By Sarah Jaffe
July 23, 2012
July 24 marks three years since the last time the federal minimum wage went up. Nationwide, as corporate profits have not only returned to pre-financial-crisis levels but hit record highs , millions of workers are still trying to survive on $7.25 an hour.
A new report from the National Employment Law Project [PDF] found that more than one in four private-sector jobs pays less than $10 an hour—and those jobs are mostly with large corporations, not small businesses. Of the 50 largest employers of low-wage workers, 92 percent of those were profitable last year —and three-fourths of them are doing better than they were before the recession.
Meanwhile, the executives at those companies are pocketing the money that isn't going to their workers. The NELP study found that top executive compensation at those firms averaged over $9 million last year. Assuming they work a 40-hour week, that's $4,326 an hour, about what 600 employees make at today's minimum wage.
So who are these companies stiffing their workers while making record profits? Some of them are familiar names that you probably pass (and maybe even shop at) every day. Below we take a look at eight companies raking in profits while paying their workers poverty wages.
1. Toys 'R' Us
The friendly face of Geoffrey the Giraffe, recognizable to kids all over the US, hides a low-wage empire controlled by another familiar name: Bain Capital. That's right, the second-largest toy supplier in the country is owned by a group of private equity firms that includes Mitt Romney's former company. And as often happens to companies bought out by private equity, 75 Toys 'R' Us stores closed shortly after Bain took over, putting some 2,250 people out of work.
But it's not just the workers laid off by Toys 'R' Us who are suffering. According to a new report from United NY and the Alliance for a Greater New York, most Toys 'R' Us workers in one of the country's most expensive (and most unequal) cities make less than $10 an hour. Michael Valdez, a member of New York Communities for Change, worked at Toys 'R' Us at the Bronx Gateway Mall while in college, making $8.50 an hour. “It wasn't enough to cover books and college expenses. I couldn't fathom how a family would live on a paycheck,” he told AlterNet. “And then the hours that we were given -- they had a whole lot of employees so the hours weren't much. Sometimes they would schedule you in and then call you and say we don't need you today.” (The Gateway Mall got about $10 million in taxpayer subsidies from the city of New York.)
Toys 'R' Us has had its problems complying with labor laws as well, including child labor law. It paid a $200,000 fine to the Department of Labor in 1999 after an investigation found more than 300 underage workers working longer hours than allowed by law. Pretty incredible for a company whose vision statement says “Our Vision is to put joy in kids’ hearts and a smile on parents’ faces. ”
Meanwhile, Gerald Storch, the CEO of Toys 'R' Us, took in $7.9 million in total compensation in 2011 (a $5.2 million increase from the previous year), and lives in an 11,000-square-foot home on two acres of New Jersey land. He bought the house for $3.4 million in 2006, the year he took over as CEO. The company as a whole had revenue of nearly $14 billion last year, according to United NY and ALIGN.
“The majority of people in our job carry three cards -- that’s our Walmart associate card, our discount card, and a welfare card. New York does not need a retailer that will take sustainable, quality jobs away from these neighborhoods by creating low-wage jobs,” Girshriela Green, a member of OUR Walmart (Organization United for Respect at Walmart), told United NY and ALIGN. It's a common refrain that you hear repeated from Walmart employees around the country— AlterNet heard the same story recently from workers in Los Angeles. Walmart is by far the country's largest low-wage employer, with a US workforce of 1,400,000 people, according to NELP. And last year its highest-paid exec took home $18.1 million, or $9,066 an hour.
But even that's not the most shocking Walmart statistic making the rounds these days. Nope, instead we've just learned that the Walton family—just six family members of Walmart founder Sam Walton— have as much wealth between them as the bottom 48.8 million American families combined. That's over 41 percent of the country. Or at least, that's what they had in 2010. Considering that between 2007 and 2010, they went from having $73.3 billion to $89.5 billion, who knows what they've got now?
3. Con Edison
New York's energy company is in the headlines right now for its lockout of 8,500 skilled workers, the folks who keep the city's power grid running and keep the air conditioning flowing during record heat. “And they say we have to cut costs, to keep the stock profitable... They don't answer to us, they don't answer to the customers out on the street,” a Con Edison mechanic told AlterNet's Michelle Chen.
But that's not Con Ed's only labor problem. The company's cleaning crew and security contractors make as little as $8 an hour, according to United NY and ALIGN's report. Meanwhile, Con-Ed's president and CEO, Kevin Burke, made nearly $11 million last year, the equivalent of $5,272 per hour. The report notes:
In other words, a cleaner making $8.00 per hour would need to work 659 hours or 16.5 weeks to earn what Burke makes per hour. Burke received an increase in 2011 of $688,653, which alone equals the annual wages of 41 cleaners earning $8 hourly.
Instead of an increase like Burke received, contracted cleaners at Con Ed’s headquarters recently had their salaries cut from as little as $9 to $8.50 per hour. Instead of ensuring that their contracted workers are making enough money to support their families, Con Ed has been rewarding its CEO enough to enable him to maintain at least three homes – a Westhampton Beach, NY home worth nearly $1 million, an Upper East Side apartment worth $1.5 million, and a house that he bought for $2.3 million in 2011 in Ponte Vedra Beach, Florida.
Con Edison made over $1 billion in profits last year—and spent $2 million lobbying over the last two years, in part against a law that would've required it to pay those contracted low-wage workers a decent living.
4. Lage Management Corp Car Washes
For a city that runs on public transit, New York still has a lot of car washes—and they're some of the worst offenders when it comes to abusing low-wage workers. New York's Department of Labor investigated the industry in 2008 and found that over 78 percent of the city's car washes were violating minimum wage and overtime laws, 39 percent had managers pocketing workers' tips, and a quarter didn't provide meal breaks for workers. When ALIGN and United NY surveyed 5,000 car wash workers this year, they found that only 23 percent of them were offered protective gear to keep them safe from the harsh chemicals they use to leave customers' vehicles sparkling.
In 2009, one particular car wash kingpin, John Lage, who owns some 21 car washes, was forced to pay $3.4 million in back wages, damages and interest to over 1,000 workers who were paid less than the minimum wage and denied overtime.
Yet Lage continues to live like a king, with two waterfront homes, one in Queens and one in Westchester. The lakefront house in Westchester cost $1.9 million back in 2002, and according to the report also has a swimming pool and turrets—and is across the street from his son and business partner's $1.3 million home.
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