restaurant CEO makes $8. So executives at fast-food giants are making eight times as much as executive leaders of the average restaurant.
For every dollar in in-store sales from locations operated by the company, an average of one percent goes to the CEO’s base pay — that’s 1 cent. Dunkin’ Donut’s CEO Nigel Travis, however, takes a whopping 9 cents.
Why are CEO salaries so high? Culture and incentive: Boards of public companies attract top CEOs with great pay and benefits, in hopes that bosses will please shareholders and grow the business. Our numbers only include the CEOs’ base salaries — the compensation they get no matter how well the company performs. Yet base salary isn’t even half the amount the CEOs actually receive from their companies. CEOs sometimes earn additional bonuses, stock rewards, and incentives if their business succeeds, which, if included in our analysis, multiply the average base salary of the CEOs up to 13 times, widening the average gap in our analysis from 66:1 to 731:1.
As discussions of wage hikes and income inequality rage on, the pay gap between fast-food CEOs and their employees appears to be widening. The Economic Policy Institute shows that in 1970, American CEOs (not limited to fast-food industries) made only 30 times as much as the average employee. Today, they make more than 300 times as much in total compensation (not limited to base salary), which is still lower than 731 times for the CEOs in our analysis.
And as millions of restaurant workers seek to make what they believe to be a real living wage, chief executive pay continues to grow at a faster rate than the average American paycheck.