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Analysis: CEO Pay Swells as Worker Wages Remain Idle

The ratio of CEO-to-worker compensation is 4.7 times greater than it was 30 years ago. (Hyejin Kang/Adobe Stock)
The ratio of CEO-to-worker compensation is 4.7 times greater than it was 30 years ago. (Hyejin Kang/Adobe Stock)
August 19, 2019

SEATTLE – A new analysis finds pay to CEOs is ballooning while average wages for workers remain stagnant.

The Economic Policy Institute looked at compensation for CEOs at the 350 largest firms in the U.S. and found they have risen more than 1,000% over the past four decades.

Meanwhile, pay to the median worker has gone up just 12% over that time period.

John Burbank, executive director of the Economic Opportunity Institute, says the growing income gap is a symptom of a larger issue in the country.

"The value of stock as shareholders is held above the value of workers, who are the people who are actually doing the work to create the profits for the companies, and it is a continual undermining of the quality of life of middle class workers and their families," he points out.

Burbank adds that this is not just happening in the private sector. Even nonprofit hospitals have emulated this trend.

According to an analysis by his organization, in 2018, the head of the Kaiser Foundation Health Plan made 193 times as much as the typical nurse.

In 2018, the ratio of CEO-to-worker compensation was 278-to-1. Thirty years ago, that ratio was 58-to-1.

Burbank says there are ways for the Washington state Legislature to address this issue.

One proposal this session would put a surtax on companies where CEOs make more than 50 times that of the median worker. Another bill would put an excise tax of 5% on employers who pay employees more than $1 million and a 10% tax for employees who make more than $10 million.

Burbank says that would bring in millions of dollars.

"Our legislators could make a choice as to whether they will continue to allow this obscene escalation of compensation to the very top or whether they want to put a little brake on that and use the revenues from that brake to fund basic services for the people of our state," he states.

Burbank says if the excise tax had been implemented this year, it would have brought in more than $300 million in tax revenue, which could help fund programs as such expanded health care coverage or early childhood education.

Disclosure: Economic Opportunity Institute contributes to our fund for reporting on Budget Policy & Priorities, Early Childhood Education, Livable Wages/Working Families, Senior Issues. If you would like to help support news in the public interest, click here.
Eric Tegethoff, Public News Service - WA