October 16, 2007
“The wages of American workers have been stagnant, in real terms, for 30 years, in spite of the growth of the economy and terrific gains in worker productivity,” said Lee. “Income inequality is back to pre-depression levels, and it is time to put to bed the idea that if we just take care of the wealthy then the rest of the economy will take care of itself. It’s just not true. It is time to reconnect the economic fortunes of the executive suite with those of the frontline employee, and that is what this bill does.”
Last year, the average CEO made more in one day than the average worker earned over the entire year. According to an AP survey of executive pay, in 2006, CEOs of large U.S. companies made an average of $10.8 million in total compensation. According to the Bureau of Labor Statistics, the average U.S. worker earned $29,544. The ratio of CEO pay to average pay is 364:1 and to minimum wage is 885:1.
Lee’s legislation would limit the amount of executive compensation corporations can deduct as a legitimate business expense to 25 times the pay of a company’s lowest paid worker. If the legislation were in place, companies whose lowest paid employees earned the national average would be able to deduct $738,000 in executive compensation. For companies where the lowest paid employee earns minimum wage, the deductible compensation would be $304,200. Companies that wanted to pay their executives more could still do so by raising the pay of their lowest paid worker, and preserving the tax deduction on executive pay, or by paying taxes on the compensation above 25 times the lowest paid workers wages.
According to the Financial Times, a study released earlier this week by the National Association of Corporate Directors found that executives themselves believe that they are overpaid and blamed the lack of objective measures for evaluating executives’ performance. Almost two thirds of those surveyed said executives are paid too much.
In January, Lee joined with members of the Congressional Black Caucus, Representatives John Conyers (D-MI) and G.K. Butterfield (D-NC), Representative Mike Honda (D-CA) of the Congressional Asian Pacific American Caucus and Representative Joe Baca of the Congressional Hispanic Caucus to form the Congressional Out-of-Poverty Caucus.
Barbara Lee Introduces Bill to Tie CEO Pay to Worker Pay
(Washington, DC) – With the gap between the rich and poor reaching its widest point in 70 years, Congresswoman Barbara Lee (D-Oakland) today introduced legislation designed to close the pay gap between executives and average workers.“The wages of American workers have been stagnant, in real terms, for 30 years, in spite of the growth of the economy and terrific gains in worker productivity,” said Lee. “Income inequality is back to pre-depression levels, and it is time to put to bed the idea that if we just take care of the wealthy then the rest of the economy will take care of itself. It’s just not true. It is time to reconnect the economic fortunes of the executive suite with those of the frontline employee, and that is what this bill does.”
Last year, the average CEO made more in one day than the average worker earned over the entire year. According to an AP survey of executive pay, in 2006, CEOs of large U.S. companies made an average of $10.8 million in total compensation. According to the Bureau of Labor Statistics, the average U.S. worker earned $29,544. The ratio of CEO pay to average pay is 364:1 and to minimum wage is 885:1.
Lee’s legislation would limit the amount of executive compensation corporations can deduct as a legitimate business expense to 25 times the pay of a company’s lowest paid worker. If the legislation were in place, companies whose lowest paid employees earned the national average would be able to deduct $738,000 in executive compensation. For companies where the lowest paid employee earns minimum wage, the deductible compensation would be $304,200. Companies that wanted to pay their executives more could still do so by raising the pay of their lowest paid worker, and preserving the tax deduction on executive pay, or by paying taxes on the compensation above 25 times the lowest paid workers wages.
According to the Financial Times, a study released earlier this week by the National Association of Corporate Directors found that executives themselves believe that they are overpaid and blamed the lack of objective measures for evaluating executives’ performance. Almost two thirds of those surveyed said executives are paid too much.
In January, Lee joined with members of the Congressional Black Caucus, Representatives John Conyers (D-MI) and G.K. Butterfield (D-NC), Representative Mike Honda (D-CA) of the Congressional Asian Pacific American Caucus and Representative Joe Baca of the Congressional Hispanic Caucus to form the Congressional Out-of-Poverty Caucus.
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