Could corporate CEOs anywhere in the universe have a deal much sweeter than U.S. defense contractor chiefs? The CEO at CybeCys, Inc., a Texas-based defense contractor, might quibble with that question. He isn’t feeling all that much sweetness these days. Last month, federal prosecutors announced a deal that will have this CEO and CybeCys pay over $283,000 in penalties and damages for cheating on two Covid-era federal loan programs. The CybeCys CEO seems to have transferred hefty chunks of taxpayer dollars into his own personal investment accounts and used those dollars, prosecutors charge, to buy up “securities, exchange-traded funds, and cryptocurrency.”
Ace researchers dropped two blockbuster reports on us last week. The first — from the UN Intergovernmental Panel on Climate Change, the IPCC — hit on Monday with a worldwide thunderclap. UN Secretary-General António Guterres is dubbing this first report’s findings “a code red for humanity” — and for good reason. Our global thermometer is already averaging 1.1 degrees Celsius above pre-industrial levels. If current trends continue, we’ll reach 3 degrees this century. Where do we need to be? To avert “catastrophe for people and natural systems worldwide,” we can’t afford to let global temperatures rise over 1.5 degrees. This week’s second blockbuster report arrived Tuesday, sans the thunderclap. Few media outlets chose to give this second study — the Economic Policy Institute’s latest look at U.S. CEO pay — any high-profile real estate.
During the pandemic, low-wage workers have lost income, jobs, and lives. And yet many of the nation’s top-tier corporations have been fixated on protecting their wealthy CEOs, even bending their own rules to pump up executive paychecks. A new Institute for Policy Studies report finds that 51 of the country’s 100 largest low-wage employers moved bonus goalposts or made other rule changes in 2020 to give their CEOs 29 percent average raises while their frontline employees made 2 percent less. Among these 51 rule-rigging companies, average CEO compensation was $15.3 million in 2020, while median worker pay was $28,187 on average. The average CEO- worker pay ratio: 830 to 1.
The combination of greed and power often spin out of control and challenge the enforceable rule of law and the countervailing force of the organized civic community. When greed and power are exercised by giant multinational corporations that escape the discipline of the nation-state, the potential for evil becomes infinite in nature. Enough is never enough. Global giant companies, aided and abetted by their corporate attorneys and accountants, can literally decide how little taxes they are going to pay by shifting profits and expenses among different tax haven countries such as Ireland, Luxembourg, and Panama.
In 1980 the average CEO-to-worker pay ratio was 42:1. In 2017 the ratio was 361:1. Total CEO compensation averaged $13.94 million last year, compared to just $38,613 for the average production and non-supervisory worker. We’ve all seen numbers like this so many times now that we barely even blink at a new set. There is, however, new research that may partly explain why this gap has gotten so wide. The CEO-to-worker pay data were reported Wednesday morning by the AFL-CIO in an update to the union’s Executive Paywatch database and website. The data were compiled from disclosures by companies of the ratio of CEO pay to the median worker’s pay required for the first time last year in federal financial filings. New research by Harvard Ph.D. candidate Nathan Wilmers, published Wednesday by the Washington Center for Equitable Growth, indicates that increased pressure from large corporate buyers suppresses wages for the workers in the buyer’s network of suppliers. Thus, large corporate buyers like Boeing and Walmart exercise outsized influence on the wages of their suppliers’ workers.
PayWatch report, thankfully, provides that context: Average worker pay in the United States last year increased just 2.6 percent. In other words, as the PayWatch study notes, “the imbalance in our economy between the pay of CEOs and working people is worsening.” And that rates as a big deal. But to really understand how staggering America’s CEO-worker pay imbalance has become, we need to widen our field of comparative vision, from domestic to global. And what do we find when we take that step? Simply this: CEOs in the United States make significantly more than their counterparts in our peer nations, and American workers make significantly less.