The report explores the connection between stagnant —and falling — wages, and it’s central finding explodes the argument that raising the minimum wage will cause employers to stop hiring, and the hurt small businesses that opponents of a minimum wage increase (and of the idea of a minimum wage itself) claim are the primary employers of low-wage workers.
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.
The data in the report only strengthens the case.
- 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.
Got that? In “recovery” in which most of the new jobs being created are low-wage jobs, the biggest corporations and biggest employers of low-wage workers are enjoying record profits — upwards of $1.97 trillion in the third quarter of 2011, according to the report. Most of them have recovered. Most have been profitable for the last three years, and nearly all were profitable in the past year. Most of them have more money to spend on operations. Executive pay at these companies averaged nearly $10 million last year, and shareholders enjoyed returns of nearly $175 million.
(I’d love to know how many of these same corporations have nothing or next-to-nothing in taxes. But I’ll have to find that in another report, or do the research myself. Still, I’m willing to bet that most of these companies aren’t any better at paying taxes than they are at paying their employees.)
The losers in all this are the workers, the very people who are creating value for these companies. If they’re getting paid the federal minimum wage, they’re getting paid about $7.25 an hour — hasn’t been adjusted for inflation in 40 years. If it had, those workers would be earning about $10.55 per hour. (It’s even worse for workers like the waiters and waitresses with whom Mitt Romney recently said he sympathizes. The federal minimum wage for tipped employees like them is $2.13., and in states like Florida — where tipped employees make just over twice the federal minimum wage for their jobs — the restaurant lobby fought to lower the minimum wage.)
They’re working for a wage that put the basic necessities our of their reach. Health care and education are priced far out of their reach —not to mention things like milk and gas, as prices rise but paychecks don’t.