America’s CEO Pay is Grotesque and It’s Getting Worse

Instead of taxing corporations at a reasonable rate and using that money to fund infrastructure projects America is now counting on Domino's pizza to fix our ailing streets. Got that? It’s true.

While our municipalities are being stripped, giant corporations are raking in billions of dollars, much of it untaxed. Now Domino's has so much money that they have decided to use it in a gimmicky marketing campaign to fix America's potholes. On top of that, Domino's CEO takes home roughly 435 times the average worker. That type of executive compensation is the norm in America's top companies. America’s CEO’s compensation continues to sky rocket and it is grotesque.

Since 1950, the CEO to worker pay ratio has increased one thousand percent, while workers’ wages have stagnated. In 1950 that ratio was 20-1, 1980 42-1 and after 40 years of low tax ‘Reaganomics’, CEO pay has skyrocketed to over 300-1. This trend continues to accelerate as the CEO’s from the top 350 companies got a 17.6% raise in 2017 compared to 2016. Workers, meanwhile, have experienced a wage decline as real average earnings are down 0.2% over the 12 months ending July 2018.

This phenomenon is unique to America. The average CEO to worker pay in Japan is 16-1. Japanese companies intentionally keep executive compensation low to promote team spirit among their loyal lifelong employees. Excessive executive compensation is seen as shameful and an embarrassment in Japan. In America, excessive executive compensation is celebrated, as an executive's compensation is considered proof of their ingenuity, intelligence and value (see our 'brilliant businessman' and current president). In reality, the gluttonous American executive compensation is self-set by the very few executives at the top of the hierarchy. In a system of interlocking directories, the corporate board members who sit on compensation committees have their own personal financial incentives to make sure CEO's are exorbitantly compensated. 

Contrary to conventional wisdom, CEO pay is not tied to performance. Higher CEO pay does not reflect higher output or firm performance and CEO pay has grown MUCH faster than profits. Additionally, higher CEO pay has no correlation with a company’s long-term performance. In fact, 22% of the top 25 highest paid CEO’s received Federal bailout money.

This inequitable distribution of income is, of course, by design. As more and more wealth is held by fewer and fewer individuals, our society and our democracy suffers. In the wealthiest nation in history, people die from preventable diseases, go bankrupt from a dysfunctional healthcare system and can’t afford the education that is necessary to function in the modern age. The laws passed in government are written to benefit and enrich the very few at the top, who are already doing better than they have in 100 years. The latest and most outrageous example being the GOP tax cut. These bills are written for the few wealthiest members of our society, because that is who funds our elections. Politicians rely on 0.26% of the population for nearly 70% of their campaign contributions. Nearly half of all political spending comes from just 158 families.

All of this is inextricably tied to wealth inequality to which the grotesque CEO pay plays a large part. A consequence of this gross inequality is the anger and divisiveness we see in our society. There is a direct correlation between income inequality and the political polarization in America and it makes sense.

Domino's Pizza Paving Program
While workers have been more productive, the benefits of that productivity has gone to the executives. People are working harder than ever before for a smaller share of the pie. They are not getting ahead. They are insecure and economically anxious. They see the people at the top doing better and better. They see Wall Street getting bailed out while others are being foreclosed on and getting kicked out of their houses. They haven’t had a pay increases in years while CEO pay grows by another 17.6%. People are angrily looking for someone to blame and due to our mainstream media organizations being owned by the same special interests that buy our elections, they don’t know who to blame. So instead of blaming the people who have written the rules that govern the structures of our economy, they cast their blame elsewhere. They blame democrats, they blame republicans, they blame the poor, they blame immigrants, they blame minorities, they blame foreign countries and they blame the government.

The level of CEO pay in America is dangerous and toxic for our society. It is also unique There is no need for it. There is no benefit from it. We must change it.


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