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Fast-Food CEOs get paid 1000 times why they pay their workers

Jeremy Sprinkle
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Demos: income gap "has become a gaping chasm"

Think 331 to 1 is a ridiculous pay gap between the average CEO and the average worker?

According to a shocking new report by think tank Demos, CEOs at the nation's largest fast-food chains make 1000 times what they pay their average workers, and that's down from 1200 to 1 in 2012.

Fast-food chief executives take home $1,000 for every $1 dollar earned by their average workers, making it the most unequal sector within the U.S. economy, according to a new report from public policy group Demos.

While CEOs have always made more than the rank-and-file, the income disparity in the fast-food sector has become a gaping chasm. Since 2000, the average fast-food restaurant CEO has seen his pay more than quadruple. The average burger-flipper, meanwhile, has seen her income inch up 0.3 percent since 2000.

That gap adds stress to the economy by holding down workers' purchase power, a problem in a country where consumers account for 70 percent of economic activity. Fast-food workers around the U.S. have staged numerous strikes over the last year to demand a higher minimum wage.

Key findings by Demos

  • In 2012, the ratio of CEO pay to their average worker was 1200:1. Proxy disclosures recently released by fast food companies reveal that the ratio remained above 1,000-to-1 in 2013.
  • Fast food CEOs are some of the highest paid workers in America and earned $23.8 million in 2013, up 400 percent in real dollars over what they earned in 2000.
  • Fast food workers are the lowest paid in the economy, earning on average just $9.09 - less than $19,000 per year for a full-time worker (but most do not get full-time hours). Their wages have increased just 0.3 percent in real dollars since 2000.
  • The greatest numbers of new jobs in the economy are in sectors with the most unequal pay, replacing jobs in sectors with lower income inequality.
  • Income inequality is making it riskier for fast food companies to do business. Lawsuits, longer customer wait times, and strikes show the systemic problems of income inequality in fast food.

Catherine Ruetschlin, who authored the report, told Bloomberg Business Week that only the executives are benefiting from the economic recovery. "It's not about how much a CEO makes or how little the workers do; it's the relationship between the two."

As Bloomberg points out, there are consequences for showering riches on CEOs while paying workers poverty-level wages:

McDonald's noted in a corporate filing this year that the increasing focus on wages risked exposing the company to "repetitional and other harm." That came just as Thomas Piketty, a French economist and author, was emerging as an intellectual superstar for his discussion of income inequality. "It's McDonald's, Davos, and Piketty," says Ruetschlin. "Economic inequality threatens economic stability and growth."

Read the report: Fast Food Failure: How CEO-to-Worker Pay Disparity Undermines the Industry and the Overall Economy.