Andrew Strom, a labor lawyer and OnLabor contributor, joined the America's Work Force Union Podcast to discuss the disparity between CEO and average worker pay, the ineffectiveness of disclosure laws and CEO benefits that further expand wage disparity.
Strom began by discussing the “staggering disparity” in CEO pay compared to the average worker’s wages. The CEO to worker pay ratio has skyrocketed from 30 to 1 in 1978 to over 200 to 1 by 2007, with some companies like Starbucks reporting ratios as high as 6,666 to 1. Strom said the dramatic increase underscores the widening gap in income distribution and raises questions about corporate priorities and fairness.
Next, Strom discussed the ineffectiveness of disclosure laws intended to regulate CEO compensation. Despite the Dodd-Frank Act's requirement for companies to disclose pay ratios, these measures have not curbed the rise in executive pay. Instead, Strom said they have inadvertently fueled a competitive environment where boards aim to pay their CEOs above average, further escalating compensation packages for top executives.
Finally, Strom talked about the perks that accompany CEO roles, such as mandatory use of corporate jets for personal travel, financial planning services and relocation expenses. Often justified as security measures or business necessities, these benefits highlight the additional layers of privilege that executives enjoy, contributing to the overall compensation disparity. Strom discussed the impact these additional perks have on the workers' wages and benefits, and why they contribute to the greater disparity in pay between the workers and CEOs.
To hear more from Strom, listen to the show above.