Wednesday, May 16, 2018

US study lays bare extreme pay-ratio problem

Note that the median is the point where half the workers make less, half make more. The difference in pay between the Executives and the lowest-paid workers must be far more.

Edward Helmore in New York
Wed 16 May 2018 05.00 EDT

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?, was published on Wednesday by Minnesota’s 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 report’s database, a single chief executive’s 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 didn’t 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 didn’t 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.


“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.


Companies singled out for criticism in the report include Marathon Petroleum, a gas station operator, whose CEO Gary Heminger took home an astonishing 935 times more pay than an average employee in 2017.


nderson’s advocacy group had previously identified at least five US firms where workers would have to work more than 1,000 years to catch up with their top bosses. The companies include the auto-parts maker Aptiv (CEO-worker pay ratio: 2,526 to 1), the temp agency Manpower (2,483 to 1), the amusement park owner Six Flags (1,920 to 1), Del Monte Produce (1,465 to 1), and the apparel maker VF (1,353 to 1).


The city of Portland, Oregon, for instance, recently imposed a 10% business tax surcharge on companies with top executives making more than 100 times what their median worker is paid – and a 20% surcharge on firms with pay gaps that stretch exceed 250 to 1.


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