Tax the rich

A new Institute for Policy Studies report, Executive Excess 2022, reveals how low-wage corporations have continued to pump up CEO pay during the pandemic while workers are struggling with rising costs.

The report zeroes in on compensation trends at the 300 publicly held U.S. corporations that reported the lowest median worker wages in 2020. At over a third of these firms – 106 in all – median worker pay either fell or failed to rise above the 4.7 percent average US inflation rate in 2021.

By contrast, CEO pay at these same 300 low-wage firms soared 31 percent to an average of $10.6 million. This stunning increase drove the average gap between CEO and median worker pay at these companies to 670-to-1, up from 604-to-1 in 2020. At 49 of the 300 firms, pay ratios topped 1,000-to-1.

Amazon’s new CEO, Andy Jassy, raked in $212.7 million last year, making him the highest-paid CEO in our corporate low-wage sample. Jassy’s pay amounts to 6,474 times the $32,855 take-home of Amazon’s typical worker.

Of the 106 companies in our sample where median worker pay did not keep pace with inflation, 67 blew a combined total of $43.7 billion on stock buybacks. This financial maneuver inflates executive stock-based pay and drains capital from worker raises, R&D, and other productivity-boosting investments.

Corporate America’s perverse pay practices become even more disturbing when we consider another often overlooked reality: Ordinary Americans are supporting our inequitable corporate economic order through the hundreds of billions of dollars in taxpayer-funded contracts and subsidies that flow every year to for-profit businesses.

Of the 300 companies in our sample, 40 percent received federal contracts totaling $37.2 billion over the past few years.

CEO pay apologists regularly argue that corporate leaders deserve their massive compensation packages because they bear enormous responsibilities and must take extraordinary risks. This argument quickly falls apart when we compare CEOs at major contractors with the government officials ultimately responsible for their contracts.

The US secretary of defense, for instance, manages the country’s largest workforce – more than 2 million employees – and makes life-and-death decisions on a daily basis. And yet the defense secretary and other Biden cabinet members make just $221,400 per year, less than three times as much as the $76,668 average federal employee annual pay.

By contrast, at the low-wage contractors we studied, CEO pay averaged $11.8 million and the average CEO-worker pay ratio sat at 571-to-1 in 2021.

Across the political spectrum, Americans are fed up with executive excess. One new poll shows that 87 percent see the growing gap between CEO and worker pay as a problem for the country.

Excerpted: ‘Low-Wage American Taxpayers Spent Billions Inflating CEO Pay Through Stock Buybacks’. Courtesy: Commondreams.org