Executive Pay: A Good Year’s Pay for a Good Day’s Work?
CAPITALISM, 17 Jul 2023
Sam Pizzigati | Inequality – TRANSCEND Media Service
Pay levels for top U.S. corporate execs have lost any connection to organizational rationality.
9 Jul 2023 – Can you imagine a president of the United States proposing a federal budget that quadruples the paychecks that go to top federal officials? Of course not. No president would dare risk wandering down that road. America’s taxpayers, our top pols understand, have a distinct aversion to seeing anyone get rich off their tax dollars.
Pay rates for top executives within the federal government reflect that aversion. The U.S. Department of Health and Human Services has, for instance, over 80,000 employees, and the work these employees do can literally make the difference between life and death for millions of people the world over. Yet the top executive at HHS, Xavier Becerra, last year took home less than $250,000 in compensation.
Within Corporate America’s top executive suites, by contrast, $250,000 wouldn’t even rate as a decent paycheck for a mere week’s worth of labor. Last year’s highest-paid U.S. CEOs pocketed over $250,000 per day.
Should we care about these astounding sums now filling the pockets of our top corporate execs? We sure should. Unlike cabinet secretaries like Xavier Becerra, corporate execs are getting rich off our tax dollars. Large numbers of these execs are either running corporations with massive federal contracts or annually raking in fistfuls of federal subsidies.
Need some specifics? Consider the pharmaceutical industry and the race against Covid. Back in 2012, notes a just-published Fierce Pharma analysis, five biopharma CEOs pocketed over $18 million in annual compensation. Last year, biopharma’s 15 highest-paid execs all took home at least $19 million. Their ranks included the CEOs at the two most prominent Covid vaccine firms: Pfizer’s Albert Bourla and Moderna’s Stefane Bancel. In 2022, their paychecks together totaled over $52 million.
What did execs like these two CEOs do to reap their immense windfalls? They surfed a Covid wave of tax dollars. That wave enabled their personal “success.” Notes a Health Affairs journal analysis: “The government invested extensively in every aspect of the basic science, preclinical development, and clinical trials for the vaccines.” Tax dollars even “reduced manufacturing risk by underwriting capacity investments.”
Overall, as data from the People’s Vaccine Alliance would show, the “excessive profits” Big Pharma giants made off Covid vaccines created “at least” nine new billion-dollar fortunes in the pandemic’s first year alone.
We have, unfortunately, learned little in the way of lessons from our Covid experience. Our tax dollars, a new study from Good Jobs First indicates, are now turbocharging supersized climate-change fortunes.
The just-released Good Jobs First analysis — Power Outrage: Will Heavily Subsidized Battery Factories Generate Substandard Jobs? — examines a little-known provision in the 2022 Inflation Reduction Act that may end up costing U.S. taxpayers more than $200 billion over the next decade, a sum above and beyond the $13 billion that state and local governments have promised as battery incentives.
Lawmakers see all those billions of tax dollars as a generator of good wages, but nothing in the battery subsidy fine-print mandates — or even incentivizes — decent worker paychecks. Ford Motor, for instance, will be eligible for $6.7 billion in federal subsidies for its new $3.5-billion battery plant in Michigan, and state and local officials have already handed Ford $1.7 billion for that plant.
How does that math play out for real-life workers?
“The company has promised to create 2,500 new jobs that it says will pay an average annual wage of just $45,000 a year,” Good Jobs First points out, “while reaping subsidies of $3.4 million per job.”
The Good Jobs First study offers a variety of policy proposals “to set the country’s emerging EV-battery industrial complex on the path to ‘high road’ employment,” steps ranging from requiring subsidy recipients to pay wages that at least match the local market rate to including contract provisions that “claw back” tax-dollar subsidies should companies fail to deliver the jobs they’ve promised.
Will steps like these be enough to ensure that the benefits of the transition to electric vehicles get “justly shared,” as the Good Jobs First report puts it, “with the workers and communities building America’s fossil-free economy”? Not unless we also take steps that meaningfully discourage any attempts by top corporate execs to grab much more than their “fair share” of federal tax dollars.
How could we do that discouraging? We could include in every government contract and subsidy provisions that deny public tax dollars to firms that compensate their top execs at over 25 or 50 times the compensation that goes to their workers.
A bit of historical perspective: Back in the mid-20th century, few corporate chiefs pocketed over 20 times the annual compensation of their average workers. CEOs at major U.S. corporations, the Economic Policy Institute reported last fall, are now averaging nearly 400 times worker annual pay.
If we shifted gears and only extended taxpayer-funded contracts and subsidies to corporations that limited their CEO pay to no more than 25 or 50 times worker pay, top execs at companies that get our tax dollars would have an ever-present incentive to raise their worker pay, not squeeze it.
Two municipalities, Portland and San Francisco, have already taken steps in that direction. State and federal lawmakers have introduced similar proposals, as this Inequality.org CEO-Worker Pay Resource Guide details.
We clearly can create a more equal United States. Corporate paychecks could lead the way.
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Sam Pizzigati co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.
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