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Why Chipotle's 4,000-worker hiring blitz isn't all good news

The burrito chain recently announced plans to hire thousands of new workers this month, as competition for workers in low-wage jobs heats up.

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Patrons exit a Chipotle Mexican Grill restaurant in San Francisco, July 21, 2015.

Robert Galbraith/Reuters/File

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Chipotle is looking for a few (thousand) good burrito makers.

The fast-food chain recently announced its Sept. 9 "National Career Day," a plan to hire 4,000 new workers in one day to help staff its roughly 1,900 restaurants.

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The headline-making mass hire is a sign that as the economy improves and lower-wage industries see the largest share of growth in the recovery, competition among fast-food chains for workers has increased.

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"The economy has been thawing, more restaurants are opening, and there are fewer job applicants than there were several years ago," a Chipotle executive told The Wall Street Journal.

It's also a stark reminder that as the economy has recovered, low-wage service jobs, like the ones Chipotle is largely offering, have replaced many better-paying, middle-class positions.

Higher-wage industries, like healthcare, accounting, and legal work, shed 3.6 million positions during the recession and have added back only 2.6 million positions during the recovery, reports the the New York Times.

Overall, the US economy now offers roughly two million fewer white-collar jobs, according to a 2014 report from the National Employment Law Project (NELP), a research and advocacy group that analyzes employment trends.

Lower-wage industries like retail and restaurant and food services lost two million jobs, then added back 3.8 million, according to NELP.

“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” Michael Evangelist, the report’s author, told the Times.

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In fact, the report found three industries that often pay minimum or near-minimum wages – restaurants and food services, administrative and waste services, and retail trades – accounted for more than 40 percent of the increase in private sector employment since 2010.

That includes Chipotle's high-profile hiring blitz. The majority of positions the chain is hiring for will be entry-level crew jobs, which pay just over $10 per hour. 

Chipotle recently increased the number of vacation and sick days that staff can take off and expanded a program to reimburse college tuition fees, but it remains a poster child for CEO-to-worker pay disparity.

That's because the fast food chain is No. 2 on a list of the biggest CEO wage gaps. Chipotle founder and co-CEO Steve Ells made $28.9 million in 2014, according to Forbes. That's 1,522 times the median worker pay of $19,000, as recorded by Glassdoor. Chipotle's other co-CEO, Montgomery Moran, earned about $28.1 million in 2014, reports Forbes.

For the amount of money Chipotle will spend hiring and paying some 4,000 new entry-level workers, it could hire about 2.5 CEOs.

The income gulf between CEO and worker pay exists across economic sectors, but is especially pronounced in fast food.

In 1965, CEOs made about 20 times as much as the average worker. By 2013, they made about 273 times as much. And CEOs of fast food companies made about 1,200 times as much as the typical fast food workers, according to a 2014 report by Demos, a public policy organization in New York. 

That same report found average CEO compensation in 2012 was $26.7 million, while average hourly wage for fast food workers was $9.09.

“It’s not about how much a CEO makes or how little the workers do; it’s the relationship between the two,” Catherine Ruetschlin, an analyst at Demos and the author of the report, told Bloomberg Business.

And Chipotle's hiring blitz brings fresh attention to that relationship. The replacement of better paying middle-wage jobs with lower-paying service jobs, the NELP report notes, may serve to further exacerbate income inequality in the US.