Executive Pay watch emphasises US pay gap between CEOs and other employees

22 May 2016

Editor

EU regulation

The US federation of trade unions, the AFL-CIO, has released its latest Executive Paywatch data which it says shows the average CEO of an S&P 500 company received an annual income of $12.4 million in 2015—335 times more money than the average rank-and-file worker. The AFL-CIO said its figures showed that in 2015 the average production and non-supervisory worker earned about $36,900 per year, a wage that when adjusted for inflation, has remained stagnant for 50 years.

The AFL-CIO claims that CEOs are boosting company profits - and therefore increasing their own pay - by avoiding paying corporate income taxes. "This corporate tax avoidance reduces the amount of money that is available for public goods like roads and schools. As a result, our economy increasingly has become out of balance." US corporations do not pay taxes on their offshore profits and the AFL-CIO suggests that companies are  “permanently reinvesting” these profits overseas to avoid paying taxes within the US. Apple, Pfizer and Microsoft are the top three companies in terms of the level of profits kept overseas untaxed.

The Paywatch report stated that the CEOs at the 25 Fortune 500 companies with the most unpatriated profits are paid 79% more than other CEOs in the Fortune 500.

At the same time US companies are continuing to outsource work overseas to reduce their wage bills. The AFL-CIO refers to the actions of Mondelez International - the owner of the Cadbury chocolate brand in the UK - and Nabisco’s parent company, which decided to move its cookie and cracker production lines from Chicago to Mexico - with the loss of 600 American jobs. This was after asking the American employees to take a 60% pay cut in order to avoid this move. Meanwhile the the Mondelēz CEO, Irene Rosenfeld's total pay in 2015 reached 19,674,812 - 534 times the average worker's.

"The income inequality that exists in this country is a disgrace. We must stop Wall Street CEOs from continuing to profit on the backs of working people," said AFL-CIO President Richard Trumka.

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