Shortly before coronavirus It exploded in the U.S., with CEOs of 180 major U.S. companies promising to do better with their employees and communities. Instead of putting shareholder profits above all other corporate interests, the members of the Business Roundtable declared a “fundamental commitment to all of our stakeholders, ”specifically, this meant investing in workers and making sure they receive“ fair compensation ”.
Nearly three years later, many companies fail to meet that commitment, according to a recent analysis by the Brookings Institution. Despite offering public praise to workers and modest salary increases, these companies rewarded shareholders with much more generosity, the researchers concluded.
The centrist think tank evaluated 22 leading companies that together employ 7 million American workers. The list includes retailers Amazon, Best Buy, CVS, Target and Walmart; grocery stores Albertsons, Costco and Kroger; the Hilton and Marriott hotel chains; and the Chipotle, McDonald’s and Starbucks restaurant chains.
Brookings found that during the pandemic, these 22 companies spent five times more on dividends and share repurchases than on overpaying workers.
“[D]Although more than half of companies raised their minimum wage during the pandemic, no one today pays a minimum wage that meets the decent wage level, “the researchers said.
Costco, where the starting salary is $ 17 an hour, is the only one that comes close to a decent salary (which is $ 17.70 according to Brookings’ estimate). Brookings found that only five companies (Amazon, Best Buy, Costco, Marriott, and UPS) pay a decent wage to at least half of its employees.
What is a “decent salary”?
Brookings defines a decent wage as sufficient for a worker to be able to cover basic expenses, such as housing, food, health care, and child care, as well as to pay their taxes. This payment does not allow for savings or extras such as eating out or entertainment. While a decent wage varies regionally depending on local living costs, Brookings sets the national average at $ 17.70 an hour, or just under $ 37,000 a year.
Throughout the pandemic, Amazon offered workers the largest pay rise of the 22 companies analyzed by Brookings. Adjusted for inflation, Amazon workers are earning 10% more today than in October 2019, Brookings found.
But this increase was overshadowed by the profits made by investors. Amazon shareholders saw their company shares rise by a total of $ 767 billion during the pandemic. In comparison, between January 2020 and October 2021, the e-commerce giant spent an additional $ 4.3 billion on workers’ pay, including COVID-19’s “danger” pay, bonuses and increases. permanent salaries.
Home Depot increased shareholder wealth by $ 149 billion and Lowe’s by $ 70 billion. If home improvement companies had redirected the cash spent on repurchasing their shares to workers’ wages, Home Depot could have doubled the typical annual income of its worker, which last year was only $ 24,500, according to Brookings. Lowe’s could have given workers a 75% increase, raising the company’s average annual salary to $ 47,000.
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Home Depot and Lowe’s did not immediately respond to a request for comment.
Top executives of Brookings-surveyed companies have also done well during the pandemic, sometimes seeing their annual compensation increase by millions of dollars.
This includes companies that made record profits and rising stock prices, as well as companies in the leisure and hospitality industry that did badly in the early days of the pandemic. Even when firing or firing front-line workers, some of these companies took steps to protect the pay of CEOs.
“Nearly half of the most affected companies changed their compensation rules in a way that protected tens of millions of dollars in CEO compensation, even while companies were performing poorly and workers were losing revenue,” he said. dir Brookings.
“Small Significant Change”
Brookings highlights Chipotle, Dollar General, and McDonald’s as the companies with the biggest difference between what executives and middle workers earn. Chipotle and McDonalds have the lowest minimum wages in the analysis, $ 11 an hour.
“Executives and shareholders have accumulated billions of dollars, while most of the workers who generate these fortunes are not yet earning a decent wage,” the researchers said.
This state of affairs is not lost on workers: the pandemic has unleashed a wave of unseen organization in decades, including high-profile union campaigns on Amazon. and Starbucks. Much more is needed to level the playing field, according to Brookings.
“When we started this analysis almost a year ago, there were multiple reasons for the optimism that the 22 companies in this analysis could live up to the potential at this time,” the authors write. However, despite record corporate profits, a tight labor market and its own promises to do better, “the pandemic test of these companies reveals few significant changes.”
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