A Proposal To Stop Outrageous CEO Pay

CEO pay has climbed to an outrageous level while worker pay has been virtually stagnant. The result is a ridiculous gap between what CEO's make and what the average worker in their company makes. And it's added to the current situation where too many workers can no longer afford to provide a decent life for their families. What can be done? Here's what former Labor Secretary Robert Reich thinks:

The big problem I want to talk about today is that CEO pay has become utterly untethered from reality. 

When I was a young man in the 1960s and ’70s, CEOs typically made 20 to 30 times the pay of their workers. That was enough to reward leadership, but not so much as to distort the entire economy and alienate workers who could still aspire to the American Dream.

Today, the gap between CEO pay and the pay of average workers has exploded. The average CEO at a major corporation now takes home nearly 300 times what their employees earn. 

In some cases, the disparity is so grotesque it defies belief. For example:

 

• Walmart’s CEO raked in $27.4 million last year — 930 times the median Walmart worker’s $29,469 salary.

  
  

• Coca-Cola’s CEO made $28 million — nearly 2,000 times what the average Coke worker earned ($14,144).

  
  

• Starbucks’ CEO pocketed $95.8 million in 2024 — almost 3,000 times the typical barista salary of $32,000. (By the way, I urge you to boycott Starbucks until they agree to a first contract with their striking baristas.)

  
  

• Tesla just approved a nearly $1 trillion pay package for Elon Musk — the world’s richest man (except for on September 10, 2025, when Oracle CEO Larry Ellison’s net worth briefly surpassed his). This pay package would make Musk the first trillionaire in history.

The problem isn’t just these ridiculous sums. It’s also what’s happening to ordinary workers. 

Undervaluing their labor while overvaluing the labor of CEOs has fueled resentment, anger, disillusionment, and fear — creating conditions ripe for a demagogue to exploit. This is what helped give rise to Trump.

 

The yawning gap between the wealth of executives and the everyday people who generate that wealth is beyond obscene. The American people agree: A staggering 62% support setting caps on CEO pay relative to worker pay.

CEOs aren’t worth nearly what they’re raking in. They get these pay packages because they’ve rigged their boards to award them. 

They’ve also linked their pay to their corporations’ stock prices — and they cash in when their corporations buy back their stock to pump up share prices.

It’s immoral. Even Pope Leo has noted these concerns: “CEOs that 60 years ago might have been making four to six times more than what workers receive, the last figure I saw, it’s 600 times more.” Referring to Elon Musk, the Pope continued: “What does that mean and what’s that about? If that is the only thing that has value anymore, then we’re in big trouble.”

So, what do we do about this? How can outrageous CEO pay be stopped?

The best idea I’ve heard comes from Senator Bernie Sanders and Congresswoman Rashida Tlaib, who have introduced the “Tax Excessive CEO Pay Act.” 

Under it, companies would pay higher taxes when the ratio of the pay of their CEO to their typical worker exceeds 50-to-1. 

• If it exceeds 50-to-1, the corporation pays an additional 0.5% tax

• If it exceeds 100-to-1, the corporation pays an additional 1% tax

• If more than 200-to-1, a 2% tax

• If more than 300-to-1, a 3% tax

• If more than 400-to-1, a 4% tax

• If more than 500-to-1, a 5% tax

So, if Tesla’s board approves Musk’s staggering $975 billion pay package, Tesla would owe up to $100 billion more in taxes over the next decade.

It won’t be easy to get this idea implemented, given all the corporate and CEO money now polluting our politics. But if my guess is correct, we’re about to witness a giant backlash against Big Money in politics. If so, this idea has a chance, especially after the midterm elections. 

Don’t wait. Please call your members of Congress today and tell them to support the Tax Excessive CEO Pay Act. (To reach Congress via the Capitol Switchboard, dial (202) 224-3121, and ask the operator to connect you to your specific Representative’s or Senator’s office, by name or office.)

It's Time For Government To Control Outrageous CEO Pay

 CEO pay has gotten out of control. In the 1960's, corporate CEO's made slightly over 20 times the pay of a typical worker. By 2021, they were making about 399 times the pay of a typical worker. That's outrageous, and something must be done about it.

The post below is just part of an excellent (but lengthy) article on CEO pay by Josh Bovines and Jori Kandra of the Economic Policy Institute:

What this report finds: Corporate boards running America’s largest public firms are giving top executives outsize compensation packages that have grown much faster than the stock market and the pay of typical workers, college graduates, and even the top 0.1%. In 2021, we project that a CEO at one of the top 350 firms in the U.S. was paid $27.8 million on average (using a “realized” measure of CEO pay that counts stock awards when vested and stock options when cashed in and ownership is taken). This 11.1% increase from 2020 occurred because of rapid growth in vested stock awards. Using a different “granted” measure of CEO pay (which counts the value of stock awards and options when announced (or “granted” rather than realized), average top CEO compensation was $15.6 million in 2021, up 9.8% since 2020. In 2021, the ratio of CEO-to-typical-worker compensation was 399-to-1 under the realized measure of CEO pay; that is up from 366-to-1 in 2020 and a big increase from 20-to-1 in 1965 and 59-to-1 in 1989. CEOs are even making a lot more than other very high earners (wage earners in the top 0.1%)—almost seven times as much. From 1978 to 2021, CEO pay based on realized compensation grew by 1,460%, far outstripping S&P stock market growth (1,063%) and top 0.1% earnings growth (which was 385% between 1978 and 2020, according to the latest data available). In contrast, compensation of the typical worker grew by just 18.1% from 1978 to 2021.

Why it matters: Exorbitant CEO pay is a contributor to rising inequality that we could restrain without doing any damage to the wider economy. CEOs are getting ever-higher pay over time because of their power to set pay and because so much of their pay (more than 80%) is stock-related. They are not getting higher pay because they are becoming more productive or more skilled than other workers, or because of a shortage of excellent CEO candidates. This escalation of CEO compensation and of executive compensation more generally has fueled the growth of top 1% and top 0.1% incomes, leaving fewer of the gains of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or were taxed more).

How we can solve the problem: We need to enact policy solutions that would both reduce incentives for CEOs to extract economic concessions and limit their ability to do so. Such policies could include reinstating higher marginal income tax rates at the very top; setting corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation; using antitrust enforcement and regulation to restrain the excessive market power of firms—and by extension of CEOs; and allowing greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.

CEO's Make 320 Times The Average Salary Of Workers

The chart above is from the Economic Policy Institute (EPI).

In 1978, the average CEO made about 31.4 times the pay of the average worker. That was because increasing productivity was shared by both CEO's and workers. But in the 1980's, the Republicans were able to change the economic landscape in this country. They initiated their "trickle-down" economic theory -- which said that giving more to the rich would benefit everyone, because much of that money would trickle down to workers.

But it did not work out as they promised. Since 1978, CEO pay has grown by 1167% (and CEO's raised the pay of other executives to justify the rise in their own pay), while the pay of workers grew by only 13.7%. This created a huge gap between the rich and the bottom 90% of Americans -- a gap that has grown as large as before the Great Depression, and keeps growing larger. It is turning th U.S. into a nation of "haves" and "have-nots" as it shrinks the middle class and increases the number of workers struggling to keep up.

The EPI has produced a report on this growth of CEO pay and it's relation to worker pay, and how it is growing the income and wealth gap. It's an excellent, but lengthy report, and well worth reading to see what is happening in our economy.

Here is a synopsis of that report, and why it matters:

Corporate boards running America’s largest public firms are giving top executives outsize compensation packages that have grown much faster than the stock market and the pay of typical workers, college graduates, and even the top 0.1%. In 2019, a CEO at one of the top 350 firms in the U.S. was paid $21.3 million on average (using a “realized” measure of CEO pay that counts stock awards when vested and stock options when cashed in rather than when granted). This 14% increase from 2018 occurred because of rapid growth in vested stock awards and exercised stock options tied to stock market growth. Using a different “granted” measure of CEO pay, average top CEO compensation was $14.5 million in 2019. In 2019, the ratio of CEO-to-typical-worker compensation was 320-to-1 under the realized measure of CEO pay; that is up from 293-to-1 in 2018 and a big increase from 21-to-1 in 1965 and 61-to-1 in 1989. CEOs are even making a lot more—about six times as much—as other very high earners (wage earners in the top 0.1%). From 1978 to 2019, CEO pay based on realized compensation grew by 1,167%, far outstripping S&P stock market growth (741%) and top 0.1% earnings growth (which was 337% between 1978 and 2018, the latest data year available). In contrast, compensation of the typical worker grew by just 13.7% from 1978 to 2019.

Exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with. CEOs are getting more because of their power to set pay—and because so much of their pay (about three-fourths) is stock-related, not because they are increasing productivity or possess specific, high-demand skills. This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or were taxed more).

Corporate CEO Compensation Is Out Of Control

Donald Trump likes to brag about how well the economy is doing, and for rich people (the top 1% or 0.1%) that is very true. They are doing better than ever -- making record profits and acquiring record wealth. But ordinary working Americans are barely keeping ahead of inflation, and many are not doing even that. The truth is that the Republican economic policies have created a very unfair economy -- one that is slanted to favor the rich at the expense of everyone else.

But there is one group that is doing better than everyone else -- even better than the 0.1% of richest Americans. It is corporate CEOs. While corporations resist raising the wages of their workers, they are giving the CEOs more compensation than ever before.

The Economic Policy Institute has an excellent article of this out-of-control growth of CEO compensation (written by Lawrence Mishel and Julia Wolfe). I highly recommend you read the whole article. Here is just a taste, showing some of their key findings:

The report’s main findings include the following:

• CEO compensation in 2018 (stock-options-realized measure). Using the stock-options-realized measure, we find that the average compensation for CEOs of the 350 largest U.S. firms was $17.2 million in 2018. Compensation dipped 0.5% in 2018 following a 7.6% gain in 2017. CEO compensation measured with realized stock options grew 52.6% over the recovery from 2009 to 2018.
• CEO compensation in 2018 (stock-options-granted measure). Using the stock-options-granted measure, the average compensation for CEOs of the 350 largest U.S. firms was $14.0 million in 2018, up 9.9% from $12.7 million in 2017 and up 29.4% since the recovery began in 2009.
• Growth of CEO compensation (1978–2018). From 1978 to 2018, inflation-adjusted compensation based on realized stock options of the top CEOs increased 940.3%. The increase was more than 25–33% greater than stock market growth (depending on which stock market index is used) and substantially greater than the painfully slow 11.9% growth in a typical worker’s annual compensation over the same period. Measured using the value of stock options granted, CEO compensation rose 1,007.5% from 1978 to 2018.
• Changes in the CEO-to-worker compensation ratio (1965–2018). Using the stock-options-realized measure, the CEO-to-worker compensation ratio was 20-to-1 in 1965. It peaked at 368-to-1 in 2000. In 2018 the ratio was 278-to-1, slightly down from 281-to-1 in 2017—but still far higher than at any point in the 1960s, 1970s, 1980s, or 1990s. Using the stock-options-granted measure, the CEO-to-worker compensation ratio rose to 221-to-1 in 2018 (from 206-to-1 in 2017), significantly lower than its peak of 386-to-1 in 2000 but still many times higher than the 45-to-1 ratio of 1989 or the 16-to-1 ratio of 1965.
• Changes in the composition of CEO compensation. The composition of CEO compensation is shifting away from the use of stock options and toward the use of stock awards, which now average $7.5 million for each CEO and make up roughly half of all CEO compensation. Stock-related components of compensation—stock options and stock awards—make up two-thirds to three-fourths of all CEO compensation, depending on the particular measure used. The shift from stock options to stock awards leads to an understatement of CEO compensation levels and growth in our measures as well as in other measures, including the measure prescribed in SEC reporting requirements.
• Changes in the CEO-to-top-0.1% compensation ratio (1989–2018). Over the last three decades, compensation for CEOs based on realized stock options grew far faster than that of other very highly paid workers (the top 0.1%, or those earning more than 99.9% of wage earners). CEO compensation in 2017 (the latest year for which data on top wage earners are available) was 5.40 times greater than wages of the top 0.1% of wage earners, a ratio 2.22 points higher than the 3.18 average ratio over the 1947–1979 period. This wage gain alone is equivalent to the wages of more than two very-high-wage earners.
• Implications of the CEO-to-top-0.1% compensation ratio. The fact that CEO compensation has grown far faster than the pay of the top 0.1% of wage earners indicates that CEO compensation growth does not simply reflect a competitive race for skills (the “market for talent”) that also increased the value of highly paid professionals: Rather, the growing differential between CEOs and top 0.1% earners suggests the growth of substantial economic rents in CEO compensation (income not related to a corresponding growth of productivity). CEO compensation appears to reflect not greater productivity of executives but the power of CEOs to extract concessions. Consequently, if CEOs earned less or were taxed more, there would be no adverse impact on the economy’s output or on employment.
• Growth of top 0.1% compensation (1978–2017). Even though CEO compensation grew much faster than the earnings of the top 0.1% of wage earners, that doesn’t mean the top 0.1% did not fare well. Quite the contrary. The inflation-adjusted annual earnings of the top 0.1% grew 339.2% from 1978 to 2017. CEO compensation, however, grew three times as fast!
• CEO pay growth compared with growth in the college wage premium. Over the last three decades, CEO compensation increased more relative to the pay of other very-high-wage earners than did the wages of college graduates relative to the wages of high school graduates. This finding indicates that the escalation of CEO pay does not simply reflect a more general rise in the returns to education.

CEO Compensation Needs To Be Controlled In The U.S.

These charts show how corporate CEO compensation has gotten out of control in the United States. The top chart shows that CEO's earn a much higher ratio to the average worker in the U.S. than in any other developed nation. The second chart shows the growth of CEO pay to that of the average worker in the corporation -- from 20:1 in 1965 to about 312:1 in 2017. The third chart shows that corporate CEO's receive more than even other members of the top 0.1% of earners -- about 5.45 times as much.

CEO pay (and that of other top corporate officials) has grown enormously, and continues to grow, while worker wages have remained virtually stagnant. In other words, top corporate officials and stockholders are hogging all the the increased productivity, and not allowing workers any of it. This contributes to the already enormous inequality in wealth in income in this country, making it worse.

Dean Baker, Josh Bivens, and Jessica Scheider of the Economic Policy Institute have written an excellent article on this. Here is just a tiny portion of it:

What this report finds: Since the 1970s, rapidly accelerating CEO pay has exacerbated inequality in the United States: High CEO pay generates pay increases for other high-level managers, while pay at the middle and bottom of the wage distribution continues to be depressed. Increasing CEO pay is not actually linked to an increase in the value of CEOs’ work; instead, it is more likely to reflect CEOs’ close ties with the corporate board members who set their pay. While corporate boards technically report to shareholders, shareholders are not particularly well positioned to put pressure on directors to restrain CEO pay.

Why it matters: CEO pay is not just a symbolic issue. High CEO pay spills over into the rest of the economy and helps pull up pay for privileged managers in the corporate and even nonprofit spheres. Because pay for top managers—CEOs and others—is not driven by their contributions to economic growth, this pay can be reduced and others’ incomes boosted if we can figure out a way to restrain CEOs’ market power. Importantly, the most direct damage done by excess CEO pay is to shareholders. Since shareholders are a relatively privileged group themselves (if not as privileged as CEOs), they could potentially wield power in this situation; policymakers should try to figure out how to enlist shareholders in the fight to restrain excess managerial pay.

What can be done about it: Policies should be passed that boost both the incentive for and the ability of shareholders to exercise greater control over excess CEO pay. Tax policy that penalizes corporations for excess CEO-to-worker pay ratios can boost incentives for shareholders to restrain excess pay. To boost the power of shareholders, fundamental changes to corporate governance have to be made. One key example of such a fundamental change would be to provide worker representation on corporate boards. Finally, as a starting point, the Securities and Exchange Commission (SEC) should change the reporting requirements for corporations calculating their CEO-to-worker pay ratios to make them consistent over time and across firms; this will make these ratios far more useful to policymakers and the public.

Key findings of this report

Excessive CEO pay exacerbates inequality. By now the explosive growth of CEO pay in large firms—relative to typical workers’ pay and even the pay of other members of the top 0.1 percent of the wage distribution—has been well documented. This excessive CEO pay matters for inequality, not only because it means a large amount of money is going to a very small group of individuals, but also because it affects pay structures throughout the corporation and the economy as a whole. If a CEO is earning $20 million, then it is likely many other high-level executives are also being paid in the millions.

There are probably even broader spillover effects in labor markets that should not necessarily be all that tightly linked to executive pay, but that are linked through norms and bargaining power that allow privileged actors in other sectors to “benchmark” their salary growth to CEO pay. Many directors of well-funded nonprofit institutions or colleges and universities, for example, once worked in the corporate sector and have seen their pay rise as corporate director pay rises.

Increasing CEO pay is not linked to increasing CEO productivity. The explosion of pay for CEOs of large firms is not strongly associated with evidence that these CEOs have become far more productive in their ability to generate returns to shareholders.

Weak corporate governance is a large part of the problem. Research has demonstrated that CEOs are rewarded for luck and that weak corporate governance—boards of directors more concerned with hanging onto their own positions than with advocating for the best interests of shareholders—fails to restrain CEO pay by subjecting it to serious competition.

Shareholders are not well positioned to hold corporate boards accountable.Reforming corporate governance to empower shareholders to rein in CEO pay will require policy changes that overcome a host of bad incentives and agency problems that currently keep boards of directors from working on behalf of shareholders. Essentially, the market for good corporate governance is plagued by externalities—costs or benefits faced by actors not directly involved in the corporate governance decisions. For example, because a large share of the benefits stemming from activist shareholders spending resources to try to discipline CEO pay will accrue not to the activists, but instead to the lazier group of shareholders who do not spend resources in this effort, the gains from activism are substantially muted. Similarly, the excess pay for CEOs at firms with particularly poor corporate governance puts upward pressure on pay for CEOs at firms whose shareholders do spend resources on good corporate governance, thereby reducing the payoff to these efforts.

Tax penalties or incentives may be helpful in restraining CEO pay, if complemented with corporate governance reforms. A number of proposals for reining in CEO pay through tax penalties or incentives have been introduced in recent years. These proposals have merit, but they would need to be complemented with corporate governance reforms to be effective in restraining CEO pay growth.

• These proposals effectively highlight how broken the market for top corporate managers is. They also highlight that the root of growing American inequality in recent decades is the labor market, with typical workers seeing anemic wage growth while their bosses see much more rapid pay growth.

• Tax penalties may raise revenue, but they’re unlikely to change corporate behavior without corporate governance reforms. In the current corporate governance environment, tax penalties pegged to excessive CEO pay have the potential to raise tax revenue and shine a spotlight on the broken market for CEO pay. But to make firms’ owners (the shareholders) responsive to these incentives—i.e., to get them to actually reduce CEOs’ pay—tax penalties must be paired with complementary efforts to empower these owners through corporate governance reform.

• Shareholders have an incentive to restrain CEO pay, but they are not well positioned to do so. Elevated CEO pay largely comes at the expense of shareholders. This means that these shareholders already have incentive to prevent large increases in CEO pay, yet this pay has risen enormously in recent decades. The key problem is not that shareholders lack incentive to restrain pay, but rather that the current corporate governance structure leaves control largely in the hands of boards of directors who owe their allegiance to CEOs rather than to shareholders.

CEO's Get 312 Times What An Average Worker Is Paid

The chart above, from the Economic Policy Institute, shows the average CEO compensation compared to the average worker's wage. Currently, a CEO makes about 311.7 times what the average worker does. The CEO's were making even more (343.5) before the Bush Recession. But they have recovered from that recession, and their compensation is once again on the rise.

The same cannot be said for workers. While CEO compensation is rising sharply again, worker wages remain flat.

It was not always this way. Back in the 1960's and 1970's, CEO's made only 20 to 30 times what the average worker made. That's because rising productivity was being shared with workers (thanks to strong unions and a fair government economic policy). Things changed when the Republicans seized control of government and instituted their "trickle-down" economic policy (which favored the rich to the detriment of everyone else).

Note how CEO compensation began to rise sharply after the GOP policies went into effect. Thanks to those policies, productivity no longer had to be shared with workers. Instead it was hogged by executives and stockholders, and workers were left out in the cold (and a middle class that is declining).

We must change this. We need an economic policy that is fair to everyone -- not just the rich. But that won't happen until the Republicans are voted out of power. And the sooner that happens, the better. We already have a huge and growing gap between the rich and the rest of Americans. We need to reverse that gap before we become a third world nation (filled only with haves and have-nots).

Should CEO Make More Than 1,000 Times A Worker's Pay ?

(Cartoon image is by Daryl Cagle at cagle.com.)

We know that thanks to the Republican "trickle-down" economic policy (the idea that what's good for the rich is good for everyone) this country is becoming a very unequal place. Since that policy was initiated in the 1980's, the income of the rich has risen dramatically while worker wages have remained stagnant (and even lost ground when inflation is considered). This has created a vast gap between the rich and the rest of America -- a gap as large as it was just prior to the Great Depression, and a gap that continues to grow.

While workers continue to struggle, corporate CEO's are making a killing. We had been estimating that they make hundreds of times more than the average worker in their company. We now learn that was an underestimate. They make over a thousand times more. Consider this from The Guardian:

The CEO of Marathon Petroleum, Gary Heminger, took home an astonishing 935 times more pay than his typical employee in 2017. In other words, one of Marathon’s gas station workers would have to toil more than nine centuries to make as much as Heminger grabbed in just one year.

Employees of at least five other US firms would have to work even longer – more than a millennium – to catch up with their top bosses. These companies include the auto parts maker Aptiv (CEO-worker pay ratio: 2,526 to 1), the temp agency Manpower (2,483 to 1), amusement park owner Six Flags (1,920 to 1), Del Monte Produce (1,465 to 1), and apparel maker VF (1,353 to 1). 

These revelations come thanks to a new federal regulation that requires publicly traded US corporations to disclose, for the first time ever, how much their chief executives are making compared with their median workers. The disclosures are just now starting to flow in. 

 The corporate media ignores the rise of oligarchy. The rest of us shouldn't

Bernie Sanders 

 

Read more

Up until this year, comparisons of CEO and worker pay have had to rely on the average take-homes of US workers overall – not the pay of workers at individual corporations. Those generalized figures helped us track the soaring trajectory of executive compensation at big US corporations, from 30 times average worker pay in the 1960s to over 300 times more recently. 

But headlines around those average figures did next to nothing to slow our CEO pay-hike express. Will the release of the ratios at individual corporations make any more of a difference?

Corporate America must surely think so. Ever since 2010, the year Congress plugged a ratio disclosure mandate into the Dodd-Frank financial reform act, corporate lobbyists have been scheming to delay and repeal that mandate’s implementation. But responsible investors and other activists rallied and kept the mandate in place. 

The new ratios offer a benchmark for corporate greed that exposes exactly which firms are sharing the wealth their employees create and which aren’t, knowledge we can use to impose consequences on the corporations doing the most to make the United States more unequal.

Congress should have acted to fix this. But they did just the opposite. They cut taxes radically for corporations and the rich -- a move that will increase CEO and management salaries while doing little to nothing for workers. And while the Republicans are busy giving more to corporations, they refuse to raise the minimum wage (which remains far below a livable wage).

Is this the kind of country you want to live in -- a country that gives a few enormous wealth while insuring that workers fall further behind every year? If not, then you need to vote the Republicans out of power this November. They have made it very clear they have no intention of changing their economic policy that favors the rich and punishes everyone else.

Outrageous: Avg. CEO Salaries Vs. Avg. Worker Salaries

The chart above, from the Economic Policy Institute, shows the multiple of corporate CEO salaries over worker salaries. Note that as late as 1978, the average CEO salary was only 30 times as large as the average worker salary in private industry. But as the GOP instituted their "trickle-down" economic policy, the CEO salaries (and those of upper management) have ballooned while the worker salaries have remained virtually stagnant (and when inflation is considered, have actually lost buying power).

Trump wants to double-down on the GOP "trickle-down" policy by cutting taxes for the rich and corporations -- making CEO's and other rich people even richer, while doing nothing for most workers. He says this will boost the economy and create jobs. It won't. The economy would only be boosted when workers make more (especially low-wage workers, who would spend all of their new-found wages).

We must change our economic policy in this country -- to a policy that is fair to everyone (and not just the rich, as GOP policy is). That can only be done by voting the Republicans out of power, since they still cling to their failed "trickle-down" policy.

Lawrence Mishel and Jessica Schieder have written an excellent study of CEO and worker salaries for the Economic Policy Institute. You can go here to read it (and I recommend that).

Robert Reich Blasts The Huge Rise In CEO Pay

Former Labor Secretary Robert Reich (pictured) thinks the rise in CEO pay since the inception of GOP "trickle-down" economics is outrageous (and I agree). Average CEO compensation in the United States is far higher, compared to the average worker compensation, than in any other developed capitalistic country -- and continues to rise, while worker wages remain stagnant.

Here is what Mr. Reich has to say about it on his own blog (posted on August 9th):

The Securities and Exchange Commission approved a rule last week requiring that large publicly held corporations disclose the ratios of the pay of their top CEOs to the pay of their median workers.

About time.

For the last thirty years almost all incentives operating on American corporations have resulted in lower pay for average workers and higher pay for CEOs and other top executives. 

Consider that in 1965, CEOs of America’s largest corporations were paid, on average, 20 times the pay of average workers. 

Now, the ratio is over 300 to 1. 

Not only has CEO pay exploded, so has the pay of top executives just below them. 

The share of corporate income devoted to compensating the five highest-paid executives of large corporations ballooned from an average of 5 percent in 1993 to more than 15 percent by 2005 (the latest data available).

Corporations might otherwise have devoted this sizable sum to research and development, additional jobs, higher wages for average workers, or dividends to shareholders – who, not incidentally, are supposed to be the owners of the firm.

Corporate apologists say CEOs and other top executives are worth these amounts because their corporations have performed so well over the last three decades that CEOs are like star baseball players or movie stars. 

Baloney. Most CEOs haven’t done anything special. The entire stock market surged over this time. 

Even if a company’s CEO simply played online solitaire for thirty years, the company’s stock would have ridden the wave.  

Besides, that stock market surge has had less to do with widespread economic gains than with changes in market rules favoring big companies and major banks over average employees, consumers, and taxpayers.

Consider, for example, the stronger and more extensive intellectual-property rights now enjoyed by major corporations, and the far weaker antitrust enforcement against them. 

Add in the rash of taxpayer-funded bailouts, taxpayer-funded subsidies, and bankruptcies favoring big banks and corporations over employees and small borrowers.

Not to mention trade agreements making it easier to outsource American jobs, and state legislation (cynically termed “right-to-work” laws) dramatically reducing the power of unions to bargain for higher wages. 

The result has been higher stock prices but not higher living standards for most Americans.

Which doesn’t justify sky-high CEO pay unless you think some CEOs deserve it for their political prowess in wangling these legal changes through Congress and state legislatures.

It even turns out the higher the CEO pay, the worse the firm does.

Professors Michael J. Cooper of the University of Utah, Huseyin Gulen of Purdue University, and P. Raghavendra Rau of the University of Cambridge, recently found that companies with the highest-paid CEOs returned about 10 percent less to their shareholders than do their industry peers. 

So why aren’t shareholders hollering about CEO pay? Because corporate law in the United States gives shareholders at most an advisory role.

They can holler all they want, but CEOs don’t have to listen. 

Larry Ellison, the CEO of Oracle, received a pay package in 2013 valued at $78.4 million, a sum so stunning that Oracle shareholders rejected it. That made no difference because Ellison controlled the board. 

In Australia, by contrast, shareholders have the right to force an entire corporate board to stand for re-election if 25 percent or more of a company’s shareholders vote against a CEO pay plan two years in a row.

Which is why Australian CEOs are paid an average of only 70 times the pay of the typical Australian worker.

The new SEC rule requiring disclosure of pay ratios could help strengthen the hand of American shareholders.

The rule might generate other reforms as well – such as pegging corporate tax rates to those ratios. 

Under a bill introduced in the California legislature last year, a company whose CEO earns only 25 times the pay of its typical worker would pay a corporate tax rate of only 7 percent, rather than the 8.8 percent rate now applied to all California firms. 

On the other hand, a company whose CEO earns 200 times the pay of its typical employee, would face a 9.5 percent rate. If the CEO earned 400 times, the rate would be 13 percent. 

The bill hasn’t made it through the legislature because business groups call it a “job killer.” 

The reality is the opposite. CEOs don’t create jobs. Their customers create jobs by buying more of what their companies have to sell.

So pushing companies to put less money into the hands of their CEOs and more into the hands of their average employees will create more jobs. 

The SEC’s disclosure rule isn’t perfect. Some corporations could try to game it by contracting out their low-wage jobs. Some industries pay their typical workers higher wages than other industries. 

But the rule marks an important start.