CHICAGO 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 a 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.
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 executive 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, underemployed Americans took those jobs.
“The sheer number of adults in the industry has just exploded” because fast-food restaurants “not only survived, but thrived during the economic recession,” said Saru Jayaraman, director of the Food Labor Research Center at the University of California at Berkeley.
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, based in the Chicago suburb of Oak Brook, paid then-CEO Jim Skinner last year. Johnson’s work flipping burgers and hoisting boxes of french fries, like millions of other jobs in low-wage industries, helps explain why income inequality grew after the 2007-2009 recession ended.
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.
Less power to demand higher pay
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. While there’s a “No Smoking” sign posted inside the hotel where he lives, that doesn’t stop the other occupants who share the showers, sinks and toilets.
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, for his first-floor room. He’s late on November rent and owes about $100 – some of it a late-payment fee, he said. Since falling behind, he’s put off buying a Dell laptop for $99 that he found online.
“Forget about that computer,” Johnson said. For now, he’ll keep going to a local Apple store when he wants to update his Facebook page in his efforts to find someone nice to date and to stay in touch with his father.
A pay stub of Johnson’s shows that he earned $8,518.80 through Sept. 9 this year at the restaurant that gives him most of his hours. He was able to work only 52 hours during that two-week pay period because the restaurant was being remodeled, he said. A statement of earnings from his other McDonald’s job shows that 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. Johnson joined despite McDonald’s previous efforts to prevent unions, which have left workers with lingering fears. The Big Mac seller has employed a group of experienced managers and executives to parachute into locations where union activity is suspected. 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’s comfortable discussing 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 in New Jersey. “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.
Widening pay gap
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.
Johnson has applied for jobs at retail stores but has never heard back from them. Like him, more and more fast-food workers are adults struggling to make ends meet, not teenagers earning a bit of spending money.
Amie Crawford, a 56-year-old former interior designer, began working for minimum wage at the Protein Bar quick-service restaurant in February. She took the job after she relocated to Chicago and couldn’t find a job in her field. With an associate’s degree from the Art Institute of Pittsburgh, she used to describe herself as comfortably middle class.
In the last two years, she has sold her car and home and is now dipping into her $55,000 of savings and retirement money to pay rent.
Protein Bar employees who start at minimum wage are eligible for a 50-cent raise after 60 days of employment and completing certain types of training, said Matt Matros, who founded the restaurant in 2009. While Crawford got the pay increase in September, she still doesn’t earn enough to pay rent at her one-bedroom apartment in the South Loop.
“If McDonald’s were paying $15 an hour, that’s what we would need to do,” Matros said. “It’s really the larger companies that act as sort of the rudder of the ship.”
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 2006, restaurant chains and their franchisees, including McDonald’s, spent at least $960,000 to fight minimum-wage increases in Nevada, Colorado, Ohio, Arizona, Montana and Missouri, according to Followthemoney.org, a website operated by the National Institute on Money in State Politics. Other chains spending money to stem pay increases include Wendy’s, Bloomin’ Brands' Outback Steakhouse, Jack in the Box and Domino’s Pizza.
About 20 miles east of McDonald’s headquarters, Johnson recently made his way to work in downtown Chicago. He wore two pairs of pants and a sweater over his white-collared McDonald’s uniform shirt because it was below freezing. He used his seven-day pass to catch the train toward the Loop, worried because the $23 pass will cost him $28 next year with proposed transit price increases.
As the elevated train rattled over the Chicago River, Johnson’s head was down as he stared at his phone. He busily texted someone – a woman he’d met earlier this year while waiting for a bus.
He didn’t look up as the train passed in sight of Trump International Hotel and Tower. It’s the riverfront building where CEO Thompson spent about $3.3 million in September to buy two condos near the top.