In the United States, CEOS of major companies make, on average, 300 times what their workers
earn.
While the average worker salary is about $50,000 dollars, many CEOs make tens of millions of
dollars.
According to researchers, in 1970, this pay ratio of CEOs to average workers was only
about 20 to 1.
So what happened?
Why are CEOs paid so much more?
Well, first of all, America hosts some of the largest corporations in the world.
Wal-Mart, along with 16 other successful businesses are among the 50 highest grossing companies
in the world.
In the US, a large portion of a CEO’s salary comes in the form of company stock.
CEOs of successful companies can see their worth increase dramatically alongside the
stock market, unlike most workers.
Then, CEO salary options are often dictated by company board directors, who the CEOs appoint
themselves.
Such close relationships leave little room for pay cuts.
Even if company performance drops, CEOs may still get a raise to inspire investor confidence.
But the drastic gap between worker and CEO wages is a relatively new phenomenon.
The next highest gap is in Switzerland, where the disparity is about 1-to-150.
This income inequality took the national spotlight after the 2008 recession, but it started back
in the late 1970s and early 80s.
As the globalization of the workforce became increasingly common and outsourcing allowed
companies to prosper, worker productivity steadily rose.
Over the last 40 years productivity nearly doubled.
Yet, due to weak US labor laws and overseas competition, wages for the middle and lower
class have barely even kept up with inflation.
Meanwhile, company profits have exploded, with nearly all those profits diverted upwards.
America is woefully behind in labor rights, compared to many other developed countries
like Germany and Sweden.
A pattern of undercutting workers’ interests puts America on par with Iraq and Yemen in
labor rights.
In August 2015, the US Securities and Exchange Commission implemented a new rule that requires
companies to disclose the wage gap between CEOs and the average workers.
Experts agree that this could show shareholders which companies prioritize their employees’
success.
Although CEO wages and profits help America stay competitive on a global scale, it is
America’s workforce that is paying the price.
Besides making way more than their low-level employees, many American CEOs have cleverly
learned to avoid paying BILLIONS in taxes.
To find out how they do it, check out this video.
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