# CEO Pay



Now that is a great idea

From Daily Kos user rok for dean:

In 1950, the average pay of an S&P 500 CEO was less than 30 times that of an average U.S. worker; by 1980, prior to the “Reagan Revolution,” the average pay of the S&P 500 CEO was approximately 50 times higher than that of an average U.S worker.  But by 2007, the average pay of an S&P 500 CEO had soared to more than 350 times as much as that of an average U.S. worker.

This is both immoral and unsustainable in a democracy.  By way of comparison, in Europe, an average CEO only makes 22 times as much as an average worker, and in Japan, only 17 times as much.

If America wants to be competitive again, we need to reduce CEO pay to a level comparable to CEO pay in Europe and Japan.  I know exactly how to accomplish this feat.  The [United Auto Workers] should agree to immediately lower U.S. union worker pay to a level equal to the level paid by their non-union, non-American competitors.  In return, auto CEO’s must agree to permanently lower their compensation to only 20 times that of an average union worker.

Sounds fair to me. How many Republicans who’ve been beating the war drums about excessively generous pay to union workers would agree to those terms?

It’s true that union workers get paid more than non-union workers (though strong unions are associated with higher average wages even for non-union workers in the same area). But in a country where two-thirds of our gross domestic product depends on consumer spending, higher wages are not a bad thing.

In any event, unions are not primarily to blame for the auto industry’s current problems. Toyota is about to post its first operating loss in 70 years despite having an entirely non-union workforce. The tough economy has diminished demand for new cars.

American automakers also have to bear the burden of our broken employer-based health insurance system, but that’s a topic for another diary.

The same Republicans who claim they’d never raise taxes on Americans are only too happy to slash the wages of middle-class auto workers. As rok for dean says, let’s call their bluff and see if they would be willing to tie executive pay to a reasonable multiple of the average worker’s salary in the company.

Side note: my dad was a Republican, but it really bothered him when corporate executives would receive exorbitant salaries and bonuses even as they were driving their companies into the ground. Rewarding good performance is one thing, but paying incompetent managers obscenely high salaries is another.  

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