You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Economy

Advertisement
Bloomberg News
McDonald’s new CEO, Don Thompson, spent part of his childhood near a Chicago housing project.

Pay gap comes with fries

Chicago worker’s struggle highlights fast-food realities

Bloomberg News
En route to work in Chicago, Tyree Johnson has struggled to rise above minimum wage after 20 years at McDonald’s.

– Tyree Johnson scrubs himself with a bar of soap in a McDonald’s bathroom and puts on fresh deodorant. He stashes his toiletries in a Kenneth Cole bag, a gift from his mother who works the counter at Macy’s, and hops on an El train.

His destination: another McDonald’s.

Johnson isn’t one of Chicago’s many homeless people who seek shelter in fast-food joints. He’s a McDonald’s employee, at both stores – one in the Loop, the other about a mile away in the shadow of Holy Name Cathedral.

He needs the makeshift baths because hygiene and appearance are part of his annual compensation reviews.

Even with frequent scrubbings, he said before a recent shift, it’s hard to remove the essence of the greasy food he works around.

“I hate when my boss tells me she won’t give me a raise because she can smell me,” he said.

Johnson, 44, needs the two paychecks to pay rent for his apartment at a single-room occupancy hotel on the city’s north side.

While he’s worked at McDonald’s stores for two decades, he still doesn’t get 40 hours a week and makes $8.25 an hour, minimum wage in Illinois.

This is life in one of America’s premier growth industries. Fast-food restaurants have added positions more than twice as fast as the U.S. average during the recovery that began in June 2009.

The jobs created by companies including Burger King Worldwide Inc. and Yum Brands Inc., which owns the Pizza Hut, Taco Bell and KFC brands, are among the lowest-paid in the United States – except in the C suite.

The pay gap separating fast-food workers from their chief executive officers is growing at each of those companies.

The disparity has doubled at McDonald’s Corp. in the last 10 years, according to data compiled by Bloomberg.

At the same time, the company helped pay for lobbying against minimum-wage increases and sought to quash the kind of unionization efforts that erupted recently on the streets of Chicago and New York.

Older workers like Johnson are staffing fast-food grills and fryers more often, according to data from the Census Bureau’s Current Population Survey.

In 2010, 16- to 19-year-olds made up 17 percent of food preparation and serving workers, down from almost a quarter in 2000, as older, jobless Americans took those positions.

Johnson would need about a million hours of work – or more than a century on the clock – to earn the $8.75 million that McDonald’s, headquartered in the Chicago suburb of Oak Brook, paid then-CEO Jim Skinner last year.

The recovery from the last downturn has been the most uneven in recent history. The 1.2 million households whose incomes put them in the top 1 percent of the U.S. saw their earnings increase 5.5 percent last year, according to census estimates. Earnings fell 1.7 percent for the 97 million households in the bottom 80 percent – those who made less than $101,583.

The widening chasm is most pronounced in the restaurant and retail businesses.

The total number of people employed in the United States at Wal-Mart Stores Inc. and McDonald’s and Yum Brands restaurants exceeds the entire 2.7 million population of Chicago. Net income at those three companies has jumped by at least 22 percent from four years ago.

Shareholders, not employees, have reaped the rewards. McDonald’s, for example, spent $6 billion on share repurchases and dividends last year, the equivalent of $14,286 per restaurant worker employed by the company.

At the same time, restaurant companies have formed an industrywide effort to freeze the minimum wage, whose purchasing power is 20 percent less than in 1968, according to the Economic Policy Institute, a think tank that advocates for low- and middle-income workers.

A worker’s routine

Johnson begins most days the same way: picking cigarette butts out of the shower drain of a shared bathroom, using a tissue so he doesn’t touch them.

His rent at the hotel in Chicago’s Uptown neighborhood is $320 a month. Johnson usually can’t cover it all at once, so he’s allowed to pay $160 every two weeks, or even $80 a week.

He’s late on November rent and owes about $100 – some of it a late fee, he said. Since falling behind, he’s put off buying a Dell laptop for $99 that he found online.

A pay stub shows that Johnson earned $8,518.80 through Sept. 9 this year at the store that gives him most of his hours. He worked only 52 hours during that two-week pay period because the restaurant was being remodeled, he said.

A statement from his other McDonald’s job shows he worked fewer than 12 hours over two weeks, earning $95.45 before taxes.

Even with the unemployment rate dropping last month to 7.7 percent, minimum-wage earners have less power to demand higher pay because so many adults are willing to take low-wage positions, said Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California at Santa Barbara.

On a chilly November morning, Johnson interrupted his routine. He left his north side apartment and made his way to St. James Cathedral, just off Michigan Avenue, the so-called Magnificent Mile and heart of Chicago’s high-end shopping district.

There he gathered with other low-wage employees from Macy’s Inc., Eddie Bauer, Chipotle Mexican Grill Inc. and Victoria’s Secret. He’d heard about an effort to form the Workers Organizing Committee of Chicago, a group pushing for a $15-an-hour wage.

In 1998, after workers at a McDonald’s in Ohio went on strike to protest unfair wages and working conditions, the leaders lost their jobs, said Sonny Nardi, president of Local 416 Teamsters union in Cleveland.

“They took a stance,” Nardi said. And “the boys did get fired that started it.”

Johnson doesn’t talk about the union at work because certain co-workers would tell his manager, he said, and he’s afraid he would be reprimanded or even fired. Off the job, though, he’ll discuss it.

“I’m trying to fight for what I believe in,” he said.

Asked about McDonald’s history with organizing, Becca Hary, a company spokeswoman, said in an email that “we don’t have a corporate policy” on whether store workers are allowed to form unions.

Employers are doing more to keep workers from organizing, said Dorothy Sue Cobble, labor professor and historian at Rutgers University.

“The numbers of people who get fired for joining a union or trying to organize one has increased dramatically over the last 30 years,” she said.

For Johnson, joining a union created strains with family members. He said they’re afraid they’ll have to give him money if he’s let go.

“They’re not supportive,” he said, adding that his mother and grandmother told him, “I’m happy you spoke up for yourself, but at the same time, don’t lose your job.”

Divergent paths

The McDonald’s near the cathedral that Johnson works in is less than a mile from where he grew up, in the Cabrini-Green public housing project, most of which has since been demolished.

McDonald’s new CEO, Don Thompson, who took the post in July, spent part of his childhood a few blocks from the project. That’s where the trajectories of their lives parted.

Johnson graduated from Lincoln Park High School in 1987. He spent six months at the Computer Learning Center in Chicago to earn a certificate in computer operations. He paid off his student-loan debt just a couple years ago. But he couldn’t find a job in that field, so he settled for one at a KFC in Evanston, on Chicago’s northern border.

Johnson started at McDonald’s in 1992, two years after Thompson, who earned a bachelor’s degree in electrical engineering from Purdue University in 1984. Thompson worked at what was then Northrop Corp. before joining McDonald’s.

“Don came from extremely humble beginnings, and with hard work and with the values of his grandmother” he made his way up the ranks at McDonald’s, said Heidi Barker, a company spokeswoman, noting that three McDonald’s CEOs started as store employees.

While Johnson has benefited from small pay raises and some minimum-wage increases – the rate was boosted from $8 in 2010 in Illinois – he said he’s often knocked down to the lowest level when a McDonald’s franchise changes ownership. He’s been bounced to different stores in Chicago (six in all), which also results in pay getting cut to minimum wage, he said.

“Every time they transfer you to a different store, they lower your pay,” he said. “You have to climb back up.”

The wage gap between CEOs and store workers wasn’t always so wide. Twenty years ago, when Johnson first started at McDonald’s, the CEO’s compensation was about 230 times that of a full-time worker paid the federal minimum wage. The $8.75 million that Thompson’s predecessor as CEO, Skinner, made last year was 580 times, according to data compiled by Bloomberg.

McDonald’s is part of a larger trend of Standard & Poor’s 500 companies, according to data from the American Federation of Labor-Congress of Industrial Organizations.

The pay gap between the average S&P 500 CEO and the average U.S. worker, which was 42 times in 1980, widened to 380 times in 2011 from 325 times in 2010, the umbrella group of 56 unions said.

The last federal increase to the minimum wage was in 2009, to $7.25. When adjusted for inflation, the wage was worth $9.07 an hour in 1968, according to the Economic Policy Institute.

Fast-food chain franchisees, who own 89 percent of McDonald’s 14,100 domestic stores, spend money lobbying against minimum-wage increases at the state level.

In July, Sen. Tom Harkin, D-Iowa, introduced a bill to raise the federal minimum wage from $7.25 to $8.10 an hour and for subsequent increases to $8.95 and $9.80 an hour.

An increase for Johnson would help him cut down on his twice-monthly trips to church food pantries for canned soup and chili, cereal, peanut butter and powdered milk. He often eats at his grandmother’s or aunt’s house, which has spared him from needing food stamps like many of his peers.

Meanwhile, a growing proportion of fast-food employees get federal assistance to buy food, according to census data compiled by the University of Minnesota Population Center. The proportion of fast-food workers who receive food stamps rose to 26.9 percent in 2010, compared with 15 percent of all Americans, the data show.

Advertisement