A new report “Big Business, Corporate Profits, and the Minimum Wage” by our friends at the National Employment Law Project examines the connection between the opposing extremes of stagnant wages and soaring corporate profits. While a great deal of attention has been directed at the role of Wall Street and the financial sector in driving economic inequality in the U.S., it is important to recognize that the top low-wage employers also bear responsibility for the growing disparity between corporate profits and worker compensation.
The central finding of this report is that the majority of America’s lowest-paid workers are employed by large corporations, not small businesses, and that most of the largest low-wage employers have recovered from the recession and are in a strong financial position. Many of these corporations are food companies, including Walmart, Target, Olive Garden, Red Lobster, and McDonald’s.
Some of the key findings include:
- The majority (66 percent) of low-wage workers are not employed by small businesses, but rather by large corporations with over 100 employees;
- The 50 largest employers of low-wage workers have largely recovered from the recession and most are in strong financial positions: 92 percent were profitable last year; 78 percent have been profitable for the last three years; 75 percent have higher revenues now than before the recession; 73 percent have higher cash holdings; and 63 percent 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.
Three years after the official end of the Great Recession, the U.S. continues to face a dual-crisis of stagnant wages and sluggish job growth. Critics argue that a higher minimum wage will discourage companies from hiring, and that most low-wage employers are small businesses that are still struggling in a weak economy. In fact, this report demonstrates that the majority of low-wage workers are employed by large corporations, most of which are enjoying strong profits.
Download the report on the raisetheminimumwage.com site.