How much more than you does your boss make?
That all depends, of course, on many factors: whether your job is unionized, the industry you’re in, whether you work in the public or the private sector.
Chances are, though, if your boss is the CEO of one of 350 top public corporations, he or she is making nearly 10 times what you are.
This is the conclusion the Economic Policy Institute (EPI) makes in a report that shows since 1978 CEO compensation has ballooned 940%; worker compensation, in contrast, has hovered around only 12%.
CEOs, according to the study, made, on average, $17.2 million last year.
Putting it into perspective, in 1965, the average CEO-to-average worker salary was 16 to 1.; by 1989, it was 45 to 1.
Last year, the number jumped to 278 to 1.
In 2017, the average CEO took home $18.9 million while employees’ wages averaged 0.3%.
One of the study’s authors, Julia Wolfe, told The Real News:
“Just as the typical worker’s compensation hasn’t risen by that much in comparison to CEOs, other really highly paid earners also haven’t experienced that extreme increase that CEO pay has. Certainly, they’ve started earning more in relation to the more bottom, in relation to the lower-level workers who are receiving lower compensation, but it’s important to note this because it tells us this isn’t just a matter of a reflection of an increased demand for skills, or an increased demand for a certain type of worker, or added value to the economy.
“Really, this is about a differential in power dynamics and the ability to set wages, and these are the people who are in power who are making these decisions. It really reflects that difference, rather than just difference in skill.”
There are those who naturally defend this income disparity by claiming CEOs deserve so much more because they are the “most talented” in their respective fields, or that they must fend off inordinate competition from similarly talented CEOs threatening to take them over.
Julia Wolfe responds:
“So that doesn’t seem entirely justified when we take a look at our study. I think that especially the extreme degree of this difference really doesn’t validate that. And when you look at other high wage earners or the growth in other measures of the valuation of skills out in the market— for example, if you take a look at the growth in the college premium in comparison to high school earners— you see that has not grown nearly as much as the CEO compensation has grown. So, it’s skyrocketing. It’s skyrocketing much more quickly and more dramatically than other measures of this demand for different skills, for a market for a particular type of manager, and I think those are all important to note when we look at this. It really doesn’t support that argument that these workers are really a different class, adding that much more, that much more competitive, or that there’s so few of them that can be doing these jobs.”
According to the EPI study:
“CEOs are getting more because of their power to set pay, not because they are increasing productivity or possess specific, high-demand skills.”
This matters because it remains a primary factor contributing to growing income inequality.
As the study explains:
“This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%.”
But what about the claim that if we pay CEOs less, the economy will only deteriorate since they are the “engines that drive the economy”?
That is false, as the study states:
“The economy would suffer no harm if CEOs were paid less (or taxed more)…We need to enact policy solutions that would both reduce incentives for CEOs to extract economic concessions and limit their ability to do so. Such policies could include reinstating higher marginal income tax rates at the very top; setting corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation; establishing a luxury tax on compensation such that for every dollar in compensation over a set cap, a firm must pay a dollar in taxes; reforming corporate governance to give other stakeholders better tools to exercise countervailing power against CEOs’ pay demands; and allowing greater use of ‘say on pay,’ which allows a firm’s shareholders to vote on top executives’ compensation.”
Historically, it is unregulated capitalism, capitalism run amok that deteriorates economies.
In 2017, McDonald’s CEO, Steve Easterbrook took home $21.7 million.
But the typical McDonald’s employee? $7,017.
Walmart CEO Doug McMillon made $22.8 million in 2017.
The average Walmart employee–$19,177.
Amazon CEO Jeff Bezos is the richest man in modern history, surpassing the $150 billion point last year, according to the Bloomberg Billionaires Index.
Yet the average Amazon worker earned $28,446, scarcely enough to prevent thousands of Amazon workers from relying on government-subsidized public assistance to try to make ends meet.
Vermont Senator and 2020 democratic presidential candidate Bernie Sanders told Newsweek earlier this month:
“The American people are sick and tired of corporate CEOs who now make 278 times more than their average employees, while they give themselves huge bonuses and cut back on the healthcare benefits of their employees.”
He added:
“We need an economy and a government that works for all of us, not just the top one percent. That means, among other things, raising the minimum wage to at least $15 an hour, making it easier for workers to join unions, guaranteeing healthcare as a right, and demanding that the wealthiest people and most profitable corporations pay their fair share of taxes.”
Last year, Sanders introduced the “Stop Bad Employers by Zeroing Out Subsidies (BEZOS) Act,” intending to require employers with at least 500 employees to reimburse the government for the food stamps, public housing, Medicaid, and other federal assistance their workers receive.
If elected president, Sanders’ plan to combat the obscene inequality the EPI study evinces includes, according to his campaign website:
- Passing the “For the 99.8 Percent Act,” establishing a progressive estate tax on multi-millionaire and billionaire inheritances.
- Eliminating offshore tax scams via the “Corporate Tax Dodging Prevention Act.”
- Taxing Wall Street speculators with the “Inclusive Prosperity Act.”
- Eliminating the Social Security payroll tax income cap through the “Social Security Expansion Act” so millionaires and billionaires will be required to pay more into the system.
- Ending special tax breaks on capital gains and dividends for the top 1%.
- Substantially increasing the top marginal tax rate on income above $10 million.
- Closing tax loopholes that benefit the wealthy and large corporations.
Image credit: nakamotoinstitute.org
