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Jun
2013
21

Teamsters Pres: CEOs of JC Penney, Abercrombie “Earn” More Than 1,000 Times Their Avg. Worker’s Pay

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Recent calculations show that the average Chief Executive Officer at a company earns 204 times more than his or her rank-and-file employees. This out-of-control sign of income disparity was touched upon in the Dodd-Frank financial reform law, which recommends that companies should be forced to provide transparency and reveal the difference between worker pay and CEO pay. Yet, this has not been implemented and now House Republicans want to scrap it all together.

Teamsters President James Hoffa recently took to The Huffington Post to ask legislators to reject HR 1135, a bill that strips the wage-gap disclosure requirement from Dodd-Frank. Coming under pressure from business lobbyists, House Republicans are looking to end this attempt at transparency. What is more interesting is that CEO’s are not fighting this to save face, they are fighting this because they believe “it is too hard to do.”

While the average is shocking, it is nothing compared to the income disparity at some companies. According to Hoffa:

McKesson, a leading pharmaceutical company, pays its CEO 313 times more than its average worker. J.C. Penney’s CEO earned a whopping 1,795 times more than the average worker employed by the retailer. Abercrombie and Fitch paid its CEO 1,640 times more than the average worker. At Simon Property Group, it was 1,594 times more.

As for the claim it is too hard. . .

It is simply not credible for companies to say they don’t know how to collect data or that it is too burdensome. The Teamsters know from 100-plus years of collective bargaining that companies quantify a dollar cost for just about every aspect of work possible.

At stake for the Teamsters and other similar organizations is their ability to invest pension funds in the future. For them, transparency is needed to ensure they are not investing in companies where CEO’s will be able to loot the company. Transparency will not correct the problem, but it will help it avoid exacerbation. This point was recently made in a letter sent to lawmakers from Americans for Financial Reform, a coalition of 250 groups that includes the Teamsters.

Disclosure of CEO-to-employee pay ratios will encourage Boards of Directors to limit CEO pay levels. Part of the CEO pay problem is that the existing disclosure rules encourage companies to focus on what other companies pay their CEOs. Because CEOs believe that they should be paid above average, this ‘groupthink’ compensation process leads to ever-spiraling pay increases for CEOs.

Transparency can go a long way in curbing systematic abuses. In this case, out of control CEO pay can lead to negative publicity. If the CEO’s have the guts to demand such ridiculous salaries, they should have the guts to make them public.

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