The Dodd-Frank act mandated that publicly listed companies would have to publish an annual figure listing the ratio between their CEO’s pay and their median worker’s pay: now, after nearly a decade of stalling tactics from corporate lobbyists, those figures are emerging, and they’re equipping cities with the tools they need to crack down on the most unequal companies in the world.
It’s started with Portland, OR (of course), where any company whose CEO makes more than 100X median worker pay has to pay a 10% surcharge on gross earnings; if the gap is 250X or more, the surcharge rises to 20%.
Other cities are poised to enact similar rules, including San Francisco; and states also considering state-level action, including Minnesota, Rhode Island, Connecticut, Illinois, and Massachusetts.
The punishments for inequality include surcharges and also exclusion from consideration for government contracts, a major source of revenue for the biggest firms.
The existence of this data also allows the participants in large investment funds — including institutional investors like pension funds — to boycott companies that practice excessive inequality.
There are plenty of big firms that fail this test: Manpower’s ratio is 2,483 to 1; Six Flags’ is 1,920 to 1; and Del Monte’s is 1,465 to 1.
In California, a state senate bill that took the same approach nearly passed. The key sponsor of that measure, Mark DeSaulnier, now sits in Congress, where he’s co-sponsoring a like-minded federal bill.Other lawmakers are advancing proposals to link government procurement to pay ratios. Existing public policies deny government contracts to companies with employment practices that contribute to race and gender inequality. Why should tax dollars be subsidizing firms that increase economic inequality?
In Rhode Island, a pending Senate bill would give preferential treatment in state contracting to corporations that pay their CEOs no more than 25 times their median worker pay. Several congressional offices are now preparing legislation that aims in the same direction.
No CEO should earn 1,000 times more than a regular employee [Sarah Anderson/The Guardian]
(via Naked Capitalism)
(Image: AFL-CIO, CC-BY)