Dan Price @DanPriceSeattle

Companies that pay their CEO over 1,000x more than their median worker: Gap, Chipotle, Ross, Nike, Coke, Dick's, BJ's, Foot Locker, KFC/Taco Bell/Pizza Hut, Starbucks, McDonald's, Kohl's, Walmart and 45 others. How come worker pay contributes to inflation but CEO pay doesn't?

April 19th 2022

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Good question, Dan!

There’s a lot written today about the stratospheric rise in CEO pay amid record company profits and stock buy-backs. At the same time, inflation is eating away the average workers’ pay, and their minuscule wage increases do not help close the gap. According to a “hot off the press”Fortune article published hours ago, the only thing beating inflation is CEO pay.

Why does soaring CEO pay matter to you and me? The following articles and reports help explain the impact to each of us and our overall economy. To start, here’s a chart from the Economic Policy Institute (EPI) that shows the tanked value of today’s minimum wage:

https://www.epi.org/blog/the-value-of-the-federal-minimum-wage-is-at-its-lowest-point-in-66-years/

— One report that lays out exactly what compensation the CEO’s of these large companies are making is titled “Executive Excesses 2022” prepared by the Institute for Policy Studies (IPS). It’s the 28th annual IPS executive compensation report and was released in June of this year. Just look at those numbers!

The three highest-paid CEOs in our sample:

1. Amazon CEO Andy Jassy raked in $212.7 million last year, which amounts to 6,474 times the $32,855 take-home of Amazon’s typical worker. The company has spent millions fighting union campaigns at several of its warehouses.

2. Estee Lauder CEO Fabrizio Freda enjoyed a 258 percent pay increase in 2021, raising his annual compensation to $66.0 million — 1,965 times more than the firm’s $33,586 typical employee pay. Over the past year, Estee Lauder slashed its global workforce from 75,000 to 62,000. None of the firm’s U.S. workers have union representation.

3. Penn National Gaming CEO Jay Snowden’s $65.9 million payout equaled 1,942 times the company’s $33,930 median pay. Less than 20 percent of Penn’s staff is unionized.

This report also explores the CEO-worker wage gap and the percentage of stock buy-backs at these companies at the same time average worker pay actually declined. And perhaps most importantly, it calls out a classic case of corporate welfare:

• Of the 300 companies in our sample, 40 percent received federal contracts between October 1, 2019 and May 1, 2022. The combined value of these contracts was $37.2 billion.

This means you and I are subsidizing the largess of CEO pay increases while the low-wage workers who made company profits possible, lost money and overall purchasing power through inflation, and in some cases wage cuts. Yet we couldn’t possibly pass federal legislation to raise the minimum wage or require paid parental leave or tax windfall profits or close the loopholes so mega companies like Amazon pay their fair share in taxes, could we?

You can read the report’s highlights and download the full report here:

https://ips-dc.org/report-executive-excess-2022/?emci=96004710-8fe6-ec11-b656-281878b85110&emdi=6e043004-99e6-ec11-b656-281878b85110&ceid=3903204&link_id=5&can_id=da78e4751e1c2e30278bc239dd24ab7c&source=email-tell-president-biden-rein-in-ceo-pay&email_referrer=email_1604610&email_subject=tell-president-biden-rein-in-ceo-pay

— Finally for this evening, a report from the AFL-CIO that provides interactive charts, graphs and search tools so you can look up the CEO compensation of individual companies, compare those salaries with the average worker pay for each company, and compare CEO pay with the average worker pay in each state where the companies do business.

The ratio of CEO-to-worker pay is important. A higher pay ratio could be a sign that companies suffer from a winner-take-all philosophy, where executives reap the lion’s share of compensation. A lower pay ratio could indicate the companies that are dedicated to creating high-wage jobs and investing in their employees for the company’s long-term health.

https://aflcio.org/paywatch

The bottom line is that the crazy rise in CEO pays directly relates to the widening gap in income inequality and contributes to inflation.Your taxpayer dollars also subsidize the business these companies receive from federal contracts which fatten their bottom line. Instead of sharing at least some of the additional profits with their workers and keeping price increases to reasonable levels, the company CEO’s and shareholders hoard the profits for themselves.

I’d love to hear what you think about the incredible rise in CEO pay. Is this contributing to inflation? Is it fair? Speak your mind in the Comment Section below.

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