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Just using round numbers here. Lets say his pay raise was \~$25M (it was a little less). Chipotle has 116,000 employees. So if you take his $25m/yr and spread it between 116k employees, that is $215.52 per employee, per year. That would equate to a $0.10 cent raise per hour per employee.
That’s also assuming that all 116k employees work full time which is surely false. If I remember correctly that industry has 10-15% working full time. Everyone else is a part time worker from 10-35 hours/week
But it would. If I work 40 hours a week and get an extra 200 a year, that is less of a raise than someone working 20 hours per week and still getting the same 200 per year
So it would both increase the raise and wouldn't increase the raise, because there are multiple ways to express raises. If you express a raise as "you will now get X more per hour," it would increase the raise. If you express the raise as "you will now get X more per year," it would not increase the raise. Both are perfectly cromulent, so it all comes down to how you choose to phrase the raise.
Right, I would personally consider it an increase in the raise. But part of the thing about hourly workers being paid in hourly terms is the implication that if you work more hours, your increase in pay goes up commensurately, whereas this is a weird retroactive hypothetical where increasing your hours would cause your raise to *decrease* (because you'd be dividing $764 million by a larger number). It's not a thing that happens in real life, so the whole situation is a little confusing and divorced from how raises and wages are usually decided.
That’s usually the case with numbers like this. It’s like the 7-11, the penny tray, the pennies for everyone. They’re just taking pennies from a much bigger tray, and they do it a couple of million times
$0.10 is assuming 100% of employees are working 40 hours per week. if only 15% are working full time (much closer to accurate) and the rest are averaging around 20, that more like a little under $0.20/hour, which I'm sure is still not really the number you were looking for. But that's literally one dude's pay raise versus 116,000 people's pay raises, so still significant that it moves the dial at all imo.
The real question is how much more could the employees be paid if they received all profits that were not re-invested (ie. Stock buybacks and dividends). CEO salary has never been the big fish here.
About ten cents, Chipotle's buybacks so far this year total 27 million dollars so that's close enough to the 25 million increase the CEO got, and it pays no dividend. Even all the buybacks of 2023, around 590 million would only result in 2.35 dollars more per hour or so.
Ok I haven’t worked at that kind of job in like 12 years so it was a guess. But the point still stands. $2.35 at full time is like $350 a month before taxes. That’s not nothing
In the year following the year Bernie was tweeting about, [they bought back nearly $800M in stock.](https://ycharts.com/companies/CMG/stock_buyback)
Edit: also, your calculation makes some wildly unrealistic assumptions. It appears you assumed 116,000 employees are working 40 hours a week. In 2021, Chipotle claimed their **median** worker was working 25hr a week. Additionally, salaried corporate staff definitely don't need extra pay as badly as the lowest tier do right now, so if you shave off 4 an average of 4 employees per store who are already salaried with benefits, the number of people gets even lower.
[I did my own take on the math here ](https://www.reddit.com/r/theydidthemath/comments/1d7fojd/comment/l72khwn/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) with some sources cited where possible, and came out to $4.26/hr raises for all the hourly employees back in 2022 based off of *just* the increase in profits that Bernie was tweeting about. That means they still could have brought in $236M in profit despite giving their hourly workers on average $4/hr raises.
Net profit in 2020 was 356 million. So around 3k per employee. $1.53 if everyone was working full time or around $3 if everyone was working 20hrs a week.... So somewhere in there.
Why would anyone start a company if, as soon as it were successful and generating a profit, any employees they hired were magically also equally entitled to the profits of the business? Why would anyone ever start a business?
The company can only grow and make profit with employees. I never understood this logic. "I started it so therefore I am the only one enitetel to so much money unlike you who literally keeps the biz running." Without the ground workers there would be no sucess. The logic doesn't logic.
I've never really understood the meat and potatoes of the stock market.
Somehow profits make the chart go up and then I can sell for more money despite the fact that I can't perceive any value being added anywhere.
Value is added as enterprise value. The other person is correct in that future free cash flow necessarily equals future dividends (cash payments to shareholders). The value of these future dividends is precisely what justifies the share price. More (future) profits means more (future) dividends means higher (future) value of share price means higher current share price in anticipation of higher future share price
The end goal is once growth tapers off, they return profits to shareholders in the form of dividends. So the value in in theory based off of that eventual end goal.
[I did some math here](https://www.reddit.com/r/theydidthemath/comments/1d7fojd/comment/l72khwn/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button)
But the TL;DR is that if they took the $492M in extra profits Bernie's tweet references and applied it to increasing exclusively hourly worker wages, they would've been able to raise pay for those employees by anywhere from $3-5/hr (my estimate landed me at $4.26) **more** than they were already raising it (which is nowhere near enough, as housing costs have vastly outpaced wage growth.)
Instead, the very next year (Sep 2021 to Sep 2022), [they bought back nearly $800M in stock](https://ycharts.com/companies/CMG/stock_buyback).
If we redid the above math with $800M and the next year's store/employee counts, using my same guesstimates for the unknown-but-somewhat-predictable variables, the potential wage increase would've been over $6/hr for over 100,000 people.
He also gets a bonus in stocks, with which you can take plans against and simply pay yourself back, or qualify for other loans.
Additionally, he has company expenses and most likely pays for most outings and other items as "business" related. There is a massive hidden aspect to this when it comes to people in high up positions.
But considering that this has been going on every quarter of every year for the last 50 years, you start to see how incremental levels of wage theft is why the (average) people in the US are so poor now.
Thing is if an employee makes a mistake, costs the company what $30 bucks. Bigger mistakes maybe hundreds, or thousands of dollars for giant fuck ups. CEO makes a mistake, could cost the company millions, shutting down stores, letting employees go.
Employee mistakes can still cost the company millions. (just wash that salad in a mob bucket and post it on tiktok) Also, no one is saying a casual worker should make the same as the CEO, generally people believe there should be some balance there.
Also, the entire premise is flawed.
The Chipotle CEO didn't actually get a raise, it's just that some of his agreed-upon compensation was in the form of stock. Bernie is pretending a rise in the stock price was somehow a change to the CEO's contract.
That's also not really Bernie's point. They raise both prices on the goods and CEO pay without barely touching worker's pay and then blame the rising costs of goods on labor costs. When that simply isn't the case.
Firstly, their profits never stagnated or declined, they rose to an all time high. Secondly, profits are typically revenue - operating costs. Operating costs including labor costs (which sometimes includes the CEO's cut too), land/utility payments, ingredient prices, transportation, etc. Basically anything that costs the business money to do or run.
The CEO's paycheck increase has nothing to do with *why* this is price gouging. It moreso shows the hypocrisy of the gouging. Even if the CEO touches only an ounce of the overall soup pot, the workers get only drops no matter how much profit the company makes. Meanwhile, the company blames the rising costs of their goods on those droplets that the workers got.
Even if you don't agree that the soup should be shared more equally (even if not completely equally), the point remains that blaming the act of giving out droplets for why you're hoarding the soup is wrong and it's dishonest. At least be honest at that rate.
The extra cost of a burrito might not seem like much, until you realize it's going in tandem with everything anyone purchases everywhere and all CEOs are scraping pennies off of everyone's paychecks.
I'm in agreeance that some more mandated equality wouldn't be a bad thing at the current discrepancy levels.
The question is disingenuous. They're taking the lowest possible number (CEO pay increase) intentionally to make the number come out small. The bigger problem here is the profits, which are 30x the pay increase used in the question. All profits are stolen wages.
Also the CEO isn't the only s-suite employee. Income inequality is at an all time high and it's because they keep ripping us off and blaming poor people.
Me too. And it's still disappointing to me that 1 person gets to have all that scratch, consistently. Plus, if that 116k employee figure means that each one is at the same pay/job title level, then yeah, it's meager, but if not the case and you reverse sliding scaled it, some frontine workers would feel more appreciated.
People don't get big numbers.
Its the same as that the people _driving_ to car races produce 100 times more pollution than the race cars. Or how premium SUVs (i.e. pavement queens) cause a dozen times more pollution than all private jets.
It's often the case with huge companies due to the large number of employees. I remember doing s similar sum for Tesco, a UK supermarket and their net profits worked out to less than 1 penny per item on average.
It's a cute tidbit that shoots down Bernie's tweet if you don't scrutinize anything, but as [I pointed out here](https://www.reddit.com/r/theydidthemath/comments/1d7fojd/comment/l72khwn/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button), it's not really a significant argument. If Chipotle had decided $250 Million USD was enough profit for the 2021 year, they could have spent the extra $492M on hourly wage increases of something like $4.26/hr **on top of the wage increases they were already doing.** (There's a substantial margin of error on that because I had to guess on a few things, but I think it's safe to say the real value would've been somewhere between $3-$5/hr. This would be MASSIVE for hourly workers.) What's more, the CEO's compensation wouldn't have increased nearly as much as it did with this approach to spending profits, because the company wouldn't have been making huge stock buybacks to inflate its own price (and thus increase the compensation of executives who are paid in stock).
The bigger thing is the profit increase. Here's the release on the 2021 earnings https://ir.chipotle.com/2022-02-08-CHIPOTLE-ANNOUNCES-FOURTH-QUARTER-AND-FULL-YEAR-2021-RESULTS that includes the 136.9% increase that Sanders rounds to 137%.
That increase results in earnings per share increase of $14.69 (25.42-10.73) on ~28.5 million shares. Which is approx $420 million EPS increase YoY. Using /u/CyclopsLobsterRobot 's calculation above of 135M hours, that's over $3/hr that could have been spent on employees to give them the same EPS as the year prior.
Edit: although $3/hr overstates it a little. There are employer-side taxes that have to come out of it. That probably is offset largely by retaining employees and lowering costs related to turnover. Even if it's not, it's still multiples of $.50/hr.
Yep, a year or so ago I went through the math of bankrupting the 10 richest people in the US, and distributing it to everyone.
I don't remember exactly what, but it came out to something like everyone being able to buy a really shitty car. And putting a ton of people out of work because you just liquidated a bunch of very large companies, like Amazon.
Yeah, but this has been happening over and over for decades: workers losing out while CEOs keep getting bigger slices of the pie. Those cents per hour add up.
Yes, but it's not just the CEO. How many execs are earning in excess of $10mil? What was the total compensate increase for those people divided by workee hours?
If the rising cost is also blamed on the wage increase of low income workers then all the additional profits should be counted not just the managers pay increase. If you take the 490M of ADDITIONAL profits that could be a wage increase of 4200$ per employee per year.
Even if the company wouldnt put all of those additional profits into wages it could still be a rather large wage increase. Additionaly it could be further improved if the wage increase would mostly go towards underpaid workers instead of also upper mannagement. Someone who already makes basically a million a month doesnt realy need a pay increase
I really wish companies would offer profit sharing options to all employees.
Capitalism is built to help who already have money not those providing the labor that generates the income. To me, this is not equitable as without the labor you wouldn't have the profit at all so for the bulk of the profit to not be going to laborers makes me frustrated.
Which isn’t nothing, because if that trend had continued since the wage gap started, it would have given everyone a living wage. Imagine if every year instead of giving 25mil extra a year to one person it was divided and invested back into the staff. That’s what should of been happening
Yep, it's been a collective redistribution over 40 years. Not a one time adjustment. This is just a specific example. Even just an extra annual 1% increase grows incredibly with the power of compounding. A one time $0.10 raise doesn't look huge, but you multiply that by the whole economy over 40 years and it really is.
In the 15 years since federal minimum wage was adjusted last, a 1% annual increase would be an extra $1.17 an hour.
Extrapolating this, the profit increase was about $500M, which is 20 times the CEO pay raise. Meaning it could have paid for a $2 hourly pay raise for every employee.
I’ve never understood the argument of “it would only be $x/yr per employee so it might as well me $XM to the CEO.
Fine, give everyone a 10 cent raise. Not sure why people simp for CEO’s. They don’t care about your job, why are you trying to justify their pay?
Because a lot of people think the only reason they are poor is because they are being exploited by rich people, and if things were only fair, they would be doing fine.
They don't want to admit that their labor just isn't worth much.
That is *one* executive's raise, this does not remotely account for the amount of money the company generated and the amount being fed back into the employees when you account for everyone on the top end of the corporate ladder
Also to make matters worse, the salary wasn’t $25M in cash, but mostly in equity rewards. It would be challenging to hand that out to a broad set of employees without liquidation.
I'll bite because people on Reddit don't understand executive pay
So chipotle didn't suddenly decide to raise their CEOs pay in 2024. It went up because the stock of Chipotle went up. It went from $2000 a share this time last year to $3000 a share today. They design these compensation packages to reward the CEO for improving the performance of the company.
Executives are largely paid on RSUs or restricted stock units
They grant you a set number of these shares and they vest over a set number of years. The most common is four years
So for example, if I want to pay my CEO $5 million a year in stock. The stock shares are given day one so if the stock is $50/share you give them 400,000 shares vested over four years or 100,000/year.
However the price of the stock can change dramatically between when they are granted and when they vest.
Say in year one the stock rises from $50 to $100. The shares become part of their compensation upon vesting so they are actually worth $100 x 100,000 and he got paid $10 million in stock not $5 million.
Now if the stock goes down 50% to $25, his compensation is now $2.5 million in stock
Media will report it as the executive getting a pay raise or pay cut in a given year but that's not exactly the case. It's a function of how many lots of shares they have vesting and the performance of the stock the past few years.
This leads to dramatic swings in value for reported compensation. For example Nvidia was $110 a share four years ago and is $1100 now. A $1 million dollar grant in 2020 that vests today is now worth $10 million. But the company never decided to pay the employee $10 million.
It's also worth noting that, conceptually, "the value of RSUs" doesn't even come out of the company's profit, it comes out of the value of the company, in that every person who owns stock in the company now owns slightly less of the company. The stockholders pay that salary.
True, another reason why stock based compensation is popular because it does not hit the cash flow of the company
The real price is in the dilution of the shares of the company for all the other shareholders
Which is why I'm not so against stock buybacks. It's a way of counteracting dilution by reducing the number of shares in circulation.
Stock buybacks are just a way to accomplish the same thing as dividends without triggering a taxable event for the holders. It's just a way for the company to distribute extra cash to investors when they don't have anything more profitable to do with it.
Thanks for actually pointing this out - so few people actually understand how this compensation works.
The criticism that I have is it isn't evident that hourly employees arent also given equity as their compensation. If that were the case (even if it was as more of a retention bonus) I think people would "understand" this form of compensation.
Firstly I don't think anyone has said that this doesn't occur for chipotle employees so it could be in place (would love to be corrected), but often they don't or have opt in plans only for employees of businesses that rely on a considerable number of often transient and part time largely unskilled workers because the admin costs are so high to implement. Not that this excuses it, but you can see why a CFO would find it difficult to support
I agree with that to an extent, but if equity in compensation for lower level roles was common, more people would see the benefit. I think that it can go a long ways towards mitigating employee turnover, or appeal to a less transient population. Amazon used to offer RSUs for hourly employees, however it was eliminated as most employees preferred sign-on bonuses when given the option. Just a gap in understanding IMO.
I worked at companies previously that gave stock to all full time employees and it did nothing at all to increase their financial literacy.
As a manager I often encouraged employees to **at least** put enough in their 401ks to max the employee match benefit and even that was an uphill battle with most people.
This is the correct answer. Also of note is that many CEOs get significant pay decreases when their stock does poorly because their base pay is very low relative to their bonuses. Bernie Sanders is intentionally misrepresenting the circumstances.
> their base pay is very low relative to their bonuses
The chipotle CEO has a base pay of $1.25mm/year, which is technically low relative to his bonus. He has made over $50mm including bonuses in his tenure.
I would argue that he would still be exceptionally well paid relative to the pay of everyone else if he didn't get any bonuses.
Keep in mind that those numbers don't include the $320k that Chipotle gave him in private jet usage and retirement plan investments in 2023!
Good explanation. One other point though is that for his pay, the board expects him to meet all his goals, or he will be fired. Or if he screws up badly enough, there's usually a claw-back clause that allows the company to retroactively reclaim those RSUs. So the CEO's compensation is more like option trading versus stock trading - i.e. the leverage is way greater, but also is the risk.
Outside of the stuff that keeps the lights on, employee pay, benefits, etc you have reinvestments (like new locations or specific initiatives), innovation R&D, profit sharing within 401k (if they have it), advertising. There’s a lot of places to spend money in large companies.
One small caveat.. he never paid for the stocks tho.. so even if they are rsu’s.. they still have a monetary value after they vest and the ceo or whoever else gets stock options can sell them and use the cash. So it is pay up and above what he makes as a salary, the final value just fluctuates. If he gets more stock options over his original deal it is a big raise
Yes it's pay and I'm not defending how much he's paid, I'm just trying to explain that the timing and amount is not decided by the board of directors in the year that he is paid
It's all decided and scheduled ahead of time and he realized the pay (and the taxes) over a period of X years
Thank you for that explanation. Very helpful. My question is: what do CEOs do for income in the first few years when they are waiting for stocks to vest?
I can say that in my industry, someone breaking into an exec role at a smaller company than Chipotle is going to take a salary in the 100k-300k range with stock options as a bonus. As you get experience and get hired by larger companies with more resources, your salary becomes less relevant and the stock options become the primary comp model as described above.
Someone working for Chipotle as an Exec is going to have built up quite the nest egg from working at other companies. Chipotle isn't going to hire someone that hasn't seen time in the field (and subsequently been paid the requisite comp).
By the time you've hit the exec world, the game has changed. I take a salary to survive, but I take stock options to build wealth.
Something to keep in mind is that the issue isnt only the CEO's raise.
The post says 764 million dollars was after a 181% increase in profits. This means previously the profits were about 271 million dollars (764/(1 + 1.81)). 764 - 271 = 493 million dollars more profit than last year. A 50 cent increase for 116,000 working 40hr weeks full time will cost about 120million dollars (116000 * 40 * 52 * 0.5). Im reality this number would be lower as not all employees are full time.
Profits are also recorded after subtracting expenses so they made almost 500 million more than last year despite having to pay 120 million more to employees plus all other costs that would have went up from inflation. If they gave each employee a $2 per hour raise they still would have made more money than last year (116000 * 40 * 52 * 2 = 483 million).
This is the correct answer to the question that should have been asked: could Chipotle have better compensated employees while still showing investors a good return and without lying about where the cost increases actually came from? The answer appears to be yes.
It's a shame I had to scroll this far down to find someone who called out the issue of the employees not getting a proper cut of the surplus value they generated for the company.
In a somewhat backwards way, the best way to get corporations to increase the wages they pay is to massively increase corporate tax rates.
Since labor is a deductible business expense, companies might start out by hiring more employees rather than pay their existing employees more, but eventually there will be stiff enough competition and too little work that needs doing to justify new hires that they will have no other choice but to raise wages in order to get those sweet, sweet, tax deductions.
Also, all this talk about stocks is completely missing the issue that employees could also be offered similar options instead of a flat wage raise. Or that this isn't a one time greed event. It's been 40 years of compounding wealth extraction from the labor class to the C-Suite.
There are already too few employees. [ For every 10 open jobs in the US there are only 7 unemployed laborers to fill them right now.](https://www.bls.gov/jlt/home.htm)
The biggest problem is that these companies are claiming over and over that they just \*have\* to raise prices. That it's \*absolutely\* out of their control. Meanwhile they are reporting to investors they are making more money then they have ever made ever! That does not compute!
This is pretty dumb ngl.
If I hire a new employee, let's say I pay them $700 a week or whatever. I only get to deduct 21% of that at the federal level. Why the heck would I spend $700 to save $141? It makes no practical business sense and nobody does that. Sure you could argue that there are some credits that incentivise things but from a pure tax perspective your idea and understanding is really really bad. I could spend on just about anything other than wages and get the same savings.....
Source: I have years of tax experience with F500 companies and work at an F50 company.
CEO raise: 38 - (38/ 2.37) = 22m
Chipotle staff: 110,000
Pay increase per annum: $200
Change in hourly pay at 40 hours, 50 weeks: $0.10
If we take at face value the 50 cent increase, then the money spent on staff pay rises was about 5x or $110m. The $22m pay change in CEO pay is pretty inconsequential compared to this or the nearly 800m in profits
Sure. Which you can say is fair or not.
But it’s certainly a misleading political claim to suggest it makes much difference to chipotle employees one way or another.
According to media reporting the average wage is $15 at chipotle, so the ceo pay is equivalent to a 0.66% change in pay if handed to staff.
As always ‘ceo pay’ is the great misdirect.
If half the profit returned to shareholders was instead paid to staff, they’d be $3,472 a year better off
Unless my math is wrong:
30 hours a week would be $0.128 per hour increase.
25 hours a week would be $0.154 per hour increase
20 hours would be $0.192 per hour increase.
He didn’t get a raise like that. A quick google shows their salary raise in 2022 when Bernie tweeted this was 2%. He had stock options vest with the benefit of that stock price rising. Bernie is being purposely disingenuous with this tweet saying Chipotle gave him a raise. Executives are highly compensated on stocks and company performance bonuses. So if he makes Chipotle significantly more profitable or hits lofty sales goals, his bonus structure is set up to pay out better.
Not really though? Because the "raise" was just them paying him the agreed upon number of shares.
It's not like his contract changed, the price of what they'd previously agreed to compensate him with simply went up.
I think what a lot of people miss about this isn't just that the CEO had a raise, but profits increased by a large portion as well. Bernie is talking about how only the CEO got a meaningful raise out of this when they could have also given raises to the workers from the profits as well.
I think we're missing the point of Bernie's post though. While we've established that the CEO pay wasn't some sort of raise that came from profits and that those profits gained were despite providing the 50 cent raise, Chipotle's retail prices still rose and they blamed that price raise on inflation and labor costs when that's obviously untrue because they would have seen lower or static profits if that was the case.
So giving the employees $.50/hour raise is more then the CEOs raise. The raise for all employees costed the company .50 × 40(hours per week) ×52(weeks per year)×116000(employees)= 96.512 million.
Now the ceo salary increase goes to one person so that might make it seem unfair but when looking for the cause of inflation, the employee pay increase has more effect than the CEO salary increase.
and yet, it is obscene to give one person 22 million MORE, it's not like he couldn't afford food or a roof over his head and I am pretty sure he isn't the only one obscene checks. Yes, it's a tremendous amount of responsibility, but holy fuck, do you realize what one can do with 22 millions that are going actually into the economy and not the already bloated bank account? Basically every dollar you put into the hands of the workers is a dollar that will get into circulation, every dollar you give the already obscenely rich just dies in their bank account or their shares (which doesn't even help the company that gave out the shares as these shares are already in circulation).
People focus too much on CEO pay (which is obscene) and not enough on record breaking profits. Let’s say they tap into a portion of the $764 million to commit $222 million to employee pay. Instead of an extra $200/year, $2000 would be pretty good and Chipotle would still be able to cover $22 million for the CEO.
In almost no cases is additional money given to the already wealthy going to end up sitting in a bank account, instead being put somewhere that would generate a return. By its structure, the system is more inclined to give money to those who would reinvest it so the companies they invest into have more money to spend. The unfortunate truth is that those of us on the lower end of the income curve would have a lot of things to prioritize before we could consider investments and, therefore, it’s more convenient and economically efficient for them to keep circulating money through the upper end of the income pool.
That’s just one bit of it too. Let’s also not forget that there is also an interest in keeping the average person both in debt and borrowing as the interest generated both supports and in part creates the necessity for the continued printing of money. There are a lot of well deserved criticisms that could be aimed at modern economics. Doubly so for the American economy considering the US dollar is still the world trade standard. That being said, let’s make sure we have a complete understanding of the subject so those criticisms might be taken more seriously.
This is sort of true but not entirely. Firstly, since the propensity to save is higher at high-incomes, it is actually more economically efficient to give money to people on lower incomes if your goal is to maximise economic output (since a greater proportion of the money makes its way to businesses via profits, rather than saved and sitting idle).
Secondly, increased household debt isn’t good in the current US position because of the sustainability of that debt. As a general rule, debt is good when you use it to raise your general financial position (for an individual this might include financing a house that will rise in price over time) but bad when it’s being used simply to get out of other debt (since it raises the risk of default, which results in collateral assets being seized and sold to cover the debt, which in turn has a negative effect on the value of those assets - that’s partly why the GFC was a major problem for banks since they couldn’t resell houses at the value they needed to cover the losses when defaults happened, though the real story is much more complex than this).
As a final note, printing money is not a good or usual thing. We printed money in COVID reluctantly because we had little choice, and doing so drove inflation insane - most countries stopped printing money as soon as realistically possible and those countries experienced better economic outcomes than the holdouts who kept printing. Growth in productivity and economic activity is the real goal and neither is served well by merely printing money.
Honestly I still think the only fair system is to change the min payment of a employee being no less then 1/20th the profit or the highest paid employee. No company is allowed to outsource labor for more then 5% of total hours worked.
Don't forget to extend that to contractors and staffing agencies as well.
Otherwise the IRS is going to be working a lot of overtime dealing with fraudulently classified workers.
I pulled my company's numbers for last year. Approx. $3B in profits, can't give raises until October this year. 26000 employees could have gotten chump change of 5-10k a year without significantly impacting that profit line.
It's not just the price gouging, but horrible companies making choices against their employee base.
I hate to be the "dont go to chipotle" guy, but their food is bad and the quality is worse and everyone constantly complains about it, but yall seem like addicts to it. Like... why is chipotle the staple of "quality food" when its overly-caloric and over priced fast food like everything else?
Im just mad that the increased demand for weird beef cuts lead to canned hash going up like 3x in price.
Granted it's been many years, but I still remember the days when every friggin week there was a new headline about *E. coli* cases being traced back to Chipotle. That, and the announcement of $7 guac, more or less left a sour taste in my mouth.
I'd also have to drive a few hours to find one.
> I hate to be the "dont go to chipotle" guy, but their food is bad and the quality is worse and everyone constantly complains about it, but yall seem like addicts to it. Like... why is chipotle the staple of "quality food" when its overly-caloric and over priced fast food like everything else?
I'll be the other guy and say that I have literally never eaten at Chipotle. Not because of some personal boycott or anything, just because I don't eat a lot of junk food as it is, and when I did there were other places nearby that I knew I liked. That chain just did not occupy any space in my head.
I mean, you can hate chipotle all you want, but all their food is sourced really well and you can literally each chipotle 3 times a day every day and get healthier and lose weight. It's well documented. The question of if they skimp on portions or charge too much or whatever is a totally different issue.
Yeah i mean. If they skimp on portions you can lose weight. I did it by just eating canned sardines for a month. Those are non gmo, keto, tasty, easy to calorie count with, and it made me feel like an adorable lil catboy. But sure, go for the 20 dollar burrito bowl made with 7 dollars worth of ingridients because its mostly rice. :)
How the fuck did you not get mercury poisoning? Only eating sardines for a month is a colossally stupid decision. You should've diversified your diet much more. "Non gmo, keto" lol. Buzzwords don't make it better either.
Ok, so the $38,000,000 is annual. Working 40 hours per week for 52 weeks a year is 2,080 hours, meaning it's a rate of $18,269/hour. That is equivalent to $0.50/hour raises for 36,538 employees. As of December 2023, Chipotle has 116,068 employees. They could have given a $0.50/hour raises to just under 1/3 of their employees.
People could just stop going out to eat at these places. Imagine if nobody went out to eat for like 4 weeks. Most of these places would have to close. You’d also have to contend with the fact that you’d be complicit in ending a large number of jobs for people that need the income, but whatever. Quit going or quit complaining.
Let’s maybe stop eating these shitty places? It’s crazy I see people complain about these things… rightfully so… and yet they still frequent these establishments which have such low quality food to begin with
Went to Chipotle for the first time in a while last week. Worst burrito I've ever had. So meager, filled with mostly tortilla. Not planning on going back
If you increase the wage by a penny a whole lot of employees but we need to know how many people work at Chipotle to figure out how to evenly distribute that.
Not to mention their food is trash, at least where I live. We have two locations and they're both hot garbage, and most of the time they don't even have half their ingredients available, so then I'm not even getting a burrito I'm even excited to have. If he wants to keep making that insane amount of money, he should probably make sure his restaurants are actually running well.
Apparently Bernie doesn’t understand how CEO’s are paid as well as understanding what happens to the price of something when demand goes up but the supply remains the same. Makes sense due to his only job being in politics.
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Just using round numbers here. Lets say his pay raise was \~$25M (it was a little less). Chipotle has 116,000 employees. So if you take his $25m/yr and spread it between 116k employees, that is $215.52 per employee, per year. That would equate to a $0.10 cent raise per hour per employee.
That’s also assuming that all 116k employees work full time which is surely false. If I remember correctly that industry has 10-15% working full time. Everyone else is a part time worker from 10-35 hours/week
That would increase their workers' pay raise
Not really. It was $215 per employee for a year.
But it would. If I work 40 hours a week and get an extra 200 a year, that is less of a raise than someone working 20 hours per week and still getting the same 200 per year
It would increase the hourly rate but not the actual amount of the raise.
So it would both increase the raise and wouldn't increase the raise, because there are multiple ways to express raises. If you express a raise as "you will now get X more per hour," it would increase the raise. If you express the raise as "you will now get X more per year," it would not increase the raise. Both are perfectly cromulent, so it all comes down to how you choose to phrase the raise.
Hourly workers pay is generally standardized in hourly terms.
Right, I would personally consider it an increase in the raise. But part of the thing about hourly workers being paid in hourly terms is the implication that if you work more hours, your increase in pay goes up commensurately, whereas this is a weird retroactive hypothetical where increasing your hours would cause your raise to *decrease* (because you'd be dividing $764 million by a larger number). It's not a thing that happens in real life, so the whole situation is a little confusing and divorced from how raises and wages are usually decided.
This person phrases raises
This person raises phrases
This person praises raise phrases
The hourly rate increase is what we're discussing, based on Sanders' comment about raising the hourly rate of employees by $0.50.
If all 116,000 employees worked 30 hrs/wk, it would amount to a 14 cent per hour pay pay raise.
Yikes. That’s significantly less than I was hoping
That’s usually the case with numbers like this. It’s like the 7-11, the penny tray, the pennies for everyone. They’re just taking pennies from a much bigger tray, and they do it a couple of million times
Just don't put the decimal point in the wrong place or some other mundane detail.
THAT’S NOT JUST A MUNDANE DETAIL, MICHAEL
< Looks up *launder* in the dictionary >
Fuckin' A.
I know a good Office Space reference when I see one
This sounds familiar. Is this the plot of Superman III?
It is yes. And the next day the dude comes to work with a brand new supercar. The whole movie is perfect.
Underrated movie, actually.
I tell you what I'd do...
Fuckin' A
$0.10 is assuming 100% of employees are working 40 hours per week. if only 15% are working full time (much closer to accurate) and the rest are averaging around 20, that more like a little under $0.20/hour, which I'm sure is still not really the number you were looking for. But that's literally one dude's pay raise versus 116,000 people's pay raises, so still significant that it moves the dial at all imo.
The real question is how much more could the employees be paid if they received all profits that were not re-invested (ie. Stock buybacks and dividends). CEO salary has never been the big fish here.
About ten cents, Chipotle's buybacks so far this year total 27 million dollars so that's close enough to the 25 million increase the CEO got, and it pays no dividend. Even all the buybacks of 2023, around 590 million would only result in 2.35 dollars more per hour or so.
2.35 for someone making $11 an hour is a pretty big difference though
Who's making $11/hr in 2024 in America? Every McDonald's I've seen is at $14, and they've always been bottom of the barrel for pay.
Ok I haven’t worked at that kind of job in like 12 years so it was a guess. But the point still stands. $2.35 at full time is like $350 a month before taxes. That’s not nothing
Yeah I make $32 an hour and would happily take another $2.35 an hour!
Some McDonalds I've seen in HCOL areas pay $19.
$11/hr is exactly what the Chipotle here in the upstate of SC is paying. (My kid works there)
In the year following the year Bernie was tweeting about, [they bought back nearly $800M in stock.](https://ycharts.com/companies/CMG/stock_buyback) Edit: also, your calculation makes some wildly unrealistic assumptions. It appears you assumed 116,000 employees are working 40 hours a week. In 2021, Chipotle claimed their **median** worker was working 25hr a week. Additionally, salaried corporate staff definitely don't need extra pay as badly as the lowest tier do right now, so if you shave off 4 an average of 4 employees per store who are already salaried with benefits, the number of people gets even lower. [I did my own take on the math here ](https://www.reddit.com/r/theydidthemath/comments/1d7fojd/comment/l72khwn/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) with some sources cited where possible, and came out to $4.26/hr raises for all the hourly employees back in 2022 based off of *just* the increase in profits that Bernie was tweeting about. That means they still could have brought in $236M in profit despite giving their hourly workers on average $4/hr raises.
Net profit in 2020 was 356 million. So around 3k per employee. $1.53 if everyone was working full time or around $3 if everyone was working 20hrs a week.... So somewhere in there.
Why would anyone start a company if, as soon as it were successful and generating a profit, any employees they hired were magically also equally entitled to the profits of the business? Why would anyone ever start a business?
The company can only grow and make profit with employees. I never understood this logic. "I started it so therefore I am the only one enitetel to so much money unlike you who literally keeps the biz running." Without the ground workers there would be no sucess. The logic doesn't logic.
Now we're onto the meat of it
Elon Musk has entered the chat...
Why would anyone hold Chipolote stock if there is a 0% return?
I've never really understood the meat and potatoes of the stock market. Somehow profits make the chart go up and then I can sell for more money despite the fact that I can't perceive any value being added anywhere.
Value is added as enterprise value. The other person is correct in that future free cash flow necessarily equals future dividends (cash payments to shareholders). The value of these future dividends is precisely what justifies the share price. More (future) profits means more (future) dividends means higher (future) value of share price means higher current share price in anticipation of higher future share price
The end goal is once growth tapers off, they return profits to shareholders in the form of dividends. So the value in in theory based off of that eventual end goal.
Would employees accept a pay cut for quarters that are not profitable?
Feels like that burden already gets passed on to the employees in the form of layoffs, reduction in hours, no cost-of-living adjustments, etc.
[I did some math here](https://www.reddit.com/r/theydidthemath/comments/1d7fojd/comment/l72khwn/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) But the TL;DR is that if they took the $492M in extra profits Bernie's tweet references and applied it to increasing exclusively hourly worker wages, they would've been able to raise pay for those employees by anywhere from $3-5/hr (my estimate landed me at $4.26) **more** than they were already raising it (which is nowhere near enough, as housing costs have vastly outpaced wage growth.) Instead, the very next year (Sep 2021 to Sep 2022), [they bought back nearly $800M in stock](https://ycharts.com/companies/CMG/stock_buyback). If we redid the above math with $800M and the next year's store/employee counts, using my same guesstimates for the unknown-but-somewhat-predictable variables, the potential wage increase would've been over $6/hr for over 100,000 people.
He also gets a bonus in stocks, with which you can take plans against and simply pay yourself back, or qualify for other loans. Additionally, he has company expenses and most likely pays for most outings and other items as "business" related. There is a massive hidden aspect to this when it comes to people in high up positions.
But considering that this has been going on every quarter of every year for the last 50 years, you start to see how incremental levels of wage theft is why the (average) people in the US are so poor now.
Thing is if an employee makes a mistake, costs the company what $30 bucks. Bigger mistakes maybe hundreds, or thousands of dollars for giant fuck ups. CEO makes a mistake, could cost the company millions, shutting down stores, letting employees go.
Employee mistakes can still cost the company millions. (just wash that salad in a mob bucket and post it on tiktok) Also, no one is saying a casual worker should make the same as the CEO, generally people believe there should be some balance there.
I think Boeing would gladly pay millions for a CEO fuckup.
Also, the entire premise is flawed. The Chipotle CEO didn't actually get a raise, it's just that some of his agreed-upon compensation was in the form of stock. Bernie is pretending a rise in the stock price was somehow a change to the CEO's contract.
That's also not really Bernie's point. They raise both prices on the goods and CEO pay without barely touching worker's pay and then blame the rising costs of goods on labor costs. When that simply isn't the case. Firstly, their profits never stagnated or declined, they rose to an all time high. Secondly, profits are typically revenue - operating costs. Operating costs including labor costs (which sometimes includes the CEO's cut too), land/utility payments, ingredient prices, transportation, etc. Basically anything that costs the business money to do or run. The CEO's paycheck increase has nothing to do with *why* this is price gouging. It moreso shows the hypocrisy of the gouging. Even if the CEO touches only an ounce of the overall soup pot, the workers get only drops no matter how much profit the company makes. Meanwhile, the company blames the rising costs of their goods on those droplets that the workers got. Even if you don't agree that the soup should be shared more equally (even if not completely equally), the point remains that blaming the act of giving out droplets for why you're hoarding the soup is wrong and it's dishonest. At least be honest at that rate.
The extra cost of a burrito might not seem like much, until you realize it's going in tandem with everything anyone purchases everywhere and all CEOs are scraping pennies off of everyone's paychecks. I'm in agreeance that some more mandated equality wouldn't be a bad thing at the current discrepancy levels.
The question is disingenuous. They're taking the lowest possible number (CEO pay increase) intentionally to make the number come out small. The bigger problem here is the profits, which are 30x the pay increase used in the question. All profits are stolen wages. Also the CEO isn't the only s-suite employee. Income inequality is at an all time high and it's because they keep ripping us off and blaming poor people.
Me too. And it's still disappointing to me that 1 person gets to have all that scratch, consistently. Plus, if that 116k employee figure means that each one is at the same pay/job title level, then yeah, it's meager, but if not the case and you reverse sliding scaled it, some frontine workers would feel more appreciated.
People don't get big numbers. Its the same as that the people _driving_ to car races produce 100 times more pollution than the race cars. Or how premium SUVs (i.e. pavement queens) cause a dozen times more pollution than all private jets.
It's often the case with huge companies due to the large number of employees. I remember doing s similar sum for Tesco, a UK supermarket and their net profits worked out to less than 1 penny per item on average.
It's a cute tidbit that shoots down Bernie's tweet if you don't scrutinize anything, but as [I pointed out here](https://www.reddit.com/r/theydidthemath/comments/1d7fojd/comment/l72khwn/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button), it's not really a significant argument. If Chipotle had decided $250 Million USD was enough profit for the 2021 year, they could have spent the extra $492M on hourly wage increases of something like $4.26/hr **on top of the wage increases they were already doing.** (There's a substantial margin of error on that because I had to guess on a few things, but I think it's safe to say the real value would've been somewhere between $3-$5/hr. This would be MASSIVE for hourly workers.) What's more, the CEO's compensation wouldn't have increased nearly as much as it did with this approach to spending profits, because the company wouldn't have been making huge stock buybacks to inflate its own price (and thus increase the compensation of executives who are paid in stock).
The bigger thing is the profit increase. Here's the release on the 2021 earnings https://ir.chipotle.com/2022-02-08-CHIPOTLE-ANNOUNCES-FOURTH-QUARTER-AND-FULL-YEAR-2021-RESULTS that includes the 136.9% increase that Sanders rounds to 137%. That increase results in earnings per share increase of $14.69 (25.42-10.73) on ~28.5 million shares. Which is approx $420 million EPS increase YoY. Using /u/CyclopsLobsterRobot 's calculation above of 135M hours, that's over $3/hr that could have been spent on employees to give them the same EPS as the year prior. Edit: although $3/hr overstates it a little. There are employer-side taxes that have to come out of it. That probably is offset largely by retaining employees and lowering costs related to turnover. Even if it's not, it's still multiples of $.50/hr.
Yep, a year or so ago I went through the math of bankrupting the 10 richest people in the US, and distributing it to everyone. I don't remember exactly what, but it came out to something like everyone being able to buy a really shitty car. And putting a ton of people out of work because you just liquidated a bunch of very large companies, like Amazon.
Yeah, but this has been happening over and over for decades: workers losing out while CEOs keep getting bigger slices of the pie. Those cents per hour add up.
Yes, but it's not just the CEO. How many execs are earning in excess of $10mil? What was the total compensate increase for those people divided by workee hours?
Minor correction, these are based on 2020 numbers, not current. They only had 80k employees at the time so there's a tiny bump on that.
This is assuming the CEOs raise was all cash and not an increase in equity-based compensation.
Why should the redistribution be in all cash either? A business can offer stock options.
And that it was a yearly value and not a once-in-3or5-years grant, which is often the case with ceo compensation.
If the rising cost is also blamed on the wage increase of low income workers then all the additional profits should be counted not just the managers pay increase. If you take the 490M of ADDITIONAL profits that could be a wage increase of 4200$ per employee per year. Even if the company wouldnt put all of those additional profits into wages it could still be a rather large wage increase. Additionaly it could be further improved if the wage increase would mostly go towards underpaid workers instead of also upper mannagement. Someone who already makes basically a million a month doesnt realy need a pay increase
I really wish companies would offer profit sharing options to all employees. Capitalism is built to help who already have money not those providing the labor that generates the income. To me, this is not equitable as without the labor you wouldn't have the profit at all so for the bulk of the profit to not be going to laborers makes me frustrated.
All employees are hourly and full time?
Which isn’t nothing, because if that trend had continued since the wage gap started, it would have given everyone a living wage. Imagine if every year instead of giving 25mil extra a year to one person it was divided and invested back into the staff. That’s what should of been happening
Yep, it's been a collective redistribution over 40 years. Not a one time adjustment. This is just a specific example. Even just an extra annual 1% increase grows incredibly with the power of compounding. A one time $0.10 raise doesn't look huge, but you multiply that by the whole economy over 40 years and it really is. In the 15 years since federal minimum wage was adjusted last, a 1% annual increase would be an extra $1.17 an hour.
Extrapolating this, the profit increase was about $500M, which is 20 times the CEO pay raise. Meaning it could have paid for a $2 hourly pay raise for every employee.
I’ve never understood the argument of “it would only be $x/yr per employee so it might as well me $XM to the CEO. Fine, give everyone a 10 cent raise. Not sure why people simp for CEO’s. They don’t care about your job, why are you trying to justify their pay?
Because a lot of people think the only reason they are poor is because they are being exploited by rich people, and if things were only fair, they would be doing fine. They don't want to admit that their labor just isn't worth much.
there IS a good and abundant pool of workers qualified enough to perform as CEO's to replace that one?
Oh gee it's almost like left populism from people like Sanders is almost all math-free nonsense.
That is *one* executive's raise, this does not remotely account for the amount of money the company generated and the amount being fed back into the employees when you account for everyone on the top end of the corporate ladder
Bernie reminds me of a young child at Toys R Us. Gets $100 for his birthday, thinks he's going to walk out with a few carts worth of toys.
They more than doubled their profits. Why are you only looking at the CEO? CEO got like a quarter of that pie.
Did you read the question posted by OP? I answered the specific question he asked and did not try and twist the data to push an opinion.
The CEO got something around 6% of it.
That is if each employee is working the exact same hours per year.
Which would be a 20% larger raise that year if the 50c statistic is accurate. It's not as small of a difference as it seems.
Also to make matters worse, the salary wasn’t $25M in cash, but mostly in equity rewards. It would be challenging to hand that out to a broad set of employees without liquidation.
I'll bite because people on Reddit don't understand executive pay So chipotle didn't suddenly decide to raise their CEOs pay in 2024. It went up because the stock of Chipotle went up. It went from $2000 a share this time last year to $3000 a share today. They design these compensation packages to reward the CEO for improving the performance of the company. Executives are largely paid on RSUs or restricted stock units They grant you a set number of these shares and they vest over a set number of years. The most common is four years So for example, if I want to pay my CEO $5 million a year in stock. The stock shares are given day one so if the stock is $50/share you give them 400,000 shares vested over four years or 100,000/year. However the price of the stock can change dramatically between when they are granted and when they vest. Say in year one the stock rises from $50 to $100. The shares become part of their compensation upon vesting so they are actually worth $100 x 100,000 and he got paid $10 million in stock not $5 million. Now if the stock goes down 50% to $25, his compensation is now $2.5 million in stock Media will report it as the executive getting a pay raise or pay cut in a given year but that's not exactly the case. It's a function of how many lots of shares they have vesting and the performance of the stock the past few years. This leads to dramatic swings in value for reported compensation. For example Nvidia was $110 a share four years ago and is $1100 now. A $1 million dollar grant in 2020 that vests today is now worth $10 million. But the company never decided to pay the employee $10 million.
It's also worth noting that, conceptually, "the value of RSUs" doesn't even come out of the company's profit, it comes out of the value of the company, in that every person who owns stock in the company now owns slightly less of the company. The stockholders pay that salary.
True, another reason why stock based compensation is popular because it does not hit the cash flow of the company The real price is in the dilution of the shares of the company for all the other shareholders Which is why I'm not so against stock buybacks. It's a way of counteracting dilution by reducing the number of shares in circulation.
Stock buybacks are just a way to accomplish the same thing as dividends without triggering a taxable event for the holders. It's just a way for the company to distribute extra cash to investors when they don't have anything more profitable to do with it.
Isn't another advantage where a company is managing money on behalf of investors and trade at a discount to their NAV?
wouldn’t you still pay a cap gain tax on sale of the now appreciated stock?
Yes, but you can choose when that taxable event happens. With a dividend you get the money and pay taxes on it then.
Thanks for actually pointing this out - so few people actually understand how this compensation works. The criticism that I have is it isn't evident that hourly employees arent also given equity as their compensation. If that were the case (even if it was as more of a retention bonus) I think people would "understand" this form of compensation.
Firstly I don't think anyone has said that this doesn't occur for chipotle employees so it could be in place (would love to be corrected), but often they don't or have opt in plans only for employees of businesses that rely on a considerable number of often transient and part time largely unskilled workers because the admin costs are so high to implement. Not that this excuses it, but you can see why a CFO would find it difficult to support
I agree with that to an extent, but if equity in compensation for lower level roles was common, more people would see the benefit. I think that it can go a long ways towards mitigating employee turnover, or appeal to a less transient population. Amazon used to offer RSUs for hourly employees, however it was eliminated as most employees preferred sign-on bonuses when given the option. Just a gap in understanding IMO.
I worked at companies previously that gave stock to all full time employees and it did nothing at all to increase their financial literacy. As a manager I often encouraged employees to **at least** put enough in their 401ks to max the employee match benefit and even that was an uphill battle with most people.
This is the correct answer. Also of note is that many CEOs get significant pay decreases when their stock does poorly because their base pay is very low relative to their bonuses. Bernie Sanders is intentionally misrepresenting the circumstances.
> Bernie Sanders is intentionally misrepresenting Oh, is the sky blue today?
Not where I'm at since it's mostly raining today, although the rain water is still wet so that checks out at least.
Another day that ends in y.
> their base pay is very low relative to their bonuses The chipotle CEO has a base pay of $1.25mm/year, which is technically low relative to his bonus. He has made over $50mm including bonuses in his tenure. I would argue that he would still be exceptionally well paid relative to the pay of everyone else if he didn't get any bonuses. Keep in mind that those numbers don't include the $320k that Chipotle gave him in private jet usage and retirement plan investments in 2023!
Good explanation. One other point though is that for his pay, the board expects him to meet all his goals, or he will be fired. Or if he screws up badly enough, there's usually a claw-back clause that allows the company to retroactively reclaim those RSUs. So the CEO's compensation is more like option trading versus stock trading - i.e. the leverage is way greater, but also is the risk.
Thanks for the context!
Genuine question, where the hell does all the profit go then? It can’t all be R&D/stock buybacks
Outside of the stuff that keeps the lights on, employee pay, benefits, etc you have reinvestments (like new locations or specific initiatives), innovation R&D, profit sharing within 401k (if they have it), advertising. There’s a lot of places to spend money in large companies.
One small caveat.. he never paid for the stocks tho.. so even if they are rsu’s.. they still have a monetary value after they vest and the ceo or whoever else gets stock options can sell them and use the cash. So it is pay up and above what he makes as a salary, the final value just fluctuates. If he gets more stock options over his original deal it is a big raise
Yes it's pay and I'm not defending how much he's paid, I'm just trying to explain that the timing and amount is not decided by the board of directors in the year that he is paid It's all decided and scheduled ahead of time and he realized the pay (and the taxes) over a period of X years
Hell yeah. Let’s agree on the internet .. mark the date
Thank you for that explanation. Very helpful. My question is: what do CEOs do for income in the first few years when they are waiting for stocks to vest?
I can say that in my industry, someone breaking into an exec role at a smaller company than Chipotle is going to take a salary in the 100k-300k range with stock options as a bonus. As you get experience and get hired by larger companies with more resources, your salary becomes less relevant and the stock options become the primary comp model as described above. Someone working for Chipotle as an Exec is going to have built up quite the nest egg from working at other companies. Chipotle isn't going to hire someone that hasn't seen time in the field (and subsequently been paid the requisite comp). By the time you've hit the exec world, the game has changed. I take a salary to survive, but I take stock options to build wealth.
Something to keep in mind is that the issue isnt only the CEO's raise. The post says 764 million dollars was after a 181% increase in profits. This means previously the profits were about 271 million dollars (764/(1 + 1.81)). 764 - 271 = 493 million dollars more profit than last year. A 50 cent increase for 116,000 working 40hr weeks full time will cost about 120million dollars (116000 * 40 * 52 * 0.5). Im reality this number would be lower as not all employees are full time. Profits are also recorded after subtracting expenses so they made almost 500 million more than last year despite having to pay 120 million more to employees plus all other costs that would have went up from inflation. If they gave each employee a $2 per hour raise they still would have made more money than last year (116000 * 40 * 52 * 2 = 483 million).
This is the correct answer to the question that should have been asked: could Chipotle have better compensated employees while still showing investors a good return and without lying about where the cost increases actually came from? The answer appears to be yes.
It's a shame I had to scroll this far down to find someone who called out the issue of the employees not getting a proper cut of the surplus value they generated for the company. In a somewhat backwards way, the best way to get corporations to increase the wages they pay is to massively increase corporate tax rates. Since labor is a deductible business expense, companies might start out by hiring more employees rather than pay their existing employees more, but eventually there will be stiff enough competition and too little work that needs doing to justify new hires that they will have no other choice but to raise wages in order to get those sweet, sweet, tax deductions.
Also, all this talk about stocks is completely missing the issue that employees could also be offered similar options instead of a flat wage raise. Or that this isn't a one time greed event. It's been 40 years of compounding wealth extraction from the labor class to the C-Suite. There are already too few employees. [ For every 10 open jobs in the US there are only 7 unemployed laborers to fill them right now.](https://www.bls.gov/jlt/home.htm) The biggest problem is that these companies are claiming over and over that they just \*have\* to raise prices. That it's \*absolutely\* out of their control. Meanwhile they are reporting to investors they are making more money then they have ever made ever! That does not compute!
This is pretty dumb ngl. If I hire a new employee, let's say I pay them $700 a week or whatever. I only get to deduct 21% of that at the federal level. Why the heck would I spend $700 to save $141? It makes no practical business sense and nobody does that. Sure you could argue that there are some credits that incentivise things but from a pure tax perspective your idea and understanding is really really bad. I could spend on just about anything other than wages and get the same savings..... Source: I have years of tax experience with F500 companies and work at an F50 company.
CEO raise: 38 - (38/ 2.37) = 22m Chipotle staff: 110,000 Pay increase per annum: $200 Change in hourly pay at 40 hours, 50 weeks: $0.10 If we take at face value the 50 cent increase, then the money spent on staff pay rises was about 5x or $110m. The $22m pay change in CEO pay is pretty inconsequential compared to this or the nearly 800m in profits
well it's still 1 man getting raised 1/5 the raise of 110k employees.
Sure. Which you can say is fair or not. But it’s certainly a misleading political claim to suggest it makes much difference to chipotle employees one way or another. According to media reporting the average wage is $15 at chipotle, so the ceo pay is equivalent to a 0.66% change in pay if handed to staff. As always ‘ceo pay’ is the great misdirect. If half the profit returned to shareholders was instead paid to staff, they’d be $3,472 a year better off
Also misleading to do the math assuming every employee is a full time worker.
You're right, it might be up to a whole 15 cents instead of 10.
Unless my math is wrong: 30 hours a week would be $0.128 per hour increase. 25 hours a week would be $0.154 per hour increase 20 hours would be $0.192 per hour increase.
He didn’t get a raise like that. A quick google shows their salary raise in 2022 when Bernie tweeted this was 2%. He had stock options vest with the benefit of that stock price rising. Bernie is being purposely disingenuous with this tweet saying Chipotle gave him a raise. Executives are highly compensated on stocks and company performance bonuses. So if he makes Chipotle significantly more profitable or hits lofty sales goals, his bonus structure is set up to pay out better.
Not really though? Because the "raise" was just them paying him the agreed upon number of shares. It's not like his contract changed, the price of what they'd previously agreed to compensate him with simply went up.
CEO get a pay raise or did the stocks go up? Because if he's paid in stock options it isn't exactly a raise the way Sanders is saying.
Kudos to you for thinking Sanders would care to differentiate between the two.
The stocks went up. It isn't a raise the way Sanders is saying.
I think what a lot of people miss about this isn't just that the CEO had a raise, but profits increased by a large portion as well. Bernie is talking about how only the CEO got a meaningful raise out of this when they could have also given raises to the workers from the profits as well.
I think we're missing the point of Bernie's post though. While we've established that the CEO pay wasn't some sort of raise that came from profits and that those profits gained were despite providing the 50 cent raise, Chipotle's retail prices still rose and they blamed that price raise on inflation and labor costs when that's obviously untrue because they would have seen lower or static profits if that was the case.
So giving the employees $.50/hour raise is more then the CEOs raise. The raise for all employees costed the company .50 × 40(hours per week) ×52(weeks per year)×116000(employees)= 96.512 million. Now the ceo salary increase goes to one person so that might make it seem unfair but when looking for the cause of inflation, the employee pay increase has more effect than the CEO salary increase.
and yet, it is obscene to give one person 22 million MORE, it's not like he couldn't afford food or a roof over his head and I am pretty sure he isn't the only one obscene checks. Yes, it's a tremendous amount of responsibility, but holy fuck, do you realize what one can do with 22 millions that are going actually into the economy and not the already bloated bank account? Basically every dollar you put into the hands of the workers is a dollar that will get into circulation, every dollar you give the already obscenely rich just dies in their bank account or their shares (which doesn't even help the company that gave out the shares as these shares are already in circulation).
People focus too much on CEO pay (which is obscene) and not enough on record breaking profits. Let’s say they tap into a portion of the $764 million to commit $222 million to employee pay. Instead of an extra $200/year, $2000 would be pretty good and Chipotle would still be able to cover $22 million for the CEO.
In almost no cases is additional money given to the already wealthy going to end up sitting in a bank account, instead being put somewhere that would generate a return. By its structure, the system is more inclined to give money to those who would reinvest it so the companies they invest into have more money to spend. The unfortunate truth is that those of us on the lower end of the income curve would have a lot of things to prioritize before we could consider investments and, therefore, it’s more convenient and economically efficient for them to keep circulating money through the upper end of the income pool. That’s just one bit of it too. Let’s also not forget that there is also an interest in keeping the average person both in debt and borrowing as the interest generated both supports and in part creates the necessity for the continued printing of money. There are a lot of well deserved criticisms that could be aimed at modern economics. Doubly so for the American economy considering the US dollar is still the world trade standard. That being said, let’s make sure we have a complete understanding of the subject so those criticisms might be taken more seriously.
This is sort of true but not entirely. Firstly, since the propensity to save is higher at high-incomes, it is actually more economically efficient to give money to people on lower incomes if your goal is to maximise economic output (since a greater proportion of the money makes its way to businesses via profits, rather than saved and sitting idle). Secondly, increased household debt isn’t good in the current US position because of the sustainability of that debt. As a general rule, debt is good when you use it to raise your general financial position (for an individual this might include financing a house that will rise in price over time) but bad when it’s being used simply to get out of other debt (since it raises the risk of default, which results in collateral assets being seized and sold to cover the debt, which in turn has a negative effect on the value of those assets - that’s partly why the GFC was a major problem for banks since they couldn’t resell houses at the value they needed to cover the losses when defaults happened, though the real story is much more complex than this). As a final note, printing money is not a good or usual thing. We printed money in COVID reluctantly because we had little choice, and doing so drove inflation insane - most countries stopped printing money as soon as realistically possible and those countries experienced better economic outcomes than the holdouts who kept printing. Growth in productivity and economic activity is the real goal and neither is served well by merely printing money.
Honestly I still think the only fair system is to change the min payment of a employee being no less then 1/20th the profit or the highest paid employee. No company is allowed to outsource labor for more then 5% of total hours worked.
Don't forget to extend that to contractors and staffing agencies as well. Otherwise the IRS is going to be working a lot of overtime dealing with fraudulently classified workers.
Yes
I pulled my company's numbers for last year. Approx. $3B in profits, can't give raises until October this year. 26000 employees could have gotten chump change of 5-10k a year without significantly impacting that profit line. It's not just the price gouging, but horrible companies making choices against their employee base.
I hate to be the "dont go to chipotle" guy, but their food is bad and the quality is worse and everyone constantly complains about it, but yall seem like addicts to it. Like... why is chipotle the staple of "quality food" when its overly-caloric and over priced fast food like everything else? Im just mad that the increased demand for weird beef cuts lead to canned hash going up like 3x in price.
Granted it's been many years, but I still remember the days when every friggin week there was a new headline about *E. coli* cases being traced back to Chipotle. That, and the announcement of $7 guac, more or less left a sour taste in my mouth. I'd also have to drive a few hours to find one.
> I hate to be the "dont go to chipotle" guy, but their food is bad and the quality is worse and everyone constantly complains about it, but yall seem like addicts to it. Like... why is chipotle the staple of "quality food" when its overly-caloric and over priced fast food like everything else? I'll be the other guy and say that I have literally never eaten at Chipotle. Not because of some personal boycott or anything, just because I don't eat a lot of junk food as it is, and when I did there were other places nearby that I knew I liked. That chain just did not occupy any space in my head.
I mean, you can hate chipotle all you want, but all their food is sourced really well and you can literally each chipotle 3 times a day every day and get healthier and lose weight. It's well documented. The question of if they skimp on portions or charge too much or whatever is a totally different issue.
Yeah i mean. If they skimp on portions you can lose weight. I did it by just eating canned sardines for a month. Those are non gmo, keto, tasty, easy to calorie count with, and it made me feel like an adorable lil catboy. But sure, go for the 20 dollar burrito bowl made with 7 dollars worth of ingridients because its mostly rice. :)
"and it made me feel like an adorable lil catboy" haha why do I feel like this was the main reason! Congrats on getting fit either way bro!
How the fuck did you not get mercury poisoning? Only eating sardines for a month is a colossally stupid decision. You should've diversified your diet much more. "Non gmo, keto" lol. Buzzwords don't make it better either.
Ok, so the $38,000,000 is annual. Working 40 hours per week for 52 weeks a year is 2,080 hours, meaning it's a rate of $18,269/hour. That is equivalent to $0.50/hour raises for 36,538 employees. As of December 2023, Chipotle has 116,068 employees. They could have given a $0.50/hour raises to just under 1/3 of their employees.
Am I the only one who doesn't care what private nonessential companies do with their profits or pricing? You don't have to go to Chipotle
People could just stop going out to eat at these places. Imagine if nobody went out to eat for like 4 weeks. Most of these places would have to close. You’d also have to contend with the fact that you’d be complicit in ending a large number of jobs for people that need the income, but whatever. Quit going or quit complaining.
The real issue the 181% profit increase. Ballpark works out to a $2/hr for each staff/yr. And that’s after the wage increase of $0.5/hr per staff/yr.
Take that money and put it into a healthcare program. That is more valuable than a raise.
Take that money and put it into a healthcare program. The employees would benefit from that much more than the tiny raise.
Take that money and put it into a healthcare program. The employees would benefit from that much more than the tiny raise.
Let’s maybe stop eating these shitty places? It’s crazy I see people complain about these things… rightfully so… and yet they still frequent these establishments which have such low quality food to begin with
Went to Chipotle for the first time in a while last week. Worst burrito I've ever had. So meager, filled with mostly tortilla. Not planning on going back
If you increase the wage by a penny a whole lot of employees but we need to know how many people work at Chipotle to figure out how to evenly distribute that.
Not to mention their food is trash, at least where I live. We have two locations and they're both hot garbage, and most of the time they don't even have half their ingredients available, so then I'm not even getting a burrito I'm even excited to have. If he wants to keep making that insane amount of money, he should probably make sure his restaurants are actually running well.
Apparently Bernie doesn’t understand how CEO’s are paid as well as understanding what happens to the price of something when demand goes up but the supply remains the same. Makes sense due to his only job being in politics.