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The pay disparity between CEOs and typical workers has become obscene. But there’s something we can do about this. (I’ll get to it in a moment.)
First, some history and numbers:
In 1965, CEOs typically earned 20 times the typical worker's pay.
By 1979, the ratio between a CEO’s pay and that of the median worker was 33 to 1.
As of 2021, the CEO-to-median-worker pay ratio had grown to 399 to 1.
Since the late 1970s, CEO pay increased more than 1,200 percent.
At the same time, the pay of the typical American workers rose 18 percent.
Inevitably, some of that obscene amount of CEO pay goes into PACs and campaign contributions.
As a result, wealthy CEOs in effect write many laws. (And when billionaires bestow gifts on Supreme Court justices, they also determine how the laws are enforced and interpreted.)
This is part of the story of how American capitalism has become rigged in favor of those at the top. It leads us directly to oligarchy — rule by the richest few, putting democracy at risk.
It’s also partly why so many Americans have become angry and cynical — some even succumbing to the false allure of Trump and neofascism.
What to do?
I’m pleased to report that Senator Sheldon Whitehouse and Reps. Barbara Lee and Alexandria Ocasio-Cortez have introduced the Curtailing Executive Overcompensation (CEO) Act. It’s designed to address the problem of out-of-control CEO pay by levying an excise tax on corporations whose CEO-to-median-worker pay disparities are 50 to 1 or greater.
The corporate tax rate would be a sliding scale — pegged to the degree to which the ratio of CEO pay (including salary, bonuses, and stock options) to worker pay is greater than 50 to 1.
The tax would apply to big companies with gross income of $100 million per year or more and payrolls totaling $10 million or more.
This legislation deserves wide support. Lawmakers need to know how popular it is. Joe Biden should get behind it.
How can you help? Alert your representatives that you want them to support this.
Click here to sign and send your message to your members of Congress.
Robert Reich is a professor at Berkeley and was secretary of labor under Bill Clinton. You can find his writing at https://robertreich.substack.com/.
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