median worker pay

Raising Taxes on Corporations that Pay Their CEOs Royally and Treat Their Workers Like Serfs

Until the 1980s, corporate CEOs were paid, on average, 30 times what their typical worker was paid. Since then, CEO pay has skyrocketed to 280 times the pay of a typical worker; in big companies, to 354 times.

Meanwhile, over the same thirty-year time span the median American worker has seen no pay increase at all, adjusted for inflation. Even though the pay of male workers continues to outpace that of females, the typical male worker between the ages of 25 and 44 peaked in 1973 and has been dropping ever since. Since 2000, wages of the median male worker across all age brackets has dropped 10 percent, after inflation.

This growing divergence between CEO pay and that of the typical American worker isn’t just wildly unfair. It’s also bad for the economy. It means most workers these days lack the purchasing power to buy what the economy is capable of producing – contributing to the slowest recovery on record. Meanwhile, CEOs and other top executives use their fortunes to fuel speculative booms followed by busts.

Anyone who believes CEOs deserve this astronomical pay hasn’t been paying attention. The entire stock market has risen to record highs. Most CEOs have done little more than ride the wave.

There’s no easy answer for reversing this trend, but this week I’ll be testifying in favor of a bill introduced in the California legislature that at least creates the right incentives. Other states would do well to take a close look.

The proposed legislation, SB 1372, sets corporate taxes according to the ratio of CEO pay to the pay of the company’s typical worker. Corporations with low pay ratios get a tax break.Those with high ratios get a tax increase.

For example, if the CEO makes 100 times the median worker in the company, the company’s tax rate drops from the current 8.8 percent down to 8 percent. If the CEO makes 25 times the pay of the typical worker, the tax rate goes down to 7 percent.

On the other hand, corporations with big disparities face higher taxes. If the CEO makes 200 times the typical employee, the tax rate goes to 9.5 percent; 400 times, to 13 percent.

The California Chamber of Commerce has dubbed this bill a “job killer,” but the reality is the opposite. CEOs don’t create jobs.Their customers create jobs by buying more of what their companies have to sell – giving the companies cause to expand and hire.

So pushing companies to put less money into the hands of their CEOs and more into the hands of average employees creates more buying power among people who will buy, and therefore more jobs.

The other argument against the bill is it’s too complicated. Wrong again. The Dodd-Frank Act already requires companies to publish the ratios of CEO pay to the pay of the company’s median worker (the Securities and Exchange Commission is now weighing a proposal to implement this). So the California bill doesn’t require companies to do anything more than they’ll have to do under federal law. And the tax brackets in the bill are wide enough to make the computation easy.

What about CEO’s gaming the system? Can’t they simply eliminate low-paying jobs by subcontracting them to another company – thereby avoiding large pay disparities while keeping their own compensation in the stratosphere?

No. The proposed law controls for that. Corporations that begin subcontracting more of their low-paying jobs will have to pay a higher tax.  

For the last thirty years, almost all the incentives operating on companies have been to lower the pay of their workers while increasing the pay of their CEOs and other top executives. It’s about time some incentives were applied in the other direction.

The law isn’t perfect, but it’s a start. That the largest state in America is seriously considering it tells you something about how top heavy American business has become, and why it’s time to do something serious about it.
These Jobs Make the World a Worse Place (Say the People Who Do Them) -

What did you want to be when you grew up? Chances are, it was along the lines of unicorn wrangler or astronaut/basketball player – just the sort of thing that’s impossible find a major in, never mind a grownup job. That doesn’t mean that all real jobs are boring or unsatisfying; during the compilation of PayScale’s latest report, The Most and Least Meaningful Jobs, workers with titles as diverse as English teacher and chiropractor told us that their jobs made the world a better place. And then were the other folks, the ones whose jobs made them long for the days when “vet who specializes only in kittens” seemed like a reasonable career path.


(Photo Credit: Seattle Municipal Archive/Flickr)

People with these jobs told PayScale that their work makes the world worse:

1. Fast Food Worker

Median Pay: $16,700

Percent who said, “My job makes the world a worse place.”: 25 percent

2. Picker

Median Pay: $24,800

Percent who said, “My job makes the world a worse place.”: 21 percent

3. Table Games Floor Supervisor

Median Pay: $50,900

Percent who said, “My job makes the world a worse place.”: 20 percent

See more jobs that aren’t helping, here.

What do these jobs have in common? Most are low paid – although by no means all. Merchandise Planning Managers pull down a median annual salary of $94,400, and Table Games Floor Supervisors earn a respectable $50,900.

Even the high-paying jobs on the list, however, share a trait with the lower-paying gigs: they either expose the worker to the impact of the worst aspects of humanity (e.g. Valets and Laundry Attendants), or encourage those negative traits (Table Games Floor Supervisors, Search Engine Marketing Specialists). Another issue is that many of the jobs are the hat trick of awful work experiences: boring, tough, and dirty (Fast Food Workers, Warehouse Pickers.

Most importantly, the majority of the jobs on the list don’t provide the features of a good job. In his book Outliers, Malcolm Gladwell says that meaningful work has three qualities: complexity, autonomy, and a clear relationship between effort and reward. Whether you’re toiling in a warehouse, packing boxes, or sitting at a computer, managing paid search ads, the world is full of jobs that requires a lot of work for not much in return. The goal, of course, is to pick the ones that do just the opposite.

Tell Us What You Think

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July 23, 2015 at 04:19PM