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U.S. Leads in CEO Pay – More Than 250 Times That of Average Worker

The gap between CEOs’ pay and that of the average worker continues to widen, made possible by unfair loopholes.
U.S. Leads in CEO Pay – More Than 250 Times That of Average Worker
By AFSCME Staff ·

For the chief executive officers of big companies, the United States is the place to be. In a new analysis of the CEO-to-worker pay ratio at companies around the world, Bloomberg finds that pay for CEOs at publicly-traded U.S. companies is 265 times greater than that of the average worker. Call it America First – in a perverse sort of way.

Following fast on our nation’s heels with this dubious distinction is India, where CEOs of publicly-traded companies enjoy a ratio of compensation that is 229 times greater than that of the average worker.

And in the U.S., according to Bloomberg, CEOs receive nearly double what chief executives at Canadian firms earn.

One reason the ratio between the compensation earned by American CEOs so far exceeds that of other nations is the way the acceleration of CEO pay was propelled through a loophole that has existed since 1993. It allows companies to deduct compensation earned through bonuses and stock options from a corporation’s tax liability. And although that loophole was closed (as others were opened) in the new tax law passed by Congress in December, experts don’t expect the loophole’s demise to affect the stark pay gap in the future.

For one, the horse is out of the barn. The loophole may have encouraged the widening gap, but extravagant CEO compensation packages are now the norm. Also, the massive tax cuts won by corporations in the new law more than offset any tax they might have had to pay on a total compensation package. While congressional leaders like to say that closing the loophole will add $9.3 billion to the treasury, they fail to note that the tax law, which largely benefits corporations, CEOs and other wealthy people, will add nearly $1.5 trillion to the deficit.

“Taxation policy cannot be used to lower executive pay," Charles Elson, director of a corporate governance center at the University of Delaware, told the Washington Post. "It's only going to be lowered when you rethink how pay is put together.”

Meanwhile, ThinkProgress reports that companies that promised workers big bonuses after the passage of the new tax law have now “quietly laid off workers at the same time.” More than 500 sales employees at Comcast were laid off just before Christmas and thousands of AT&T workers received layoff notices two weeks before the holiday. According to ThinkProgress:

CWA filed a lawsuit against the company claiming that some of those layoffs are needless, and that the timing of the terminations — just two weeks before Christmas — represents “an extraordinary act of corporate cruelty.”

In 2015, Comcast CEO Brian L. Roberts received $36.2 million, up 10 percent from the year before, according to the Wall Street Journal. AT&T CEO Randall L. Robinson, Forbes reports, scarfed up $26 million in the 2016 fiscal year.

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