How much people make in the United States has become front-page news. Most recently, Congress considered a special tax on America’s 700 billionaire families. The effort failed, but the tax rate of the richest people in the country most likely will rise as expensive bills move through Congress. Another widely reported story was about Elon Musk’s tax bill. The founder of SpaceX and Tesla is worth $288 billion, which may make him the wealthiest person in history.
This wealth is often put in contrast to the vast poverty problems in America. According to the Census Bureau, 37.2 million people lived in poverty last year.
One of the longest-running battles about pay is what the chief executive officers of America’s large public companies make. Rarely a year goes by when the highest-paid CEO makes less than $100 million. For CEOs who have held their positions at the biggest companies for years, and for many founders, the numbers top $100 million by a big margin.
A Securities and Exchange Commission rule adopted in 2015 “requires a public company to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees.” The debate about the accuracy of these reports falls into two camps. The first is CEOs who claim that much of their pay comes in stock options that cannot be valued because they will be exercised in the future. The other is that workers disagree about whether the employee compensation number is fair if it includes workers outside the United States and does not include so-called emerging companies.
The ““CEO Wage Gap: How Do CEO Salaries Compare to What Their Workers Earn?” study from Lensa agrees that the larger pay gaps can cause employee morale problems. “Having such a disproportionate pay scale between the CEO and average employee can be counterproductive, demotivating workers who might feel disgruntled or not fairly compensated for the work they do.”
The largest gap was at Coca-Cola, where CEO James Quincy made 14,007% more than his employees did last year. Starbucks followed, with CEO Kevin Johnson making 12,671% more than the median pay for employees. Next, Chipotle CEO Brian Niccol made 8,738% more. Notably, Starbucks and Chipotle have large numbers of hourly workers who make very little.