As ordinary workers across the United States watched inflation eat away at modest wage gains in 2021, many corporations — including firms contracting with the federal government — used record-shattering profits to lavish their CEOs with bigger pay packages and reward shareholders with billions of dollars in stock buybacks.
According to an analysis published Tuesday by the Institute for Policy Studies (IPS), the average gap between CEO and median worker pay at a sample of 300 low-wage U.S. corporations surged in 2021, rising to 670 to 1 — up from 604 to 1 in 2020.
Forty-nine of the publicly traded companies examined in the IPS study, titled “Executive Excess,” had CEO-to-worker-pay ratios above 1,000 to 1 last year.
Amazon paid Andy Jassy CEO a staggering 6,474x more than it paid its median worker for 2021, an year in which Amazon spent $1.6 trillion. $4.3 millionAnti-union consultants
Overall, IPS found that CEO salaries at 300 corporations increased by $2.5million to an average $10.6 million while median worker wages grew by only $3,556, rising up to $23,968 due to inflation.
IPS noted that skyrocketing inflation — which has been fueled by corporate profiteering — resulted in effective pay cuts for median workers at 106 of the companies in its sample.
IPS found that 67% of these firms spent a total $43.7 billion on stock purchasebacks. These buybacks benefit shareholders and increase stock-based compensation. Share buybacks are now a common practice in profitable corporations. largely illegalBefore 1982
“With the $13 billion Lowes alone spent on share repurchases, the company could have given each of its 325,000 employees a $40,000 raise,” the new report states. “Instead, its median pay fell 7.6% to $22,697.”
Sarah Anderson, director of the IPS Global Economy Project and lead author of the new study, said in a statement that “CEOs’ pandemic greed grab has sparked outrage among Americans across the political spectrum,” pointing to an April survey showing that nearly 90% of U.S. adults believe the widening chasm between CEO and worker pay is “a problem in this country today.”
That problem, according to IPS’ findings, is being exacerbated by taxpayer dollars. 40% of the 300 companies that were analyzed received contracts from the federal government between October 1, 2019, and May 1, 2022.
IPS discovered that the federal contracts totaled $37.2 billion. The average CEO-worker pay ratio rose to 571:1 in 2021.
“Amazon has reported $10.3 billion in recent federal contracts, most of it to provide web services for the National Security Agency,” the report notes. “The company reportedly also received a lucrative share of a multibillion-dollar CIA contract for cloud services. The details and exact value of this contract continue to be classified.”
IPS argued among other policy recommendations the President Joe Biden should take unilateral action to ensure that contracts flow towards firms with lower CEO-to worker ratios.
“The president could wield the power of the public purse by introducing new standards making it hard for companies with huge CEO-worker pay gaps to land a lucrative federal contract,” Anderson said.
IPS also identified other possible policy measures to limit excessive CEO pay. significant contributorTo rising inequality
One is the passage of legislation such as Sen. Bernie Sanders’ (I-Vt.) Tax Excessive CEO Pay ActThis would increase taxes on large companies that pay more than 50 times the median worker’s salary.
IPS also recommended imposing taxes and other restrictions on stock buybacks, which the report characterizes as a “legal form of stock manipulation” that “artificially inflates the value of a company’s shares — and the value of executives’ stock-based pay.”
“President Biden supported a buybacks tax as a revenue source for the Build Back Better bill and included such a tax in his latest budget proposal,” IPS noted. “In addition, Biden proposed new rules that would ban top executives from selling their personal stock for a multi-year period after a buyback.”
“Instead of waiting for Congress,” the group argued, “the president could take action by imposing such a ban on federal contractors.”
