A number of America’s most successful companies employ large numbers of low-wage workers. These workers are hired to staff stores, call centers, and restaurants. These workers are typically paid hourly, and oftentimes earn little above the federal minimum wage of $7.25 per hour. Oftentimes, these employees serve as the face of their companies and spend most of their workday interacting with consumers.
Not all employees at these companies are paid modest salaries. While customer account executives at Comcast earn $13.26 per hour on average, according to Glassdoor.com figures, stars of the company’s NBC television network shows were paid hundreds of thousands if not millions of dollars a year. And while the average attractions cast member at Disney’s parks and resorts earned just $16.39 per hour, Disney also employs far higher-paid workers at its ABC and ESPN television networks.
Recently, a number of these companies have chosen to use their resources for massive deal making. In February, Comcast announced a deal to acquire Time Warner Cable for $45.2 billion in stock value. In May, AT&T agreed to acquire DirecTV for $48.5 billion. Regulators have yet to approve the deals. Last year, Verizon signed on to an even bigger deal when it bought out British telecom Vodafone’s 45% stake in Verizon Wireless for $130 billion.
Of course, companies may not necessarily have an obligation to pay their employees a higher wage. If the recent spate of mega deals is any indication, companies can spend huge amounts to help provide better returns to their shareholders.
However, many argue that companies still spend too much in executive compensation. Comcast chairman and CEO Brian Roberts earned more than $31 million last year in salary, stock options and awards, and other benefits. Bob Iger, CEO of Disney, received more than $100 million in total compensation from 2011 through 2013. Outsized salaries like these appear especially disproportionate when compared to low-wage workers.
Based on data provided by Capital IQ on S&P 500 companies, 24/7 Wall St. identified corporations with high operating income, high operating profit margins, and major one-year growth in operating income. In order to be considered, companies had to be in a customer-facing industry and have a large number of low-wage workers. We excluded financial companies, such as banks and thrifts, because the data we used to measure profitability is inadequate for judging the industry’s performance. Employee totals by company are from Yahoo! Finance. CEO pay is from filings submitted by public companies with the Securities and Exchange Commission. Figures on compensation are from Glassdoor.com and are self-reported by users to the website.
1. Time Warner Cable Inc. (NYSE: TWC)
> 1-yr. stock price change: 48.3%
> 5-yr. stock price change: 359.9%
> Total employees: 51,200
> Total CEO compensation: $14.2 million
Time Warner Cable is one of the nation’s largest telecom companies, with revenue of more than $22 billion and operating income of $4.6 billion last year. Although Time Warner Cable is not growing especially quickly, it continues to generate large amounts of cash from its operations and return profits to shareholders. The company’s stock has been one of the S&P 500’s better performers over the past twelve months, up 48.3% in that time. Some of the stock price rally is the result of the company’s deal with Comcast, which agreed in February to acquire Time Warner Cable. The merger will combine the nation’s two largest cable operators. But while shareholders reap the benefits of the deal, many employees may be left in the lurch as a result. Part of the deal’s appeal is an estimated $1.5 billion in savings from operating efficiencies, which may include job cuts. According to Glassdoor.com, the average customer service representative at Time Warner Cable makes just $11.85 an hour, and the average inbound sales representative earns just $11.41 an hour.
2. Public Storage (NYSE: PSA)
> 1-yr. stock price change: 12.7%
> 5-yr. stock price change: 156.7%
> Total employees: 5,200
> Total CEO compensation: $9.2 million
Public Storage owns more than 2,200 self-storage facilities across the U.S. and Europe. Because of its low-cost business model, Public Storage recorded a nearly 50% operating margin in its latest fiscal year, higher than nearly all other companies in the S&P 500. Its earnings were actually higher than its operating income because of the earnings it recorded from its investments in Shurgard Europe, a European storeage company, and PS Business Parks, a U.S. commercial real estate company. While highly profitable, Public Storage pays the average relief manager just $10.57 per hour, and the average property manager only $10.50 per hour, according to Glassdoor.com.
3. Michael Kors Holdings Limited (NASDAQ: KORS)
> 1-yr. stock price change: 49.7%
> 5-yr. stock price change: 290.3%
> Total employees: 9,184
> Total CEO compensation: $7.6 million
Michael Kors’ retail operations have grown rapidly in recent years, with comparable store sales up 26.2% last year, due largely to increased sales of accessories and watches.The company also added more than 100 new stores in most recent fiscal last year. Alongside the expansion, total operating expenses increased considerably during fiscal 2013 by about $331 million. As a percent of revenue, however, the company’s operating costs actually declined. While the overall dollar amount allocated to salaries increased from the previous fiscal year, Kors sales associates are paid an average of just $10.37 per hour, according to Glassdoor.com, although they can also earn commissions.
4. McDonald’s Corp. (NYSE: MCD)
> 1-yr. stock price change: 5.1%
> 5-yr. stock price change: 72.0%
> Total employees: 440,000
> Total CEO compensation: $9.5 million
Despite CEO Donald Thomson’s claims last July that McDonald’s has “always been an above-minimum wage employer,” the fast food chain is well-known for its low wages. Thomson, himself is paid quite well. He earned close to $9.5 million in total compensation last year. While McDonald’s operating income increased each year for the last six years as of fiscal 2013, wages of lower level employees often barely exceed the minimum wage. An average crew member at the fast food chained earned an average of $7.77 per hour, according to Glassdoor.com data. In March, workers in three states filed lawsuits against the company and several franchisees, claiming they had been illegally underpaid. Among the specific allegations raised in the lawsuit were that workers were forced to work unpaid overtime and had hours shaved off of their timecards.
5. Comcast Corporation (NASDAQ: CMCSA)
> 1-yr. stock price change: 30.3%
> 5-yr. stock price change: 280.0%
> Total employees: 136,000
> Total CEO compensation: $31.4 million
Comcast is one of the largest companies in the U.S., with revenues of $64.6 billion and an operating income of $13.6 billion last year. A majority of the revenues came from its cable business, which accounted for $41.8 billion in sales last year. Comcast also owns NBCUniversal, which operates television networks, film studios and theme parks, and accounted for $23.7 billion in revenue. Comcast has spent considerable sums on deal making. It bought General Electric’s 49% stake in NBCUniversal for $16.7 billion last year and recently agreed to acquire Time Warner Cable for $45.2 billion in stock (at deal closing). Still, while executives and notable on-air talent are well compensated, customer account executives earn just $13.26 per hour on average, according to Glassdoor.com. By comparison, chairman and CEO Brian Roberts took home $31.4 million in 2013.
6. The Walt Disney Company (NYSE: DIS)
> 1-yr. stock price change: 33.0%
> 5-yr. stock price change: 246.3%
> Total employees: 175,000
> Total CEO compensation: $34.3 million
Disney reported revenue of $65.0 billion in the most recent calendar year, as well as roughly $10 billion in operating profits, among the highest figures in the S&P 500. Walt Disney currently operates a number of different lines of business. It owns media networks such as ABC and ESPN, as well as film and music studios such as Marvel, Walt Disney animation and Lucasfilm. Additionally, the company owns parks and resorts across the globe, including Disneyland and Walt Disney World, which account for roughly 30% of its revenue. Many employees working this division often earn relatively little pay, with the average attractions cast member earning $16.39 per hour. By comparison, in the last three full fiscal years, CEO Bob Iger was paid more than $100 million.
7. AT&T, Inc. (NYSE: T)
> 1-yr. stock price change: 0.6%
> 5-yr. stock price change: 42.0%
> Total employees: 246,730
> Total CEO compensation: $23.2 million
AT&T agreed on a deal to acquire DirecTV for $48.5 billion last month. The deal follows several consecutive years of slow growth, with revenue rising from $126.7 billion in 2011 to $128.7 billion last year. Despite its slow top-line growth, AT&T managed to grow its operating income by a whopping 134.5% in 2013 to nearly $30.5 billion. A big chunk of this increase, however, came from actuarial gains for company’s benefits plans. The company’s financial success has not improved its image in the eyes of its employees. Just 55% of employees approve of CEO Randall Stephenson, who received roughly $23.2 million in total compensation during the company’s most recent fiscal year. Retail sales consultants, on the other hand, are paid just $13.52 on average, according to figures reported to Glassdoor.com.
8. Verizon Communications Inc. (NYSE: VZ)
> 1-yr. stock price change: 1.7%
> 5-yr. stock price change: 68.5%
> Total employees: 176,900
> Total CEO compensation: $15.8 million
In line with the acquisition trend among large telecommunications companies, Verizon
Communications recently finalized its $130 billion purchase of Vodafone’s 45% indirect interest in Verizon Wireless, the largest such deal in over a decade. In the last two years, revenue has grown steadily, while operating income has more than doubled from $12.9 billion to nearly $32 billion — although some of these were paper gains due to benefit and pension plan adjustments. Verizon Wireless’ store workers, meanwhile, often earned comparably little. According to Glassdoor.com, Verizon Wireless paid retail sales representatives just $31,556 a year on average, with hourly retail sales representatives paid an average just $13.05 per hour. By contrast Verizon’s CEO Lowell McAdam earned $15.8 million in total compensation during the company’s most recent fiscal year.