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There has been an explosion in CEO pay relative to the pay of average workers, writes Reich, but that isn't because CEOs have become so much more valuable than before. It's because they are scamming the American people into thinking they are somehow worth more. Don't buy it. (Image: Screenshot / Inequality Media)
How to Become a Corporate CEO Scam Artist in Five Easy Steps
And how to stop it in five more
Aug 22, 2019
Average CEO pay at big corporations topped 14.5 million dollars in 2018. That's after an increase of 5.2 million dollars per CEO over the past decade, while the average worker's pay has increased just 7,858 dollars over the decade.
Just to catch up to what their CEO made in 2018 alone, it would take the typical worker 158 years.
This explosion in CEO pay relative to the pay of average workers isn't because CEOs have become so much more valuable than before. It's not due to the so-called "free market."
It's due to CEOs gaming the stock market and playing politics.
How did CEOs pull this off? They followed these five steps:
First: They made sure their companies began paying their executives in shares of stock.
Second: They directed their companies to lobby Congress for giant corporate tax cuts and regulatory rollbacks.
Fourth: This automatically drove up the price of the remaining shares of stock.
Fifth and finally: Since CEOs are paid mainly in shares of stock, CEO pay soared while typical workers were left in the dust.
How to stop this scandal? Five ways:
1. Ban stock buybacks. They were banned before 1982 when the Securities and Exchange Commission viewed them as vehicles for stock manipulation and fraud. Then Ronald Reagan's SEC removed the restrictions. We should ban buybacks again.
2. Stop corporations from deducting executive pay in excess of 1 million dollars from their taxable income - even if the pay is tied to so-called company performance. There's no reason other taxpayers ought to be subsidizing humongous CEO pay.
3. Stop corporations from receiving any tax deduction for executive pay unless the percent raise received by top executives matches the percent raise received by average employees.
4. Increase taxes on corporations whose CEOs make more than 100 times their average employees.
5. Finally, and most basically: Stop CEOs from corrupting American politics with big money. Get big money out of our democracy. Fight for campaign finance reform.
Grossly widening inequalities of income and wealth cannot be separated from grossly widening inequalities of political power in America. This corruption must end.
An Unconstitutional Rampage
Trump and Musk are on an unconstitutional rampage, aiming for virtually every corner of the federal government. These two right-wing billionaires are targeting nurses, scientists, teachers, daycare providers, judges, veterans, air traffic controllers, and nuclear safety inspectors. No one is safe. The food stamps program, Social Security, Medicare, and Medicaid are next. It’s an unprecedented disaster and a five-alarm fire, but there will be a reckoning. The people did not vote for this. The American people do not want this dystopian hellscape that hides behind claims of “efficiency.” Still, in reality, it is all a giveaway to corporate interests and the libertarian dreams of far-right oligarchs like Musk. Common Dreams is playing a vital role by reporting day and night on this orgy of corruption and greed, as well as what everyday people can do to organize and fight back. As a people-powered nonprofit news outlet, we cover issues the corporate media never will, but we can only continue with our readers’ support. |
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Robert Reich
Robert Reich, is the Chancellor's Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. His book include: "Aftershock" (2011), "The Work of Nations" (1992), "Beyond Outrage" (2012) and, "Saving Capitalism" (2016). He is also a founding editor of The American Prospect magazine, former chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." Reich's newest book is "The Common Good" (2019). He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.
Average CEO pay at big corporations topped 14.5 million dollars in 2018. That's after an increase of 5.2 million dollars per CEO over the past decade, while the average worker's pay has increased just 7,858 dollars over the decade.
Just to catch up to what their CEO made in 2018 alone, it would take the typical worker 158 years.
This explosion in CEO pay relative to the pay of average workers isn't because CEOs have become so much more valuable than before. It's not due to the so-called "free market."
It's due to CEOs gaming the stock market and playing politics.
How did CEOs pull this off? They followed these five steps:
First: They made sure their companies began paying their executives in shares of stock.
Second: They directed their companies to lobby Congress for giant corporate tax cuts and regulatory rollbacks.
Fourth: This automatically drove up the price of the remaining shares of stock.
Fifth and finally: Since CEOs are paid mainly in shares of stock, CEO pay soared while typical workers were left in the dust.
How to stop this scandal? Five ways:
1. Ban stock buybacks. They were banned before 1982 when the Securities and Exchange Commission viewed them as vehicles for stock manipulation and fraud. Then Ronald Reagan's SEC removed the restrictions. We should ban buybacks again.
2. Stop corporations from deducting executive pay in excess of 1 million dollars from their taxable income - even if the pay is tied to so-called company performance. There's no reason other taxpayers ought to be subsidizing humongous CEO pay.
3. Stop corporations from receiving any tax deduction for executive pay unless the percent raise received by top executives matches the percent raise received by average employees.
4. Increase taxes on corporations whose CEOs make more than 100 times their average employees.
5. Finally, and most basically: Stop CEOs from corrupting American politics with big money. Get big money out of our democracy. Fight for campaign finance reform.
Grossly widening inequalities of income and wealth cannot be separated from grossly widening inequalities of political power in America. This corruption must end.
From Your Site Articles
Robert Reich
Robert Reich, is the Chancellor's Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. His book include: "Aftershock" (2011), "The Work of Nations" (1992), "Beyond Outrage" (2012) and, "Saving Capitalism" (2016). He is also a founding editor of The American Prospect magazine, former chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." Reich's newest book is "The Common Good" (2019). He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.
Average CEO pay at big corporations topped 14.5 million dollars in 2018. That's after an increase of 5.2 million dollars per CEO over the past decade, while the average worker's pay has increased just 7,858 dollars over the decade.
Just to catch up to what their CEO made in 2018 alone, it would take the typical worker 158 years.
This explosion in CEO pay relative to the pay of average workers isn't because CEOs have become so much more valuable than before. It's not due to the so-called "free market."
It's due to CEOs gaming the stock market and playing politics.
How did CEOs pull this off? They followed these five steps:
First: They made sure their companies began paying their executives in shares of stock.
Second: They directed their companies to lobby Congress for giant corporate tax cuts and regulatory rollbacks.
Fourth: This automatically drove up the price of the remaining shares of stock.
Fifth and finally: Since CEOs are paid mainly in shares of stock, CEO pay soared while typical workers were left in the dust.
How to stop this scandal? Five ways:
1. Ban stock buybacks. They were banned before 1982 when the Securities and Exchange Commission viewed them as vehicles for stock manipulation and fraud. Then Ronald Reagan's SEC removed the restrictions. We should ban buybacks again.
2. Stop corporations from deducting executive pay in excess of 1 million dollars from their taxable income - even if the pay is tied to so-called company performance. There's no reason other taxpayers ought to be subsidizing humongous CEO pay.
3. Stop corporations from receiving any tax deduction for executive pay unless the percent raise received by top executives matches the percent raise received by average employees.
4. Increase taxes on corporations whose CEOs make more than 100 times their average employees.
5. Finally, and most basically: Stop CEOs from corrupting American politics with big money. Get big money out of our democracy. Fight for campaign finance reform.
Grossly widening inequalities of income and wealth cannot be separated from grossly widening inequalities of political power in America. This corruption must end.
From Your Site Articles
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.