Today the Economic Policy Institute (EPI) released a study that looked at compensations given to the CEO of the 350 largest company and compared them to the average worker’s compensation and the findings are startling. For starters, while wages continue to stagnate and to be the biggest economic pain facing working families and negatively affecting the U.S. economy, the CEO compensation surged in 2017, with CEOs making 312 times more than a typical worker in the firm’s industry. In fact, the report states that the average CEO of a top U.S. firm made $18.9 million last year compared with $62,431 for the typical worker. This puts CEOs of the largest publicly traded companies far above the earnings in the top 0.1 percent of all wage earners, $2.5 million (in 2016). The escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1 percent incomes and has yet to “trickle down” as promised by the White House administration.
Lawrence Mishel and Jessica Schieder who have authored the study make the following recommendations to buck this trend without hurting the economy:
- Reinstate higher marginal income tax rates at the very top.
- Set corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation.
- Set a cap on compensation and tax anything over the cap.
- Allow greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.
The Stephen Silberstein Foundation partially funded this study.
Want more news? Read the article on the Apple News app.