Economy

Should CEOs Make 335 Times More Than Average Workers?

Douglas A. McIntyre

Published: May 18, 2016 9:45 am

Last Updated: January 13, 2020 7:54 am

The battle over executive pay has gone on for decades, particularly due to cash and stock option rich contracts of chief executive officers. The argument against the practice is that no one person should make so much, particularly compared to average workers. The “CEOs make too much” point of view got an apparent boost as the huge AFL-CIO union released data that show CEOs make 335 times more than average workers.

The basis for the claim is how much S&P CEOs made in 2015, which was pegged at $12.4 million. On the other hand, “the average production and nonsupervisory worker earned about $36,900 per year, a wage that when adjusted for inflation, has remained stagnant for 50 years,” the AFL-CIO Executive PayWatch authors claim.

The union study made another point, which is that highly paid CEOs often run corporations with cash that sits overseas and, therefore, is not taxed by the United States. This practice undermines the ability of the government to take in money that might aid low-paid Americans. Additionally, the analysis claims that for every U.S. job cut by large companies, almost seven jobs are created overseas, a point that the numbers do not entirely prove.

The AFL-CIO also says that pay disparities and the export of jobs ruins the fabric of some parts of America’s society:

“The income inequality that exists in this country is a disgrace. We must stop Wall Street CEOs from continuing to profit on the backs of working people,” said AFL-CIO President Richard Trumka. “Last month, when I stood with the Carrier workers in Indianapolis whose jobs making home heating furnaces are being shipped to northern Mexico, I saw firsthand how corporate greed destroys communities. Carrier is a subsidiary of United Technologies and its CEO Gregory Hayes made nearly $10.8 million in 2015. It’s shameful that a CEO can make that type of money and still destroy the livelihood of the hardworking people who make the company profitable.”

Boards of large companies continue to adopt the attitude that their CEOs are gifted, that if they do not get high pay packages they will get top jobs elsewhere. That argument and the AFL-CIO’s are based on sets of facts that cannot be entirely meshed together, because facts bleed into opinions.