The Majority of Low Wage Workers Are Employed By Large Corporations

The service economy was supposed to set us free.

No more assembly line drudgery. Symbolic analysts would use their minds to generate wealth. As if.

But the assembly morphed from its traditional industrial setting to a cheerier one: at least superficially. The new assembly line is in fast food, or retail, or call centers or warehouse packing and shipping.

The wages are low because the corporations that run the businesses hiring workers for such tasks can afford to keep the system running on part-time employment with no benefits and too few hours to provide a living. They do so to avoid regulations that drive up costs. And, as the report below delineates, the most of the employers who pay these wages are successful large corporations, not struggling small businesses.

The problem - as Henry Ford understood so well - is that if you do not pay your workers enough to buy your products you eventually go out of business. But corporate HR policies appear to be driven by what is fundamentally a lack of trust in the future. Senior executives seem to think they had best take what they can get for themselves now because the deluge can't be far away. The financialization of the economy contributed to this mindset: what 40-something executive wants to make less than a 20-something bond trader? But this is really about a deep-seated fear of the future. And its impact may be both corrosive - and self-fulfilling. JL

Dave Jamieson reports in the Huffington Post:

Contrary to what many people believe, most low-wage workers aren't employed by small businesses or mom-and-pop operations, but instead by large corporations that have enjoyed healthy profits amid a sluggish economy, according to a new report.


The report, put out by the left-leaning National Employment Law Project, found that two-thirds of America's low-wage workers work for companies with more than a hundred employees, such as Walmart, McDonald's and Yum! Brands, parent company of Taco Bell, Pizza Hut and KFC.

Of the 50 largest employers of low-wage workers, more than 90 percent were profitable last year, and three-quarters of them are enjoying greater revenues than they did before the recession, the authors note, suggesting that such corporations could withstand a raise in the minimum wage.

"Contrary to what critics sometimes suggest, the majority of the impact of any increase in the minimum wage will therefore be felt by large companies and corporations rather than small mom‐and‐pop establishments," the report states.

The federal minimum wage has remained $7.25 since 2009, when it was last raised through legislation passed during the administration of President George W. Bush. President Barack Obama campaigned on hiking the minimum wage to $9.50 by the end of 2011, but bills that would raise the wage floor haven't advanced far in the House or Senate.

A Senate bill, introduced by Sen. Tom Harkin (D-Iowa), would raise the minimum wage to $9.80 over the course of two-and-a-half years and peg it to inflation, while House Democrats, led by Rep. Jesse Jackson Jr. (D-Ill.), have proposed raising it to $10.

Neither proposal, however, is likely to overcome opposition from Republicans and even some Democrats who argue that when the economy is fragile, it isn't the time to raise the minimum wage. Business groups like the U.S. Chamber of Commerce, as well as conservative research groups like the Employment Policies Institute, claim that boosts to the minimum wage end up killing jobs, ultimately hurting small businesses and low-wage workers.

The minimum wage has resurfaced as an issue on the campaign trail this year, with several Republicans saying during the GOP primary that it shouldn't be raised. Presumptive Republican presidential nominee Mitt Romney has offered a mixed assessment of the minimum wage, first saying it should be pegged to inflation then walking back that statement.

If the minimum wage had kept pace with its relative high in the late 1960s, it would now be more than $10 an hour when adjusted for inflation, according to the National Employment Law Project.

Most large employers of low-wage workers "are earning profits above their pre‐recession levels, and are sharing those profits generously with their top executives and shareholders," the report states. "Taken together, these indicators show that the nation’s top low‐wage employers can readily afford to pay for a higher minimum wage for their lowest‐paid employees."