McDonald's Can't Figure Out How Its Workers Survive on Minimum Wage

[Tarpeian]

The leading opponent of mandatory pay-ratio disclosure is a Washington-based non-profit called the HR Policy Association, which represents top human resources executives at about 335 large corporations.

“We don’t believe the information would be material to investors,” said Tim Bartl, president of the group’s advocacy arm, the Center on Executive Compensation. Accounting for country-to-country differences in wages and benefits at global companies would be costly, time-consuming and all but impossible, he said in an interview.” Source cited: Bloomberg News article 4/30/2013

The above statement is absurd and insulting. We put a man on the moon, but this is “impossible.” The article goes on to reveal the real reason, conflict of interest, and greed.
“The group has brand names behind it: 17 companies on HR Policy’s board of directors have CEO pay ratios in the top 20 percent of S&P 500 corporations, Bloomberg data show. They include General Electric Co. (GE), with a ratio of 491; McDonald’s Corp. (MCD), at 351; and AT&T Inc. (T), at 339.”

Mr. Cotton states the obvious the very thing Our Lord warns us about greed. "James Cotton, a retired securities attorney for International Business Machines Corp. (IBM), may have been the first to propose mandatory disclosure of the CEO pay ratio. He said it would have “a significant impact by either lowering the excessive executives’ compensation or raising the average compensation of employees and managers” in a 1997 article in the Northern Illinois University Law Review. He got the idea shortly after joining IBM in 1970, Cotton said in an interview.
The young attorney, an Army captain during the Vietnam War, said he was listening to managers discuss how to handle the company’s cash when he proposed giving out raises.
“They looked at me like there was something wrong with me,” Cotton recounted. “They said, ‘We can’t do that.’” For years after that, he said, he kept an eye on the CEO’s pay and IBM’s cash holdings, both of which increased.
Informing Workers
Cotton said he mailed his law review paper to the SEC, members of Congress and some unions, including the AFL-CIO, and then forgot about it. Now retired at 73 and almost blind from glaucoma, he didn’t know until recently that the ratio’s disclosure was included in the Dodd-Frank Act.
The ratios will help inform workers, he said. “‘Am I going to get ripped off? Or am I going to get a fair price for my labor?’ If there’s anything I want to happen, it’s that.”

Source cited: Bloomberg News 4/30/2013

Across the Standard & Poor’s 500 Index of companies, the average multiple of CEO compensation to that of rank-and-file workers is 204, up 20 percent since 2009, the data show. The numbers are based on industry-specific estimates for worker compensation. The most egregious being being JC Penny came in at 1,795 to 1 ratio per employee. The link below compiled by Bloomberg paints the picture. Some researchers data suggest even higher ratio’s.

go.bloomberg.com/multimedia/ceo-pay-ratio/

I understand the cost with bring products to market as you explained in the value chain. Does this hold with companies that have been around for decades, and have used automation, and technology to reduce those cost’s? I agree for a startup company this is an enormous expense. For established companies that are well managed, have been around for decades, and have infrastructure in place they are leaner than ever.

My definition of a neocon is not cryptic in any sense. An example would be Rush, Hannity, Beck, and Karl Rove compared to say, Barry Goldwater. Then again I could say Goldwater is a neocon compared to Belloc, Chesterton, and hopefully me.

Continued

 

[Tarpeian]

Mark,

You stated: “If I was to suggest a place for you to have your concern on “greed”, I would suggest that the proper place to have that concern is with institutional investors. Mutual funds, union / government worker retirement funds, and so on. I will try to do a post on that in a bit.”

I agree but along with Wall Street, you have to include big corporation’s, bank’s, and the government both Democrats, and Republicans. It was Clinton who repealed Glass-Steagall in 1999. This is what allowed massive speculation into the markets. Loans that had always been held by small banks, and credit unions were now allowed to be bundled, and sold to the big financial institutions. Now you have this massive influx of money, from main street being sent to speculators on Wall Street. This is what caused the crash. Historians will look back hundreds of years from now (assuming the end has not come), and point to the repeal of Glass-Steagall as one of the death blows to our country. And Dodd-Frank its replacement is a joke.

I have the same issues with unions that you list, and I was a shop steward. To be fair I would distinguish between leadership and membership. I would say many don’t hold to the culture of death ideology. Unfortunately many card carrying members like most Americans vote their wallet. And once again I’m not speaking about government unions. I always voiced my displeasure about being told how to vote. And I had a real conflict of interest knowing a portion of my dues went to the DNC.

Pax,
Tarpeian

 

[markomalley]

Hello Mark,

I don’t regard all CEO’s as intrinsically evil purely because they are wealthy. That is what the Marxists want you to believe. Our Lord teaches. “And again I say to you: It is easier for a camel to pass through the eye of a needle, than for a rich man to enter into the kingdom of heaven. And when they had heard this, the disciples wondered very much, saying: Who then can be saved? And Jesus beholding, said to them: With men this is impossible: but with God all things are possible.” Matthew 19: 24-27 He is saying that it is EXTREMELY difficult for wealthy people to maintain DETACHMENT from their wealth, and the richer people become, the more attached they tend to be to their wealth.

It has been three years since Congress ordered public companies to reveal actual CEO-to-worker pay ratios under the Dodd-Frank law, (by the way Dodd-Frank is a joke) the numbers remain unknown. Why the delay, why the reluctance? Why don’t corporate executives want us to know their compensation packages? Is it a matter of privacy? In 1998 my employer decided to publish my wages, vacation, pension, and health and welfare package to the world. My privacy was not a factor. It was done because the company was losing a public relations war in the press, over a labor dispute. In a last ditch attempt, out of desperation to paint labor as a bunch of overpaid, ungrateful, prima donnas, and to demonstrate how “generous” the company was to its already “over compensated workers,” compared to the average peasant. The fact that corporate executives don’t want to disclose their numbers speaks volumes.

Continued:

As an FYI, CEO salaries for publicly traded companies are required to be disclosed by the SEC. They either appear on the company’s 10-K or the annual proxy statement.

Since we are talking about McDonalds on this thread, here is an example:

i.imgur.com/sBQY03c.png

I am not trying to justify his income or defend it in any way, but it is disclosed.

Any publicly traded company that I’ve ever researched has disclosed that information…as I say, it’s the law…and their records have to be audited and attested, so it’s not something that they’d be willing to go to jail for.

Private companies (like Bechtel, as an example) or non-profits have no such obligation.

 

[markomalley]

Across the Standard & Poor’s 500 Index of companies, the average multiple of CEO compensation to that of rank-and-file workers is 204, up 20 percent since 2009, the data show. The numbers are based on industry-specific estimates for worker compensation. The most egregious being being JC Penny came in at 1,795 to 1 ratio per employee. The link below compiled by Bloomberg paints the picture. Some researchers data suggest even higher ratio’s.

go.bloomberg.com/multimedia/ceo-pay-ratio/

Tell you what, give me 5 random US corporations that are publicly traded and I will come back with their CEO’s compensation…and tell you where I found it.

I understand the cost with bring products to market as you explained in the value chain. Does this hold with companies that have been around for decades, and have used automation, and technology to reduce those cost’s?

It’s a little too open ended to go into here. But in general, one seeks out methods to reduce costs, streamline, and improve quality (fitness for use…reduction of scrap…reduction of rework)

With automation, it’s pretty simple: when labor costs rise (due to a scarcity of workers with certain skill sets), it becomes increasingly beneficial to look at re-working the process to include inserting automation into the process. There generally is a large initial investment in equipment and process engineering that must be recouped. The higher the labor costs, the easier it is to justify the investment in process equipment.

I agree for a startup company this is an enormous expense. For established companies that are well managed, have been around for decades, and have infrastructure in place they are leaner than ever.

With startups, it is sort of a mixed bag. You have to realize that a lot of times a startup will outsource much of the manufacturing itself and concentrate on research, development & engineering, as well as final assembly and kitting to produce a finished good. Not always, but a whole lot of times. For example, I’ve worked in what you would deem a “start up” – we would outsource circuit board manufacturer to one outfit, plastic case fabrication to another outfit, cable fabrication to yet a third outfit, manual publication to a printer, driver CD printing to another publisher, and so on. When we received the parts in our warehouse, we would assemble the components, put them on a bench for test and alignment, and then kit each assembly into an end item kit based upon customer orders. None of our subcontractors knew exactly why they were building the parts…we gave them a purchase order with our specification, they sent us a “first article” (well, more than “a”) to make certain that their manufacturing process produced what we needed, and then we ordered production quantities from them.

There would be zero way we could do it all in house…even if we bought all of the tools, in as much as we would have a hard time keeping each person who built the components busy for 40 hours a week. By outsourcing component manufacture, our vendors did a production run for us, then for the next client, and so on.

My definition of a neocon is not cryptic in any sense. An example would be Rush, Hannity, Beck, and Karl Rove compared to say, Barry Goldwater. Then again I could say Goldwater is a neocon compared to Belloc, Chesterton, and hopefully me.

Continued

Interesting. I would not have placed Beck in that group (he’s – imho – far too libertarian to fit in with the rest of them).

 

[markomalley]

Mark,

You stated: “If I was to suggest a place for you to have your concern on “greed”, I would suggest that the proper place to have that concern is with institutional investors. Mutual funds, union / government worker retirement funds, and so on. I will try to do a post on that in a bit.”

I agree but along with Wall Street, you have to include big corporation’s, bank’s, and the government both Democrats, and Republicans. It was Clinton who repealed Glass-Steagall in 1999. This is what allowed massive speculation into the markets. Loans that had always been held by small banks, and credit unions were now allowed to be bundled, and sold to the big financial institutions. Now you have this massive influx of money, from main street being sent to speculators on Wall Street. This is what caused the crash. Historians will look back hundreds of years from now (assuming the end has not come), and point to the repeal of Glass-Steagall as one of the death blows to our country. And Dodd-Frank its replacement is a joke.

I have the same issues with unions that you list, and I was a shop steward. To be fair I would distinguish between leadership and membership. I would say many don’t hold to the culture of death ideology. Unfortunately many card carrying members like most Americans vote their wallet. And once again I’m not speaking about government unions. I always voiced my displeasure about being told how to vote. And I had a real conflict of interest knowing a portion of my dues went to the DNC.

Pax,
Tarpeian

Best way to illustrate this is through an example.

Since we are talking about McDonalds, let us say you own 2 million shares of Mickey Dee’s stock. (I know, neither of us are that rich nor want to be that rich). There are currently 1.66 billion shares of McDonalds common stock currently in circulation.

You think the CEO is a greedy so-and-so and want to cut his salary. So you move that the board of directors does that. It comes up to a vote…

You don’t want McD’s to use genetically engineered products. So you take action.

You want to pay the hourly workers a starting wage of $10 an hour minimum (more in high cost areas). So you take action.

The point is that you KNOW that you own McD’s stock and so you care about what happens to that company…you own a big chunk of it after all and you feel responsible. And if your ethical actions cause the company to lose a little in the short term, you can live with it.

Let us instead say that you hold shares of the Blackrock Equity Dividend Fund. Chances are that you won’t know that the Blackrock Equity Dividend Fund holds over 4.4 million shares of McD’s stock. And chances are, you don’t care. When you get your statement from your 401(k)l, all you will be interested in is whether your investment in Blackrock Equity Dividend Fund is making money for you or not. If it does, you’re happy. If it doesn’t, you may sell the Blackrock Equity Dividend Fund or, when it comes time for a proxy vote on the fund manager, you may vote to fire the fund manager and hire a different one who is more interested in making you money.

You don’t get a vote on what McDonalds does…your fund manager gets that vote. Again, you may not even realize that you own a piece of McDonalds. Since your desire for that fund is to make money, your fund manager is going to act on your behalf and cast the appropriate votes to ensure that McDonald’s makes money…whatever it has to do in order to do so. Why? Because that’s what you want…even though you may not realize that this is the result.

That’s one half of the problem.

The other half of the problem is on the internal company side. If you are a senior manager in one of these publicly held corporations (like McDonalds), you have to report up your revenue and earnings every quarter (at least) to your boss, who compiles them and sends them up to corporate headquarters, who then compiles them with all the rest and reports to the board of directors and to the stockholders through a quarterly statement.

Your job is to make money for the corporation. If you lose money in a quarter, you are in big, big trouble. And you’d better have your ducks in line explaining exactly what happened. If you do it twice in a row, you better have had a sterling record beforehand… and if you do it three times in a row, you’re gone.

Trust me, that makes a big, big, big difference in how you manage. Not just peoples’ salaries…but making long term investment decisions (“do I want to invest this large amount into R&D…it will be a couple of years before I get payback, but I am certain I will…”)

In other words, it changes the way you manage.

And those two factors are what Pope Benedict was criticizing in his encyclical Caritas in Veritate.

 

[Tarpeian]

Mark,

Interesting and informative post. I will spend more time with them this evening after the kids are in bed. It deserves more than a quick once over to do them justice.

And I did hesitate with Beck in that list for the reasons you stated

Pax,
Tarpeian

 

[october_baby]

Mark,

Interesting and informative post. I will spend more time with them this evening after the kids are in bed. It deserves more than a quick once over to do them justice.

And I did hesitate with Beck in that list for the reasons you stated

Pax,
Tarpeian

It was a bad list; 1) Rush is what I would call an american conservative; i.e. he hold views that
a lot of american conservatives hold. At fist I thought he was a shill for republican party, but as the party moves further left, he hasn’t changed.
2)Hannity- republican,shill hack.
3).Beck a libertarian with some conservative leanings
4).Rove- I can’t stand this guy, he’s an establishment neo-con hack. He’s the worst thing to happen to the republican party since Richard Nixon.
so in my view you got 1 out 4.

 

[markomalley]

i.imgur.com/sBQY03c.png

BTW, I thought I remembered reading something about this guy a while ago which I thought was interesting:

During his 23 years at McDonald’s, Thompson has helped drive business results and global strategic innovation across the organization. Since joining as an electrical engineer in 1990, he has held a variety of key leadership positions within the company including Regional Vice President, Division President and Chief Operating Officer. Between 2006 and 2010, Thompson served as President of McDonald’s USA, the company’s largest business segment. Most recently as President and COO of McDonald’s Corporation, Thompson and his leadership team established three global growth priorities in support of the McDonald’s Plan to Win: to optimize the menu, modernize the customer experience and broaden restaurant accessibility.

I always think it’s pretty cool when somebody can join a company at the worker level and rise up to a high level over time. I don’t see that all that much anymore. While this guy didn’t start flipping burgers, starting work as an engineer is “worker bee” level still.

BTW, if you look at the link: their COO started off as a burger flipper. I didn’t look through each and every bio, but I saw quite a few who started off as “crew members”.

 

[ThinkingSapien]

So, what is a living wage? Should a job pay one income to a father of four and another income to an unmarried employee for doing the same job? Or does a living wage mean “enough money for one person to live on”?

It’s going to depend on the resources available to the person and the environment in which he or she lives. When my dad first went to college some one in the financial area of the school told my dad he was living below the poverty line. He had never thought of himself living at the poverty line. What the financial aid department did not account for was that my dad had been living in an agricultural area where they could acquire the resources that they needed to live through a combination of farming, trading with others in the community, hunting, and drawing water from the well.

By contrast if I tried to do the same thing I currently could not have the same success. There’s no clean water sources near me beyond what I pay the water company. There are not trees that can be cut down to provide energy for warming and cooking. The land that I call my “own” isn’t enough for growing the amount of food that I need. For the things that I do grow there are not neighbors that also produce or gather resources with which to trade. To get the resources needed to live I must pay those that have a means of producing them elsewhere and transporting them to where I live. I make more than a sufficient amount of money to do this. I’ve got no children or the resource needs that come with having children.

This is no challenge for me at the moment. But the costs for this will vary by geography. The needs of a person can also vary. Nailing down how much a “living wage” is could be difficult.

 

[ThinkingSapien]

I always think it’s pretty cool when somebody can join a company at the worker level and rise up to a high level over time. I don’t see that all that much anymore. While this guy didn’t start flipping burgers, starting work as an engineer is “worker bee” level still.

Yeah, I don’t see that very often. I wonder how many people that are entering the work force today will have the option of staying there for their entire career.

Perhaps it is the line of work that I’m in, but at some of the companies at which I’ve worked there have been what I will call “advisory statements” that if you want to climb above a certain level you need to leave the company and come back.Some times this was because of policies that limited one’s ability to move up; for certain types of positions the companies would only hire externally. But sometimes it seems that it was necessary to get out of the environment for a while for others to see the employee in a different light.

 

[Tarpeian]

BTW, I thought I remembered reading something about this guy a while ago which I thought was interesting:

During his 23 years at McDonald’s, Thompson has helped drive business results and global strategic innovation across the organization. Since joining as an electrical engineer in 1990, he has held a variety of key leadership positions within the company including Regional Vice President, Division President and Chief Operating Officer. Between 2006 and 2010, Thompson served as President of McDonald’s USA, the company’s largest business segment. Most recently as President and COO of McDonald’s Corporation, Thompson and his leadership team established three global growth priorities in support of the McDonald’s Plan to Win: to optimize the menu, modernize the customer experience and broaden restaurant accessibility.

I always think it’s pretty cool when somebody can join a company at the worker level and rise up to a high level over time. I don’t see that all that much anymore. While this guy didn’t start flipping burgers, starting work as an engineer is “worker bee” level still.

BTW, if you look at the link: their COO started off as a burger flipper. I didn’t look through each and every bio, but I saw quite a few who started off as “crew members”.

You can do that where I used to work its one of the last companies you can start, and finish a career. They still believe in hiring from within the ranks, and if you are highly motivated you can be very successful. I started in 1987 as a part time employee, and moved all the way up the ranks. By the time I retired in 2009, I performed every job (save management) there. I was encouraged every year to submit my letter of intent for management. I could not afford the pay cut. Most management positions unless it’s upper tier do not give you the power to effect changes.

Pax Christi,
Tarpeian

 

[Tarpeian]

It was a bad list; 1) Rush is what I would call an american conservative; i.e. he hold views that
a lot of american conservatives hold. At fist I thought he was a shill for republican party, but as the party moves further left, he hasn’t changed.
2)Hannity- republican,shill hack.
3).Beck a libertarian with some conservative leanings
4).Rove- I can’t stand this guy, he’s an establishment neo-con hack. He’s the worst thing to happen to the republican party since Richard Nixon.
so in my view you got 1 out 4.

I wish I would have used the word “american conservative.” If we agree Hannity is a shill hack, then I still believe to some extent that Rush must be. All of Hannity’s material is Rush repackaged. Rush, Hannity, and Rove are all cut from the same cloth. That would get me back to 75%, and I quickly admitted my gaffe with Beck as markomalley pointed out. I chalk that one up to, “internet fatigue.” In theory I’m back to 4 for 4.

 

[october_baby]

I wish I would have used the word “american conservative.” If we agree Hannity is a shill hack, then I still believe to some extent that Rush must be. All of Hannity’s material is Rush repackaged. Rush, Hannity, and Rove are all cut from the same cloth. That would get me back to 75%, and I quickly admitted my gaffe with Beck as markomalley pointed out. I chalk that one up to, “internet fatigue.” In theory I’m back to 4 for 4.

Hannity never has libertarians and very seldom has true conservatives (he had Rand Paul on,
be he almost had too because Paul has been in the news lately.) The usual Hannity fare
consists of Karl Rove,John Boehner, and Mitch Mcconnell. Neocons all. Republican hacks all. Right now Hannity is talking about Antony Wiener. He’s a republican shill.
Rush used to shill for the republican party, but here lately he’s been taking the republican
party to task for it’s leftward lurch. That in my mind makes Rush an "american conservative "
not a neocon. If you want to have examples of american conservatives in the republican party
try these names; Mike Lee, Rand Paul, Ted Cruz, and Jason Chaffetz
As a personal note, I thank God for Beck because he taught me not to think along party
lines. I think your confusing conservative with neocon.
Thus Karl Rove should not be mentioned in the same breath with Beck,Rush, and I hate
to admit it Hannity.

 

[markomalley]

I wish I would have used the word “american conservative.” If we agree Hannity is a shill hack, then I still believe to some extent that Rush must be. All of Hannity’s material is Rush repackaged. Rush, Hannity, and Rove are all cut from the same cloth. That would get me back to 75%, and I quickly admitted my gaffe with Beck as markomalley pointed out. I chalk that one up to, “internet fatigue.” In theory I’m back to 4 for 4.

Leaving Rove aside…

The first thing to remember about any of these radio personalities is that they are first and foremost entertainers. They will be outrageous and provocative to retain an audience. That’s how they make their money.

Limbaugh’s strength is that he was the first national entertainment voice on radio to express conservative ideas as the theme of his entertainment. He has, by far, the most experience of any of these folks and is masterful at his craft. I would hope that anybody would see that and acknowledge it…whether they agree with the content or not.

Hannity is a sycophant, as others have pointed out. He parrots the Republican Party line. If he had a different time slot on the radio than the one he does, I doubt that he would even have a national audience – I think people who had their radios tuned to the channel are just too lazy to turn them off when his show comes on (myself, I turn my MP3 player on in the car and listen to tunes rather than endure him…but I guess I’m the exception). On TV, he made his bones as the Republican counterweight to Alan Colmes. He succeeded not because of any intellectual firepower on his part, but because of the weakness of his co-host. I am honestly amazed by the fact that his show succeeds in its time slot on Fox. Again, I’d rather watch “shark week” on Discovery than endure him.

Out of all the national conservative radio talk show hosts I’ve heard throughout the years, the only three that I believe have any intellectual gravitas whatsoever were G Gordon Liddy, Laura Ingraham, and Mark Levin. Please keep in your memory that all three are still entertainers, but at least all three of them have actually worked inside of government (of course, everybody knows Liddy from the Nixon era…Ingraham was a clerk for Justice Clarence Thomas…and Levin worked in Reagan’s Justice Department). That is not to say that conservatives should act as chelas and treat them as gurus, but at least they all have a clue as to what actually goes on inside of government…

 

[Matilda_Bennett]

Please remember that discussions of particular political parties and figures are not allowed in the Social Justice forum. Thank you for your cooperation.