Wanted: CEO to fight income inequality by cutting executive pay
General Motors CEO Mary Barra condemns discrimination against LGBT people, while Apple CEO Tim Cook defends immigrants brought to the United States illegally as children. More and more business leaders are joining activists to address society’s most divisive issues.
Where are the top executives, though, taking concrete steps to address income inequality? Who is taking a pay cut to give their employees a higher standard of living?
Alexis Ohanian, a co-founder of the Reddit website, resigned from the company’s board last month to make way for an African American director. An admirable gesture that few have emulated as Americans again reckon with institutional racism and centuries-old inequities.
Forty years of tax cuts and crony capitalism have delivered the most dramatic gap between rich and poor in this country’s industrial era. Boards of directors have showered wealth on executive teams that have maximized shareholder value by cutting jobs and the benefits and salaries of the average worker.
No one should be surprised that between 1989 and 2016, the gap between rich and poor Americans has more than doubled, according to Pew Research, the nonprofit data and polling firm.
The wealthiest 20 percent of Americans are capturing more than half the nation’s total income, according to Pew. The wage gap between white and Black Americans has grown, even when adjusted for all other factors, including education, according to Federal Reserve Bank data.
Since the beginning of the COVID-19 pandemic, the government and the Fed have pledged $7 trillion of debt to support the economy, but only 5 percent of the money went to working people. The rest propped up companies and the wealthy so they would not suffer significant losses.
Five of the nation’s top billionaires — Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett and Larry Ellison — have seen their net worth rise by $584 billion since March, according to Americans for Tax Fairness. Meanwhile, more than 15 million people have lost their jobs.
Top executives, who are paid in stock, are raking in millions.
“In three months, about 600 billionaires increased their wealth by far more than the nation’s governors say their states need in fiscal assistance to keep delivering services to 330 million residents,” Frank Clemente, executive director of Americans for Tax Fairness, said. “Their wealth increased twice as much as the federal government paid out in one-time checks to more than 150 million Americans.”
Almost everyone among the wealthiest 10 percent of Americans has seen their net worth rise during the pandemic. But this is not a new phenomenon, thanks to the Trump tax cuts, the wealthy have never paid such a small percentage of their income in taxes.
Median CEO pay at the 500 public companies with the highest revenue was $12.3 million in
2019, according to Equilar, a firm that tracks executive compensation. Among S&P 500 firms, nearly 80 percent paid their CEO more than 100 times their median worker’s wages in 2018, according to the left-leaning Institute for Policy Studies.
These are the same executives who talk about how employees are “partners” and “team members.” They rattle on about how the company’s workers are the brand’s greatest strength. Every executive I interview wants to brag on their people, but when I ask about pay standards, they change the topic.
The next time an executive brags about living well by doing good, ask them how much better must they do than their employees? How can they justify their pay when their employees have little or no health insurance?
Which CEO will be first
I’m not talking about giving money to charity; I’m talking about a pay cut concomitant with higher base wages and benefits for the lowest-paid employees.
to reduce income inequality by cutting their compensation package? I’m not talking about giving money to charity; I’m talking about a pay cut concomitant with higher base wages and benefits for the lowest-paid employees.
I wonder how many CEOs will ask about the wages and benefits paid by their contractors? Do they know how much the janitorial staff get paid, or do they only worry about which company made the lowest bid?
A CEO who shaved $1 million off the C-suite pay packages could give their 100 lowest-paid workers raises of $10,000—considering that the median household income in Texas is $60,000, that could make a significant difference in people’s lives.
Taking the lead and speaking out on income inequality would also benefit the brand’s reputation, the same as clean energy and civil rights. Almost two-thirds of Americans consider income inequality a problem and believe businesses should do more to address it, according to Pew.
Talk is cheap, which is why CEOs do so much of it. Here’s a chance for them to do something real and prove they value workers.
Tomlinson writes commentary about business, economics and policy.