Daily Management Review

U.S. Union Report Says U.S. Workers Dwarfed By CEO Pay


05/10/2017




U.S. Union Report Says U.S. Workers Dwarfed By CEO Pay
There are no signs of narrowing down of the earnings of U.S. CEOs and workers, and a labor group analysis that was released recently described this as a wide and longstanding gap.
 
According to the AFL-CIO, the largest federation of U.S. labor unions, noting an average paycheck of 347 times the pay of the average U.S. worker, Chief executives of S&P 500 companies surveyed were paid on average $13.1 million last year.
 
The labor group, which posted the latest figure on its website, said that a widening income inequality was reflected by that gap which was up from 335 times worker pay in 2015.
 
The outsourcing of jobs to countries with lower wages and slow U.S. wage growth were highlighted using the survey release by the AFL-CIO. AFL-CIO President Richard Trumka said that even when investor returns lag, corporate directors were at fault for enabling top executives' pay.
 
"The system is rigged," he said in an interview with CNBC. "We think shareholders ought to become more active and lower those (executive pay raises), and that workers ought to get a bigger share of the wealth they produce."
 
Even as official unemployment remains low, the manner in which U.S. workers are largely not sharing the economic gains of those at the top of the income scale, is often measured by the labor group's annual study.
 
One reason many backed Donald Trump in last year's U.S. presidential election was dissatisfaction among those workers.
 
However, the current CEO pay levels are generally supported by U.S. investors. According to consulting firm Semler Brossy, average support of 91 percent was received in the advisory votes that S&P 500 companies held for their shareholders on executive pay last year. Less than 50 percent support in the advisory votes was received by only six companies.
 
Available filings from 419 companies in the S&P 500 index was analyzed for its study by the AFL-CIO. It noted a 6 percent increase over the prior year in the average pay of CEOs which was roughly $13.1 million in 2016.
 
Citing figures from the Bureau of Labor Statistics, a Department of Labor agency, the labor group said that in contrast, the study found a 2 percent increase in the average annual pay of production and non-supervisory workers in the United States which was $37,632.
 
U.S. worker's wages have been stagnant for 50 years when adjusted for inflation, the AFL-CIO said. For instance, in 1967, production and non-supervisory workers averaged $41,473 a year when adjusted for inflation.
 
AFL-CIO officials said in a conference call with reporters that because of the widespread practice of using "peer group" averages to set pay, U.S. CEO pay is often higher than in other countries. They said that making shareholder votes on pay binding, as they are for British companies, could be one improvement.
 
Since it does not compare executives directly with their own employees, the AFL-CIO's measure of pay differences is imperfect. Most publicly listed U.S. companies would be required to disclose the ratio of their CEO pay to that of the median pay of their workforce under a rule dating from the administration of Democratic former President Barack Obama that is slated to go into effect next year.
 
(Source:www.reuters.com)  






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