Federal contractors have biggest pay gaps

American taxpayers are subsidizing wide gaps in compensation at major U.S. corporations that receive lucrative federal government contracts and subsidies, a new report shows.

More than two-thirds of the top 50 publicly held federal contractors and federal corporate subsidy recipients paid their CEOs more than 100 times the median pay of their workers in 2017, according to the analysis by the Institute for Policy Studies, a think tank focused on equality issues.

As a result, highearning chief executives at many companies with major federal contracts or subsidies in part “owe their personal good fortune to America’s taxpayers,” the report concluded.

“Taxpayers should not be subsidizing extreme pay gaps in any way, whether through tax, contracting or subsidy policies,” said Sarah Anderson, the report’s co-author.

The analysis was based on a comparison of federal contract and subsidy awards with pay ratio data that publicly traded companies have disclosed this year for the first time under a new federal regulation enacted by the Securities and Exchange Commission.

The pay ratio between the $400,000 U.S. presidential salary in 2017 and the $82,406 average annual compensation for federal employees is roughly 5-1.

In contrast, the report cited data that showed the 2017 pay ratios for the top 50 corporate federal subsidy recipients was 153-1. Similarly, the ratios for the top 50 corporate recipients of federal contracts was 188-1, the data showed.

The largest pay gap among the top 50 federal contractors was the 806-1 ratio reported by DXC Technology, a Virginiabased internet technology services company, the report said.

The ratio represented the gap between the nearly $32.2 million annual total compensation earned by J. Michael Lawrie, the company’s chairman, president and CEO, and the $39,945 median compensation for an employee without applying cost of living adjustments, the company reported.

PPG Industries, a Pittsburgh-based global manufacturer of paints and coatings, had the largest pay gap among the 50 largest corporate recipients of federal subsidies, the report said. PPG reported a 382-1 pay ratio between the more than $14.2 million that its CEO M.H. McGarry received in 2017 and the $37,307 median compensation for an employee.

Large corporate pay gaps matter, the report said, because U.S. employee wages have largely stagnated since the 1970s.

Additionally, mammoth levels of corporate compensation “give executives an incentive to take excessive risks and “contribute to short-term decision making,” the report said.

Separately, a 2016 Stanford University survey cited by the report found that many Americans feel that corporate CEOs are overpaid.