LANSING, Mich. — CEO compensation is still rising with millions out of work. Alicia Nieves looks at how the amount of money company leaders get is impacting workers everywhere, and what could be the answer to fixing this.
While more than 50 million Americans have lost their jobs over the past five months and many are still struggling to make ends meet those running some of the biggest companies in this country are thriving.
“We find that a CEO now earns about 320 times that of a typical worker in their main industry.
Laurence Mishel is a labor economist and fellow at the Economic Policy Institute, an independent think tank in Washington D.C.
Mishel just authored a report analyzing CEO compensation. It shows, first how headlines in March and April of CEO's cutting their salary during the economic downturn, wasn’t as big of a sacrifice as it seemed.
“Salaries makeup about 5% of CEO compensation packages” ”and it seems like when CEOs say they are making a sacrifice. it’s really, i think, better for press releases than in that they are actually going to take a cut in their standard of living. ”But more eye opening, the report shows how CEO compensation growth is affecting and has affected workers everywhere.
“If you look at CEO compensation since, back over the last four decades since 1978, CEO compensation grew 1167%.”
"The compensation of a typical worker grew 13-14% over that period.”
What is more the report shows CEO compensation increase by 14% just last year, and is set to continue to go up this year even in a recession with companies having to let go of millions of workers.
“The wages of the vast majority, the bottom 90%, has grown only half as fast as it otherwise would had the top 1% not really expanded like it did.”
Essentially the “profit pie” has not grown proportionate to CEO compensation growth so as CEO's are getting significantly higher compensation, it is taking from the pay other worker’s.
“I think this is a problem of corporate governance and our tax policies and it needs to be addressed.”
Proposed solutions include: capping CEO compensation and taxing anything above the cap to allowing shareholders and company workers to directly have a say in their CEO’s pay. but both solutions are as controversial as the problem.
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