7 Ultra-Rich Companies Rake in Profits While Paying Workers Peanuts
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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