By Sarah Anderson, video edited by Josh Hirschfeld-Kroen
Working families are hammered by inflation and corporate leaders and politicians call for belt-tightening
[Jerome Powell, news clip]: And of course, everyone loves to see wages go up and it’s a great thing. But you want them to go up at a sustainable level.
But there’s one group of Americans that has actually profited from increasing prices…
[News clip]: So your wages are not keeping up with inflation. Happily, however, CEOs have things much better, which is how we all want it of course.
CEOs have enjoyed soaring pay even as their employees have been struggling to keep their families safe and their bills paid.
Look at Target, for example. Last year, the median Target worker salary did not even keep pace with inflation, rising less than 4% to just $25,500.
Did the giant retailer lack the money to make sure wages kept up with rising prices? No, just the opposite. In 2021, Target spent $7.2 billion of their extra cash on stock buybacks. That would’ve been enough to give every one of their 450,000 employees a $16,000 raise.
When a company repurchases their own shares, it does nothing for workers but makes rich CEOs even richer by artificially inflating the value of their stock-based pay.
Last year, Target CEO Brian Cornell made $19.8 million, which is 775 times more than the median pay for his employees.
How do CEOs get away with making hundreds of times more than their workers? Corporate pay practices are still based on the ridiculous notion that the “genius” in the corner office is almost single-handedly responsible for company value.
This was always pure nonsense but during the pandemic it became even more clear that lower-level workers are essential to their companies and our whole economy.
[Target worker Adam Ryan, MPU Interview]: Without us, this company would have no profits whatsoever. Cornell wouldn’t make, you know, 800, sometimes more than what we make as workers.
Target is just one example of Corporate America’s obscene disparities. At the Institute for Policy Studies, we looked at 300 low-wage employers and found that the average gap between CEO and worker pay rose to 670-to-1 in 2021. That was up from 604 to 1 the year before.
And among the companies where worker pay fell below inflation, about two-thirds spent huge sums on stock buybacks to further enrich their CEOs. With such extreme unfairness, it’s no wonder we’re seeing record numbers of workers quitting their jobs and a surge in unionization.
One recent poll shows 87 percent of Americans view the growing gap between CEO and worker pay as a problem for the whole nation.
What can we do about it? Workers can fight for equitable pay through collective bargaining. In other countries with higher unionization rates, CEO pay tends to be much lower than in the United States.
But policymakers need to step up as well.
On Capitol Hill, one pending bill would use tax incentives to encourage companies to narrow their divides. The wider the gap between a company’s CEO and worker pay, the higher their corporate tax rate.
President Biden could also take action on his own without waiting on Congress.
For instance, he could make it hard for companies with huge pay gaps to land lucrative federal contracts. That would have a big impact because federal contractors employ an estimated 25 percent of the private sector work force.
Biden could also ban contractor CEOs from personally profiting from stock buybacks. And he could order contractors to be neutral in union organizing drives. That would help combat the union-busting we’ve seen at some major federal contractors, like Amazon.
[Teamsters President O’Brien, testimony]: To put it plainly, it is wrong for our government to be giving taxpayer dollars in the form of federal contracts to companies like Amazon. There is no excuse to reward employers who repeatedly, knowingly, and purposefully violate federal labor laws.
These kinds of executive actions would build on Biden’s executive order requiring federal contractors to pay a minimum of $15 per hour.
By wielding the power of the public purse against excessive CEO pay, the president could strike another blow against extreme inequality. All workers, up and down the corporate ladder, deserve a fair share of the wealth they create.
[Chris Smalls, testimony]: This is not a left or right thing. This is a working class issue. And the workers at the bottom are the ones who make these corporations go.