business news in context, analysis with attitude

The issue of pay inequality and wealth distribution in America continues to be a story that has legs...

The Los Angeles Times reports that McDonald's employee hotline, "McResources," has now taken to suggesting to struggling employees that they take advantage of federal assistance when they find themselves in trouble.

This particular story concerns a woman named Nancy Salgado, described as a 10-year McDonald's employee who "struggles to support her children with a wage that keeps her under the poverty line." She used McResources "in hopes of finding help making ends meet," but was told that she should "try food pantries, federal food stamps and Medicaid."

The Times notes that the conversation between Salgado and the McResources representative was recorded, edited and released to the media by a labor advocacy group called Low Pay Is Not OK, "and could not be independently verified." The advocacy group, which has been part of a national effort to draw attention to low-pay workers in the fast food business, says that McDonald's is taking advantage of these employees and then expecting taxpayer-funded programs "to pick up the slack."

McDonald's immediately fired back, saying that the recording was not an accurate representation of what happened: "The fact is that the McResource Line is intended to be a free, confidential service to help employees and their families get answers to a variety of questions or provide resources on a variety of topics including housing, child care, transportation, grief, elder care, education and more."

To be fair to McDonald's, the scenario seems to suggest that Salgado may be an employee with an agenda. Albeit a poorly paid employee with an agenda. That said, the way this has played out does not mean that her agenda is wrong. Attention, I think, should be paid ... if only because it seems inarguable that there are an awful lot of people in the US who are working at perfectly respectable, full-time jobs and yet are unable to support themselves and their families. This is an issue with enormous economic and cultural implications

This clearly is an issue that is high on the radar at the Times, which had a piece the other day in which it focused on a proposed Securities and exchange commission (SEC) rule that, as mandated by the Dodd-Frank financial reform legislation, would require "most large public companies to calculate the ratio of the pay of their chief executive officer to the median pay of all their employees."

Unlike most SEC rules, which are designed to affect investors, this rule is "designed to provide information for the larger community — for society, if you will. Its aim is to provide ammunition for the argument that the share of corporate profits going to top management, and by extension corporate shareholders, has gotten out of control.

"That's a sound argument, shared by many management experts and economists who argue that the diversion of corporate resources from workers to executives and shareholders is a major contributor to rising income inequality in the U.S., as well as to other social and economic ills."

I'm a big proponent of this rule, not because I'm against corporate executives making a lot of money, but because in public companies, there should be this kind of transparency. I simply don't think most people understand how vast the disparities are.

Check out the video at left. To me, it is a striking description of the situation we face. And at the very least, an Eye-Opener worth discussing.

KC's View: