Charter Communications CEO Thomas Rutledge is interviewed on the floor of the New York Stock Exchange, Tuesday, Jan. 14, 2014.
Trickle-down capitalism has determined that the average American CEO is 347 times more valuable than the average worker.
That’s the main takeaway from the new Executive Paywatch analysis by the AFL-CIO. The labor union federation dug into the compensation levels of CEOs of companies on the Standard & Poor’s 500 Index.
The average S&P 500 CEO pulled in $13.1 million last year, a 5.6 percent increase from 2015. Meanwhile, the average employee only made $37,362. Think about that: Your typical head honcho makes nearly as much in one day as his typical employee makes in a year.
The compensation winners were the heads of corporate behemoths like Google, Charter Communications, Expedia, CBS, Nike, and Walt Disney. According to most recent data obtained by the AFL-CIO, Sundar Pichai, the CEO of Alphabet, Google’s parent company, is the country’s highest paid executive: He commanded more than $100 million in 2015. Next up was Charter Communications CEO Thomas M. Rutledge who raked in more than $98 million last year.
In a stunning display of just how much investors despise labor cost increases, American Airlines ignited a firestorm on Wall Street late last month when it approved an 8 percent salary raise for its pilots and 5 percent raise for its flight attendants—an almost unheard development in recent years. One analyst complained in a letter to clients: “This is frustrating. Labor is being paid first again. Shareholders get leftovers.” Yet in 2015, American Airlines CEO Doug Parker made more than $11 million.
The yawning pay gap between CEOs and workers has widened since the 1970s as the shareholder capitalism that rewards executives with huge raises, performance bonuses, and stock options and slashes employees’ salaries and benefits has become more entrenched.
Productivity rates have increased right along with corporate profit margins, but the median income for American workers has stagnated while their bosses continue to systematically hollow out their health care and retirement benefits. All the while, CEOs aggressively push back on calls to bump up worker pay with fear mongering about widespread job losses and a new economic apocalypse if they were to sanction wage and salary hikes.
Meanwhile, the Trump administration works tirelessly to ease tax rates for millionaires, billionaires, and corporations while ripping away affordable health care for everyone else. The president wants to dramatically reduce the 35 percent corporate tax rate under the guise of spurring economic growth. Yet research has shown that many companies pay nowhere near the top marginal rate, thanks to umpteen lucrative tax loopholes. Between 2008 and 2015, 18 Fortune 500 companies paid no federal taxes at all, according to a study by the Institute on Taxation and Economic Policy.
Moreover, corporations like Apple, Pfizer, and Microsoft continue to stash tens of billions in profits abroad, avoiding an estimated $767 billion in taxation stateside. Trump wants to give those companies a generous tax holiday on their offshore profits as a way to entice investment in the United States.
Previous corporate tax-cut proposals have never produced much economic growth. Companies typically don’t direct tax savings into research and development, capital improvements, or—you guessed it—higher pay for workers. Instead, lucrative bonuses incentivize CEOs to funnel those savings into stock buybacks that further enrich shareholders, creating an insular feedback loop that is one of the core driving forces in this ever-increasing CEO-worker pay gap.
Bottom line? CEOs continue to get paid more and more by pushing workers’ wages lower and lower while their own salaries and perks increase year after year. For their unrivaled skill in exacerbating income inequality, the American CEO is our Trickle Downer of the Week.
Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.