For all you numbers fans, its time for another round of WTF? (with math!)

There has been a lot of talk about the 99% this year, as well as wage discrepancies and class warfare. Since it is such a big topic, we hear at Iter Veritas decided to look at 12 large companies that have been in the news lately about salaries  profits, and the like, and then do a little math. The results below:

Let’s compare the CEO wages of the big 12 companies to a calculated best case salary of the average worker. To do this, we will take the Gross Revenue (total money made), minus the Operating Income (the profit left after operating costs and wages but before taxes and interest) of these companies and minus the Highest Pay Rate (CEO), divided by the number of employees in America, or more simply put:

$(GR – OI – HP) / #Emp

This should give us the average amount the company pays for its infrastructure, inventory, wage, and other expense per employee that is not the CEO. Obviously this is not the amount paid out in wages on average, since it doesn’t take out the operating costs of the business, but trust me, its shocking enough:

Company Revenue (billion) Operating Income (b) Highest Pay (mil)
C GR OI HP
Starbucks 13,29 1,99 16,07
JC Penney 17,2 -0,002 53,28
Darden(OliveG) 7,5 0,648 8,48
Wendy’s 2,13 0,137 16,54
Macy’s 26,41 1,863 17,65
DE (Applebees) 1,08 0,117 5,39
Burger King 2,33 0,363 4,02
Sears 41,57 -1,5 9,93
Target 69,87 4,46 19,71
McDonalds 27,01 8,529 4,07
YUM(Taco, KFC) 12,63 1,815 20,41
Walmart 446,95 26,558 18,13
Company Employees  Average pay (w/o taxes or operating costs out)  % CEO pay
C #Emp  AP  %
Starbucks 176533                                  63.919,66              0,40
JC Penney 159000                                107.853,58              0,20
Darden(OliveG) 165475                                  41.356,82              0,49
Wendy’s 168672                                  11.717,77              0,07
Macy’s 171000                                143.446,49              0,81
DE (Applebees) 173350                                    5.524,14              0,10
Burger King 191815                                  10.233,71              0,25
Sears 293000                                146.962,70              1,48
Target 365000                                179.151,48              0,91
McDonalds 859978                                  21.485,35              0,53
YUM(Taco, KFC) 880330                                  12.261,98              0,06
Walmart 1400000                                300.267,05              1,66

Again this is WITHOUT taking operating expenses into account.

Note how there are average wages of less then 6 thousand per year up there.

None of the percentages go above 1.7 percent of the CEO wages, and only 2 go above 1 percent.

5 of the 12 companies don’t pay in this best case scenario above the poverty line.

The highest paid CEO has the 2nd least successful company in terms of profit margin (OI/GR): 0.01%

The second lowest paid CEO has the most successful company in terms of profit margin: 31.5%

The middle-paid CEO has the 10th highest profit margin: 14.9%

Here’s a graph of CEO pay versus Profit Margin %

Again, note that the CEO pay has little to do with the actual profits they achieved, and actually seems to almost have an inverse relationship (the higher the pay, the lower the profit).

Now these companies employ 5 million people total, or about 3.5 percent of the workforce. These are very well known and public companies. They have a gross income of 668 billion, an operating income of approximately 45 billion, and a net income (after taxes) of 25.5 billion dollars in total for the American side of their companies.

This means they spend 20.5 billion in taxes and interest, or approximately 3% of their Gross Revenue. Considering this does not include the interest taken out of the profit, that number could be lower depending on the interest charges for the company. So the rate they pay is far lower then the federally mandated rate of 39% (which is usually pointed out by economists as the different between tax rate and effective tax rates).

If you’re wondering how much windfall we would create by closing the tax loopholes and actually charging 39%, based on these 12 companies alone we would have 240 billion dollars more in income. That would be enough to fund half of our entire country’s public schools system.

The only way we get close to a 39% rate is if we were only to tax their incomes after all expenses. If we were taxed the same way corporations are taxed we would get to write off food, transportation, electricity, classes, vacations, everything except for interest items (like mortgage). Imagine only paying taxes on the money you keep after paying for your everyday living costs. That’s what a corporate tax rate is like.

So the next time someone asks why you think there is a major wage discrepancy in this country, or why corporations aren’t people, or why class warfare is not the purvey of the “spoiled masses,” point them to this blog. We all might learn something new.

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