The first comprehensive study of CEO-to-worker pay reveals an extraordinary disparity with the highest gap approaching 5,000 to 1
The first comprehensive study of the massive pay gap between the US executive suite and average workers has found that the average CEO-to-worker pay ratio has now reached 339 to 1, with the highest gap approaching 5,000 to 1.
The study, titled Rewarding Or Hoarding?, waspublished on Wednesday by Minnesotas Democratic US congressman Keith Ellison, and includes data on almost 14 million workers at 225 US companies with total annual revenues of $6.3tn.
Just the summary makes for sober reading.
In 188 of the 225 companies in the reports database, a single chief executives pay could be used to pay more than 100 workers; the average worker at 219 of the 225 companies studied would need to work at least 45 years to earn what their CEO makes in one.
It also shows how some of the most extreme disparities in CEO-to-worker pay exist in industries that are considered consumer discretionary, such as fast food and retail, with a 977 to 1 disparity, one of the widest gaps.
Now we know why CEOs didnt want this data released, says Ellison, who championed the implementation of the pay ratio disclosure rule as it was written into the Dodd-Frank financial reform bill of 2010. I knew inequality was a great problem in our society but I didnt understand quite how extreme it was.
The requirements, long resisted by some of the largest US companies, simply tells companies to identify a median worker and then calculate how much the CEO makes in comparison to that person.
But the requirement triggered years of prevarication as companies claimed the method of calculating CEO compensation and median employee compensation had not been well defined. Some claimed that including workers employed abroad, especially in developing countries, would make pay ratio data even more extreme than it would be if calculated only within the US.
If wealth is being concentrated into fewer and fewer hands, then obviously wealth is being dissipated from more and more people, Ellison said.
We have people who are paying more half their income in rent, and we have whole school districts where poverty is erasing any opportunity for Americans to climb that ladder.
According to a recent Bloomberg analysis of 22 major world economies, the average CEO-worker pay gap in the US far outpaces that of other industrialized nations.
The average US CEO makes more than four times his or her counterpart in the other countries analyzed.
Ellison rejected claims from corporate America that executive suite compensation is a just reward for the skillful exercising of their business talents. Truth is, theyre doing nothing except extracting value and wealth from hard working people because they have economic advantages.
With all this extra money they have, it corrupts our politics absolutely, he continues. It concentrates markets and makes them less competitive.
Ellison has become a frequent target for criticism from the Trump administration, including from the president himself.
Last week, Ellison, who also serves as deputy chair of the Democratic National Committee, appeared at a Minnesota May Day parade wearing a black T-shirt with the words Yo no creo en fronteras, or I dont believe in borders. Trump described the slogan as an example of the US having the worst immigration laws in the history of mankind.
Read more: http://www.theguardian.com/us