Subway CEO Fred DeLuca announced that he is in full support of a minimum wage increase for his employees at the fast food chain. He stated that he did not think that it would be bad for his company or his workers, and thought the minimum wage should be adjusted so that wages would automatically increase with the rate of inflation.
When interviewed by CNBC regarding minimum wage increases throughout the years, he responded that he was not concerned. He has seen many wage increases periods over time, and believes it is a normal occurrence. As he hopes that it will not negatively impact the company, he still stands behind his argument stating that he is in favor of an increase in salary that would overall benefit the company’s employees.
Due to the large size of the Subway Corporation, DeLuca’s acceptance of a higher minimum wage is not typical of the corporate industry. Other large corporations generally oppose a raise in the minimum wage, stating that it cuts too much into profits. However, most small businesses support around a $10 dollar minimum wage, given the condition of the current economy and inflation rates. While warning that a rapid increase in the minimum wage would not be good for business, DeLuca states that those living on a minimum wage deserve to make more for their hard work.
When the Subway CEO originally opened the company for business almost 39 years ago, the minimum wage at that time was $1.25 per hour. However, given inflation rates over time, this would be around $9.38 dollars an hour in today’s currency. Despite the first increase in the minimum wage since a decade, the wage raise from 2008 to 2010 was still only 20 percent less than it was worth in the 1960s.
DeLuca states that if he were in control of the government, he would set the minimum wage to match inflation. This tactic would be put in place so that people could continue to earn a living wage to support their lifestyle, with a consistent system in place to match those needs.
While the CEO of Subway had criticized the increase in minimum wage as happening too fast in the past, the number of workers on strike has increased throughout the United States. Recently starting with a few fast food chains in New York, there are now over a hundred cities across the country whose fast food employees demand a living wage. These strikes across the nation, as well as demonstrations in 30 other countries, continue to pressure politicians to vote in favor of a minimum wage increase.
Despite the CEO’s spoken support for a gradual increase in the minimum wage, Subway remains number one among fast food chains in the number of wage theft violations. Even though its number of locations is partly to blame for this, other fast food chains such as McDonald’s seemed to fare better. According to the U.S. Department of Labor’s Wage and Hour Division, Subway faced over 17,000 violations of the Fair Labor Standards Act from the 2000 to 2013.
In response to these violation claims, DeLuca responded by stating that the huge majority of Subway store owners make sure to adhere to mandated policies, but “the company realizes that some have not done the right thing.” He remarks that there is “no excuse” for wage theft and lack of overtime pay.
While many fast food CEOs try to keep wages low for their low-ranking employees, they themselves earn more than 1,200 times these workers. This results with the largest pay gap in comparison to other industries.
As Subway CEO Fred DeLuca remains in favor of a minimum wage increase, the company’s average workers have yet to see this put in effect. Many employees still face working under a poverty wage, lack of overtime pay, as well dealing with instances of wage theft.
By Scott Gaudinier