Saturday, May 10, 2014

Subway CEO endorses minimum wage increase

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By Alan Pyke
Nation of Change
May 9,2014
The founder and CEO of Subway says a minimum wage increase wouldn’t be such a bad thing for his stores and workers and believes it should be changed so that wages rise automatically with inflation.

“I’m not concerned,” CEO Fred DeLuca said on Wednesday when CNBC asked him about minimum wage hikes. “Over the years, I’ve seen so many of these wage increases. I think it’s normal. It won’t have a negative impact hopefully, and that’s what I tell my workers.”

DeLuca’s support is noteworthy in part because of the size of his business. Subway has the most locations of any fast food chain. While a majority of small business owners support a $10.10 wage hike, major corporations of that scale typically oppose raising wages.

DeLuca had previously warned that raising the minimum wage too rapidly would be a “bad idea” that could damage businesses, while acknowledging that “minimum-wage workers deserve to make more.” At the time that he offered that warning in 2013, President Obama was proposing a minimum wage hike from $7.25 to $9 an hour. Since then, Obama has joined congressional progressives in calling for a $10.10 hourly minimum, which would nearly recoup the purchasing power low-wage workers have lost to inflation over the past 40 years.

DeLuca launched Subway nearly 39 years ago. The minimum wage then was $1.25 an hour, which would be $9.38 per hour in today’s dollars. Even after a three-step wage hike from 2008 to 2010 — the first time the minimum wage had been raised in over a decade — the minimum wage is worth 20 percent less than it was in the late 1960s. “I personally think that if I were in charge of the government, I would index the minimum wage to inflation so that way everybody knows what they can count on,” DeLuca told CNBC.

In the 15 months since DeLuca criticized proposed wage hikes as too rapid, low-wage worker strikes have spread from a handful of New York fast food stores to a hundred cities in all parts of the country, ratcheting up the pressure on lawmakers to act on wages. On Wednesday, workers announced plans for strikes in 150 U.S. cities and protests in 30 other countries across six continents.

Beyond opposing higher wages, large fast food companies are often perpetrators of wage theft, which nine out of 10 fast food workers report experiencing. Subway leads the industry in wage theft violations, thanks in part to its size. “We, as a company, realize that some of our owners have not done the right thing,” DeLuca said when asked about wage theft. “The people who come to work deserve to be paid properly and there’s no excuse.”

At the same time that fast food companies fight to keep wages down and hide behind franchise agreements when discussing wage theft, their CEOs are earning ever-larger compensation packages. The fast food industry has the largest pay gap between workers and executives, with top men making 1,200 times more than their typical worker.

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