“In the 1950s, CEOs made 20 times more than their median employees. Last year, the average S&P 500 CEO made 287 times their median worker pay. Workers in this country should not be paid totally inadequate wages while CEOs make outrageously high compensation packages…[The Sanders] plan would impose tax rate increases on companies with CEO to median worker ratios above 50 to 1.”
— The Sanders Income Inequality Tax Plan https://berniesanders.com/issues/income-inequality-tax-plan/ Accessed February 26, 2020
Hmmm, sounds like CEOs are being paid too much and American workers are being way paid too little. But before jumping to conclusions, let’s do a little digging. For example, what is actually meant by “median worker pay”? To its credit, the Sanders campaign site provides a link to the source of the claim re S&P 500 CEOs: the AFL-CIO.
According to the AFL-CIO, here are the corporations with the worst CEO/Worker pay ratios in 2018, along with the median worker pay for each company:
Wait a minute - almost all of those median worker pay figures are way too low to be full-time, year-round jobs in the USA. Clearly, these workers include a substantial number of short-term, seasonal, part-time, and overseas employees. Which makes sense given the number of retail, hospitality and global manufacturing firms in the S&P 500.
Consider that in 2018, the median salary for a half-time retail salesperson in the US was around $12,200 per year or that Vietnamese workers earn an average of less than $3100 a year. Should CEO compensation packages really be compared to what these workers are being paid? It’s not just me who has recognized the absurdity of the CEO-Worker pay ratio. In The CEO Pay Ratio: Data and Perspectives from the 2018 Proxy Season, Deb Lifshey notes,
“…the inclusion of a large overseas or part-time workforce had a big impact on median employee pay and the pay ratio... Not surprisingly, one of the strongest correlations and predictors of pay ratio was the percent of company employees located overseas. The lowest pay ratio band had roughly 9% of its employees located outside of the US, while those companies with a pay ratio of over 150 had more than a third of their workforce overseas.”
The Sanders campaign uses the CEO-worker pay ratio figures as evidence of the “totally inadequate” wages of workers “in this country” [my italics] and to justify their plan to impose additional taxes on companies with CEO to median worker ratios above 50 to 1. But if the worker side of the pay ratio were limited to full-time, year-round American workers, it would already be less than 50 to 1 for the vast majority of US companies. Check it out:
Reference:
The CEO Pay Ratio: Data and Perspectives from the 2018 Proxy Season by Deb Lifshey/The Harvard Law School Forum on Corporate Governance, posted on October 14, 2018