Lowering CEO earnings and increasing worker pay

The widening gap in income inequality has become a growing issue since the turn of the century. One of the main causes that contributes to the disparity is that worker pay has stagnated while chief corporate executives (CEO) incomes have skyrocketed. In the United States, compensation for CEOs soared 937% between 1978 and 2013. Today, a CEO makes 300 times that of the average company worker. CEOs at the top 350 firms earned an average of $15.2 million while the average worker’s earned about $52,000.

The income gap may vary between industries and companies. The average CEO compensation at Starbucks, McDonald’s and other major fast-food companies was $23.8 million in 2013, more than 1,000 times what the average worker made, according to Demos, a New York public policy group and according a study by the University of California and the University of Illinois, more than half of fast-food workers’ families nationwide rely on public assistance.

In 2012, Monsanto was sued by migrant workers over wages under minimum wage. A Monsanto recruiter promised them a wage of $80 per acre, but the actual pay turned out to be below the federal minimum wage of $7.25 per hour. Although Monsanto provided free motel housing when the workers arrived, the workers ended up in a former nursing home, many of whom were required pay $300 rent monthly and were not provided enough beds for their children. Monsanto’s net sales totaled $15.9 billion last year and CEO Hugh Grant raked in $10.8 million in compensation.

One of the companies that has been highly criticized for their low employee pay and benefits is Walmart. In 2014, Walmart CEO Doug McMillion received $25.6 million in compensation. In an article by Fortune, a Walmart worker making the minimum wage of $9 an hour would have to work 2.8 million hours to equal McMillion’s earnings. A big concern is that companies keep wages low so they can minimize employee benefits and the workers in turn depend on government assistance. In 2013, 7000 Walmart employees received food stamps. This article titled Americans are spending $153 billion a year to subsidize McDonald’s and Wal-Mart’s low wage workers, written by Ken Jacobs of the Washington Post garnered national attention. Although the $9 minimum wage is $1.75 higher than the federally mandated minimum wage, it is not enough. Walmart plans to increase the minimum wage again to $10 next year. Reports stated the raise will cost the company $1 billion. But for a company with $485 billion in revenue and profits of around $15.5 billion, should they be doing more to ensure their workers are earning a livable wage? Do you believe companies have the responsibility to pay their employees living wages and provide them adequate health benefits?

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4 thoughts on “Lowering CEO earnings and increasing worker pay

  1. I really like your post and ideas. In a capitalist society, the wage gap between the wealthy and poor is inevitable. However, it is true that the CEO wage is too much higher than the average workers and there should be a reform to increase the minimum wage for all states. I do believe that CEO and the administrations should be able to earn a lot more money than the workers because our modern values support this idea. But the rising cost of living as we all have higher living standards than before, we need reform that could support the workers to gain more money per hour make our job environment more lively. I really think you did a great job in your argument.
    keep it going!

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  2. Thanks for the comment! I agree that there definitely should be a hierarchy of employee income and that wages today aren’t enough to support our cost of living. I didn’t expand as much I wanted but I think low wages, combined with the rich receiving tax benefits, had a lot to do with the unequal wealth distribution and diminishing middle class. And this has had a negative effect on our economy. I also wanted to bring up that the years prior to the Great Depression and 2008 economic crisis had the widest ceo-worker income gap and that in the years after WWII when the rich were being taxed 70-90%, the economy boomed. Today, although the middle class is slowly growing, the 1% still own 46% of the worlds wealth. Increasing worker pay isn’t just good for the workers and business but will circulate money flow in the economy and benefit our standard of living as a whole.

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  3. The worker and CEO pay issue is huge! I really don’t like how McDonalds and other companies pay workers so little. I hate seeing people that are no longer in school working their tail off day in and day out to only be getting less than $10 a hour. People like those deserve to be rewarded. Many arguments exist here. Such as, those jobs are meant for college kids or people still in school. I understand where they are coming from, because people in school do not need to be earning $15 an hour like some people are suggesting. My concern has to deal with the people who are in the middle of looking for a job and are there just part time. In the mean time, they are collecting government assistance and might just be working there until they are able to get a better job. More things should be considered, and people should have more respect towards these workers. They are humans and everyone has a different story or situation going on in their life. CEOs do not deserve the insane amount of money they earn. Especially since most of these companies were not even founded by their current CEO. Another thing that angers me is the “golden parachute” some CEOs receive. When companies merge or when companies fire CEOs, sometimes they get these huge compensation bonuses for being let go. I don’t know why things like that exist, especially the amount of money some of these people earn while being employed. I don’t think a fired CEO deserves a seven figure check for being a bad CEO. These people have enough experience and knowledge to get another job. Wynn Resorts CEO and founder, Steve Wynn has, a huge payout for if he dies while employed. His wife is set to gain eight figures once he dies to maintain the lifestyle she currently maintains. That money would come out of shareholders pockets, all while the lower level employees are barely getting by.

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    1. I completely agree. CEO’s already receive large base salaries plus bonuses, stock options, etc. while their workers aren’t even making a living salary and are forced to rely on government assistance. It’s unfortunate that people defend this as “capitalism”. Meanwhile, it has a huge effect on our economy and standard of living and contributes to class division. At the same time, I’m not sure if increasing federal minimum wage would fix anything because employers would also find more loopholes. For example, when Obamacare was passed, many employers limited the hours so they didn’t have to provide for their employees and many people were forced to work more jobs to compensate for the loss of hours. Increasing minimum wage would also be difficult because the cost of living depends on the location of workers. On the other hand, I’ve been reading news that many companies are limiting CEO pay or CEO’s lowering their pay in order to raise minimum wages for their employees.

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