At McDonald’s, Fat Profits but Lean Wages

http://www.nytimes.com/2016/04/28/opinion/at-mcdonalds-fat-profits-but-lean-wages.html

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McDonald’s Corporation has reported a 35 percent increase in profits for the first quarter of 2016, an unexpectedly large gain driven in part by its recent decision to sell Egg McMuffins all day long. It was the third straight quarter of positive results, indicating that the company has begun to compete more effectively against hipper, faster-growing rivals.

All of which is good news for the executives and shareholders of McDonald’s. But when, if ever, will it be good news for McDonald’s employees and for taxpayers?

McDonald’s, a leader in the restaurant and food service sector, is a target in the Fight for $15 movement to raise pay, and rightly so. Nearly 23 percent of workers in the sector are paid at or near the minimum wage, and raises have been feeble. A recent pay increase at McDonald’s to at least $1 over the local minimum wage will not help most employees, because it applies only to those who work at some 1,500 corporate-owned restaurants, rather than the vast majority who work at 12,500 franchises.

The stated rationale for the disparate pay scales is the company’s assertion that franchisees, not the corporate parent, are solely responsible for pay at the franchises. Since last year, the National Labor Relations Board has been examining the legality of that assertion. It’s been slow going. At a recent hearing, McDonald’s lawyers disputed at length the admissibility of plain-English emails that the general counsel of the N.L.R.B. wanted to use as evidence to show the involvement of corporate headquarters in employee issues at the franchises. The irritated judge asked whether they would prefer “another 50 subpoenas” before moving on.

Through it all, taxpayers continue to pick up the difference between what fast-food workers earn and what they need to survive. An estimated $1.2 billion a year in taxpayer dollars goes toward public aid to help people who work at McDonald’s.

At the same time, McDonald’s is under fire in Europe for shifting profits to Luxembourg in ways that allow the company to avoid tax in Europe and in the United States. Margrethe Vestager, the competition commissioner of the European Union, said recently that the tactic exploited policies against double taxation to justify “double nontaxation.” France has reportedly sent McDonald’s a 300-million-euro tax bill connected to the profit shifting. Similarly, in Brazil, McDonald’s is expected to respond to federal subpoenas asking about the company’s tax, labor and business practices no later than the end of June.

As its profits show, McDonald’s makes a lot of money on fast food. There was a time when workers and citizens received a fair share of such profits through decent pay and robust corporate taxes. This is a past that McDonald’s and much of corporate America would rather you forget.