Big Crony CEO Pay Grab–Effects Beyond Greed!


As the New Year gets underway, the highest-paid CEOs of many large corporations have already paid themselves more than the average worker will earn in the entire year!  By the end of the first week of January, the highest-paid CEOs had already made as much as their average workers will earn over 8 years.

An analysis by Equilar, a consulting firm specializing in executive pay, found that on average, the 200 highest-paid CEOs make approximately $22.6 million a year, or almost $10,800 an hour, a 9.1% increase from the previous year.  Meanwhile, the Census Bureau reports the average household earns approximately $53,000 a year.

Over the past fifty years, the pay gap between many highly-paid CEOs and their employees has increased dramatically. In 1965, when they also liked to be rich, CEOs made approximately twenty times as much as their average employee, meaning they would earn their workers’ average pay by the third week of January, and since the 1980s, the average difference and greed have increased. Highly-paid CEOs now make 303 times as much as their employees in a year, according to a study by the Economic Policy Institute.

Equilar notes that Discovery Communications CEO David Zaslav makes $156.1 million a year ($74,796.36 an hour), or approximately 1,951 times as much as his average employee. Doug McMillan, the CEO of Wal-Mart takes in $25.6 million ($12,266.41 an hour), 1,133 times as much as the average experienced store associate, who earns roughly $22,000. Other highly-paid CEOs include Larry Merlo, the CEO of CVS Caremark, who makes 422 times as much as CVS employee, meaning that he earns an average worker’s yearly pay by 1 PM on his first work day of the new year; and Goodyear CEO Richard Kramer, who pulls in as much as an average Goodyear employee’s yearly pay by3:00 PM on January 1st.

Shareholders, the owners of those companies, do not have binding power to determine the pay of their hired help—the company bosses. The wined-and-dined selected boards of directors regularly rubber stamp massive CEO pay raises.

An additional consequence of CEOs pushing up their own wages is that the company’s accounting, stock options and stock buybacks are often shaped to further directly enrich the corporate executives. With such a vast disparity, the impact on employee morale is not good. All of these consequences for big companies are the reason Warren Buffett takes a critical view of sky-high corporate compensation packages.

As the gap between the wealthy and the working-class continues to grow, the federal minimum wage remains stagnant at $7.25 an hour, or a little more than $15,000 a year, far below the $24,000 poverty line for a family of four.

Do you find this state of affairs upsetting?

Economists see raising the minimum wage as an essential tool to fight income inequality, with an increase benefiting at least thirty-five million Americans, according to a 2015 study by the Economic Policy Institute.

Unlike the soaring pay awarded to highly-compensated CEOs, the minimum wage has not even kept up with inflation. Department of Labor data shows that, had minimum wage increases kept up with inflation since 1968, the minimum wage would be nearly $11 today. Instead, it has lost one-third of its purchasing power.

Raising the federal minimum wage would also reduce spending on numerous social welfare programs. A 2013 study by the Center for American Progress found that by raising the minimum wage to $10.10 an hour, the cost of enrollments in food stamp programs would decrease by $4.6 billion a year, which is why such prominent conservatives like Phyllis Schlafly and Ron Unz support a long-overdue raise.

On top of that, a minimum wage increase would also benefit the country’s gross domestic product. A 2013 study by the Chicago Federal Reserve showed that increasing the federal minimum wage to $9.00 an hour would increase the GDP by $22 Billion annually.

In fact, raising the minimum wage can allow companies to remain profitable. A study by the United Kingdom’s Chartered Institute for Personnel Development found that when companies raised wages for their employees, the companies became more efficient, and workplace productivity increased.

Costco CEO Craig Jelenik explains that “An important reason for the success of Costco’s business model is the attraction and retention of great employees. Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty.” Raising wages means that employee turnover is reduced, meaning that companies do not have to spend as much on recruitment and training. And because of this, Costco has an $11.50 an hour starting salary and benefits.

Jelenik is not the only CEO who supports raising the minimum wage. Other corporations that have started to pay a more livable wage include Aetna, The Gap and Ikea.

With the New Year, seventeen states saw an increase in the minimum wage, with Massachusetts being the first state in the country with a minimum wage of $10.00 an hour. In 2015, the city of Los Angeles set forces in motion to increase their minimum wage from $9 to $15 by 2020, and San Francisco plans to go from $12.25 an hour to $15 an hour by 2018. Currently, twenty-nine states, the District of Columbia and thirty-five cities have minimum wages set higher than the $7.25 federal minimum.

In the 2016 race for president, almost all of the Republican candidates are opposed to raising the minimum wage. The only Republicans who support a small wage hike are former senator Rick Santorum and Ohio Governor John Kasich.

On the Democratic side, all of the candidates endorse a higher minimum wage, with Hillary Clinton supporting an increase to $12 an hour, with no set time-frame, while both Bernie Sanders and Martin O’Malley support a $15 an hour minimum wage by the end of the decade.

As the 2016 gets started, it is important that CEOs concern themselves more with how they can stop denying their lowest-paid employees a fairer minimum wage than with how much more compensation they are going to demand for themselves over the next 351 days.

Visit Timeforaraise.org for more action-oriented information.

More articles by:

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! 

March 22, 2018
Conn Hallinan
Italy, Germany and the EU’s Future
David Rosen
The Further Adventures of the President and the Porn Star
Gary Leupp
Trump, the Crown Prince and the Whole Ugly Big Picture
The Hudson Report
Modern-Day Debtors’ Prisons and Debt in Antiquity
Steve Martinot
The Properties of Property
Binoy Kampmark
Facebook, Cambridge Analytica and Surveillance Capitalism
Jeff Berg
Russian to Judgment
Gregory Barrett
POSSESSED! Europe’s American Demon Must Be Exorcised
Robby Sherwin
What Do We Do About Facebook?
Sam Husseini
Trump Spokesperson Commemorates Invading Iraq by Claiming U.S. Doesn’t Dictate to Other Countries; State Dept. Defends Invasion
Rob Okun
Students: Time is Ripe to Add Gender to Gun Debate
Michael Barker
Tory Profiteering in Russia and Putin’s Debt of Gratitude
March 21, 2018
Paul Street
Time is Running Out: Who Will Protect Our Wrecked Democracy from the American Oligarchy?
Mel Goodman
The Great Myth of the So-Called “Adults in the Room”
Chris Floyd
Stumbling Blocks: Tim Kaine and the Bipartisan Abettors of Atrocity
Eric Draitser
The Political Repression of the Radical Left in Crimea
Patrick Cockburn
Erdogan Threatens Wider War Against the Kurds
John Steppling
It is Us
Thomas Knapp
Death Penalty for Drug Dealers? Be Careful What You Wish for, President Trump
Manuel García, Jr.
Why I Am a Leftist (Vietnam War)
Isaac Christiansen
A Left Critique of Russiagate
Howard Gregory
The Unemployment Rate is an Inadequate Reporter of U.S. Economic Health
Ramzy Baroud
Who Wants to Kill Palestinian Prime Minister Rami Hamdallah?
Roy Morrison
Trouble Ahead: The Trump Administration at Home and Abroad
Roger Hayden
Too Many Dead Grizzlies
George Wuerthner
The Lessons of the Battle to Save the Ancient Forests of French Pete
Binoy Kampmark
Fictional Free Trade and Permanent Protectionism: Donald Trump’s Economic Orthodoxy
Rivera Sun
Think Outside the Protest Box
March 20, 2018
Jonathan Cook
US Smooths Israel’s Path to Annexing West Bank
Jeffrey St. Clair
How They Sold the Iraq War
Chris Busby
Cancer, George Monbiot and Nuclear Weapons Test Fallout
Nick Alexandrov
Washington’s Invasion of Iraq at Fifteen
David Mattson
Wyoming Plans to Slaughter Grizzly Bears
Paul Edwards
My Lai and the Bad Apples Scam
Julian Vigo
The Privatization of Water and the Impoverishment of the Global South
Mir Alikhan
Trump and Pompeo on Three Issues: Paris, Iran and North Korea
Seiji Yamada
Preparing For Nuclear War is Useless
Gary Leupp
Brennan, Venality and Turpitude
Martha Rosenberg
Why There’s a Boycott of Ben & Jerry’s on World Water Day, March 22
John Pilger
Skripal Case: a Carefully-Constructed Drama?
March 19, 2018
Henry Heller
The Moment of Trump
John Davis
Pristine Buildings, Tarnished Architect
Uri Avnery
The Fake Enemy
Patrick Cockburn
The Fall of Afrin and the Next Phase of the Syrian War
Nick Pemberton
The Democrats Can’t Save Us