The statistics showing the widening pay gap between CEOs and their workers are stunning. In the mid-1960s, the gap was about 20 to 1. By 2014, the gap had swollen to about 300 to 1.
"Skyrocketing CEO pay is one of the drivers of increased US income concentration," Anderson says.
Between 1979 and 2007, rising pay for corporate executives was a "major factor" contributing to income expansion for the top 1 percent, according to a 2015 report by the Economic Policy Institute. Meanwhile, worker wages have largely stagnated since the late 1970s.
Runaway CEO pay contributes to income inequality, but it also harms companies. CEO pay practices drove the reckless bonus culture that fueled the 2008 economic meltdown. And corporate governance experts recognize that large pay disparities are bad for company performance and undermine morale within firms.
As a result, company shareholders globally have tried to rein in excessive pay. And as part of the Dodd-Frank financial reform legislation, public corporations will have to disclose their CEO-worker pay ratio, starting with their 2017 pay figures.
Nationally, some federal and state lawmakers have proposed capping the tax deductibility of CEO pay. Currently, corporations can deduct unlimited amounts of so-called performance pay, including stock options and certain types of bonuses. This means that the more corporations pay their CEOs, the less they pay in taxes. Sens. Jack Reed and Richard Blumenthal and Rep. Lloyd Doggett are leading efforts to get rid of this perverse loophole.
Recently, these lawmakers reintroduced the 2017 Stop Subsidizing Multimillion Dollar Corporate Bonuses Act, which would treat bonuses as salaries and cap their deductibility at $1 million.
Wall Street's representatives in Congress will be working to gut the federal disclosure law for pay ratios in the coming year. But cities and states have the ability to address runaway inequality. Watch for more [in addition to Portland, OR] local jurisdictions to push forward CEO-worker pay gap reform.
(From Chuck Collins, YES! Magazine in truthout, 4/15/17)