Microeconomics: Income Inequality for Fast Foodservice Industry Income inequality is a very important concept to talk about when we really go deep into microeconomics. In the United States alone there are sectors that have income inequality that has been in our headline news for the past years, and to top off the list would be fast foodservice. There has been a lot of studies that looked into CEO-to-worker compensation ratios across all labor forces that show fast foodservice industry is the most unequal sector in American economy (Jaimeson, 2014). This inequality of wages can easily be explained and will be fully detailed in this paper. That is why it is important to look into cause of income inequity from a foodservice industry …show more content…
We can see this inequality from CEO position having their pay doubled in 2009 for the decade of the year 1990s, which was quadrupled average pay than for the year 1980s.That was also eight times the CEO average for all the decades if the mid-20th century. With this we can see over the years to decades we can see CEO pay has increased a lot more than expected to be, and still growing. Looking at hourly wages of non-corporate pay that has been the same since the early 1970s. Studies have shown between 1947 and 1972 it was said to have hourly wages only rose 76%, but ever since it has only risen 9% (Income Inequality, n.d.). While CEO pay has been growing exponentially, we can see other hourly pay hasn’t been increasing since the 1970’s which is hard to believe.
CEO Pay Compares to Typical Workers According to a report created by Ruetschlin (2014) stating that compensation practices that is seen within companies of fast food industries is “out of line” with rest of our economy. We can see that CEOs have the greater and greater economic rewards while workers don’t seem to reap those rewards so luckily. In Ruestschlin studies, she was able to piece together that CEO average pay since 2000 has quadrupled in numbers than the typical workers. That in 2013, the average CEO took home a whopping $23.8 million dollars unlike typical works that doesn’t even have that much if we were to combine each worker in every food establishment. We can
This inequality stems from the changes within the U.S. economic structure coupled with the changes in our government policy. At least 80% of all citizens work in a service related job. These types of jobs pay far less than the manufacturing jobs that dominated the American economy. With the present economy looking bad, most employers are laying off employees and possibly replacing them with lower paying temporary or
In “The Overpaid CEO” Susan Homberg and Mark Schmitt bring to attention how CEO pay in America is ridiculous in numbers as opposed to other parts of the world. Looking back, in the nineteen hundreds CEO pay was relativity average. As businesses and companies began to expand there was a demand for higher pay. Between 1978-2012 CEO pay increased by 875%! Many rules and regulations were put in to place to limit the pay of a CEO, such as the Securities Exchange Act that I will explain later on, regardless CEO pay kept getting higher and higher as many loopholes were found. Bonuses pay a large part in the salaries of CEOS’, as an effect CEOS’ tend to partake in risky behavior in order to score those big paychecks.
CEO compensation has been a heated debate for many years recently, and it can be argued
The wage gap continues to stretch farther and farther apart. A wage gap is the ratio difference between the top twenty and lower twenty percent of income levels. The United States is a leading example of a differentiating income levels. A recent study by Harvard students, showed the United States pay gap ratio from CEO’s to average workers is around 350:1. This is a ridiculous difference in pay, especially when there are millions of people underneath the poverty level. The differences in wages being described is solely targeting skill level and is not referring to any other factors like gender, race, social class, and etc. Society has been dealing with income inequality for thousands of years. Although, it is unfair for people to be paid unequally, but it is also the only way for the economy to run smoothly. It would be impossible for the United States to pay everyone equally because of time spent, work incentives, and executive positions.
Executive Compensation. I’m in agreement with Thomas Piketty that the one cause of rising inequality in the United States “the rise of supersalaries” for top executives (Piketty & Goldhammer, 2014, p. 298). The average American estimates CEO to worker pay ratio at about 30-to-1, which is more than 4 times what they believe to be ideal. The career review site Glassdoor reported from 2014 data that the average pay ratio of CEO to median worker was 204-to-1 and that at the top of the list, four CEOs earn more than 1,000 times the salary of their median worker with the very top pay ratio of 1,951-to-1. In some cases a CEO makes in one-hour what it takes the average employee six-months to earn. In comparison, the Washington Post reported for the
According to the Wealth Inequality in America video, the CEO of a company makes 380 times more than the average paid worker. With these numbers, the average worker must work over a month to make what the CEO makes in an hour. That’s insane, there is no way that the average worker does not work as hard as the CEO of the company works, the workers are what make the company what it is. Sure the CEO has worked very hard to get to where they are in the company, but with the way everything else is, can we truly be sure that the way the CEO is getting paid is
In an article on AlterNet entitled “Fast-Food CEOs Making 1,200 Times Workers’ Wages Have No Idea What Their Greed Does To Employees” it revealed just how pathetic this industry really is. In the article by Alyssa Figueroa, she stated that “In the past decade, fast-food CEOs’ wages have increased more than 400 percent, while workers’ wages increased 0.3 percent”. In a later statement, “the average fast food CEO salary at $23.8 million in 2013 and the average worker salary at $19,000”. If we are a country that recognizes the issue of income inequality, why are we not doing anything in relation to this issue? The article featured numerous testimonies including many occurrences of wage theft. In a testimony by a woman named Marie Sanders, she states “I was 17 years old and I had problems at home, so I needed to budget my money in order to pay my expenses, I just stumbled upon it. I would ask my manager for printouts of my time. And that’s when I had noticed that I had been clocked out for days that I did not take breaks. And it would be
This is a topic that had been lingering in the shadows until the Occupy Wall street movement made many take a good look at the inequalities that exist all across the board. Vidal states that “the outrage of Occupy was directed at the top 1 percent of the population, an elite class consisting mainly of investment bankers, corporate executives, and layers who currently own 35 percent of the total net wealth in the United States.” (Anderson pg 270) Vidal explains that in order for us to fully understand economic inequality we need to take a look at the stagnation of living standards experienced by millions of
Income inequality in the United States has been increasing gradually as from the 20th century where there was economic stability. It is estimated that around a quarter of the American worker population receives not more than $10 in an hour. Through this condition, it creates an income that is below what the federal poverty level demands. Those who receive low income include the fast food employees, cashiers, nurse's aides and many more. Other individuals get good payments which are above $10 per hour. Wealth inequality in America is quite common as there are those who are the major economic block and those who can’t afford even the three meals in a day. The social issues that income and wealth inequality might cause in the United States include poverty, household debts becoming high, high crime rates, no health insurance for the low-income families, high mobility rates, high crime rates and school dropouts.
Since the 1970’s there have been surveys showing there is a pay gap between men and women. This gap seems to have been decreasing since then but it is still there. There have been social movements over the pay gap issue stating that “in the 1970s was 59 cents on the dollar and a more recent crusade for pay
Many adults are dependent on fast food industry jobs to support their families. “More than one in four fast-food workers are raising children, according to a Center for Economic and Policy Research study” (Owens). The sad truth to the matter it that “eighty eight percent of low-wage workers are adults today, compared with seventy four percent thirty five years ago” (Owens). Large companies are able to pay their lowest, “frontline” workers a decent salary, but many don’t want to share their wealth. These large industries are more than capable of doing so and to watch as their employees have to scrape by every week, to be able to make ends meets, is very disturbing. “Boosting wages for America’s lowest-paid workers is a crucial step toward reducing economic inequality and rebuilding a strong economy” (Owens).
Many proponents of capitalism argue that the wealth is shared with the workers. But is it true? According to an annual report in 2008, an average American CEO makes as much money in one day compared to what an average worker earns in one year1. And the disparity between business leaders and average workers continues to grow over time. From 1990 to 2005, the CEO’s salaries increased almost 300%, while a worker received a scant 4.3%2. The social consequence of this disparity is the concentration of wealth on a small percentage of population.
This report explores the issue of the pay that top executives make, and the reasons why they do. It also suggests improvements that can be made to make the system better. High Pay Seems Small When Compared To Company Profits Many companies pull in profits that are extremely high. When an employee of such a companies salary is compared to the amount of profit that the company earns, it starts to seem reasonable. It only makes sense that if the employee is directly responsible for the success of their company, then they deserve to get their payback. It seems ironic, but many salaries even look small once compared with a companies profits. Top Executives Are Under A Lot Of Pressure Being the CEO of a
In 2003 the average pay for CEOs at 200 of the largest U.S. companies was $11.3 million--but there are a good number whose compensation packages approach the $100 million mark. Faced with these figures, Americans from all walks of life--who revile CEOs as greedy fat cats--are overcome with bewilderment and indignation. Astonished to learn that what an average worker earns in a year, some CEOs earn in less than a week--people ask themselves: "How can the work of a
Within the United States, 12.7% of households had been food insecure at some point within 2015, meaning that not enough money was had to spend on food. ("United States Department of Agriculture Economic Research Service", par. 3) With this in mind, one of the largest problems when it comes to nutrition in the developed countries of the world is the availability of nutritious food to the lower classes because lower quality processed food is easier to obtain than nutritious food. This only seems to be a trend within developed countries so this argument will only focus on the developed countries such as the United States and France. Underdeveloped countries are left outside of these studies as they do not have widespread statistical values for any of their nutrition at any of the levels of