EPI’s Mishel: Combination of Pro-Corporate, Anti-Worker Policies Leads to Huge CEO-Worker Pay Ratio

WASHINGTON (PAI)–A combination of deliberate pro-corporate and anti-worker policies – including refusal to update the nation’s labor laws – leads to huge ratio, now 296-1 between total CEO compensation and worker pay, Economic Policy Institute President Larry Mishel says.   And the average CEO last year had total compensation of $15.175 million.
            In a telephone press conference on June 12 about new EPI’s paper on the issue, CEO Pay Continues To Rise As Typical Workers Are Paid Less, Mishel said he could not assign shares of the chasm between CEOs and workers to specific anti-worker or pro-CEO policies.
            “But the economic policies we adopted are those where those at the top have done exceedingly well, while those who actually do the work haven’t,” he said.
            Mishel laid particular emphasis on Democratic President Bill Clinton’s backtracking on a 1992 campaign promise to eliminate the corporate tax deduction for all executive compensation, including stock options, over $1 million.
            On the worker side, he said the U.S. has adopted policies over the last 35 years that include deregulation of key industries, failure to raise the minimum wage and “failure to adopt labor law reform to preserve collective bargaining.”  And “the emergence of wage theft” including misclassifying workers as “independent contractors,” harms workers’ pay, he said.
            Clinton dropped his executive pay tax at the behest of Wall Street executive Robert Rubin, then head of the President’s Council of Economic Advisers.   Leaving the deduction in the tax code cost the Treasury $30 billion over the last three years alone, Mishel said.  That money, and much more, went into CEOs’ pockets as “economic rents,” worth far more than execs’ contributions to company productivity, he added.
            Using figures from 2013 and including exercised stock options, bonuses, salary, restricted stock grants, and long-term incentive payouts, EPI reported total compensation for the top 350 public company CEOs last year was 295.9 times the median wage of workers.  That compares with a 20-1 ratio in 1965, the first year where comparable data were available.
            Factoring in the pay of Facebook’s CEO, after the firm went public in 2012, raises the ratio last year to 510.7-1, as that CEO earned $3.3 billion combined in 2013, Mishel noted.
            CEO compensation “takes off in the 1990s after the performance pay loophole, which I call the Robert Rubin loophole, passed Congress,” Mishel explained.  “When the stock market boomed, so did pay,” regardless of the performance of the CEO’s firm.
            But so did the stock options, bonuses and other compensation – so much so that executive compensation grew 937 percent from 1978 through 2013, far above the 422 percent growth for  the rest of the “1 percent” and the 10.2 percent growth in workers’ pay those years.  All the figures are adjusted for inflation.  The paper is available on EPI’s website.