The Wonk Room

How American Workers Subsidize Excessive CEO Compensation»

Two weeks after the Government Accountability Office reported that “two-thirds of corporations operating in the United States did not pay taxes” between 1998 and 2008, The Institute for Policy Studies (IPS) released a new study revealing that the American tax payer is subsidizing “executive pay excess” to the tune of $20 billion a year.

In fact, “the more that corporations shell out for executive pay, the more they pocket in profit at the expense of average taxpayers.” Through a series of bureaucratic rules and loopholes, the federal government is transferring billions of dollars to the most privileged Americans:

Large increases in executive pay have had an inverse relationship to falling unionization rates — during the 1980s, as workers began losing their ability to check executive compensation by bargaining with employers for fair wages and benefits, CEO compensation steadily increased.

“Thirty years ago, chief executives averaged only 30 to 40 times the average American worker paycheck.” In 2007, top executives faced almost “no institutional challenge from their workers,” and earned “344 times the salary of the average American worker”:

As the report notes, to restore the balance of power in the workplace, lawmakers should pass the Employee Free Choice Act, “legislation that would help workers
realize their right to organize into unions and bargain collectively with their employers.”

Full disclosure: American Rights At Work is currently advertising for the Employee Free Choice Act on this site, though they had no role in any part of this post.