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WASHINGTON, D.C. (Oct. 5, 2022) — CEO pay, including stock awards and options, is up 11.1% since 2020 and 1,460% since 1978, a new EPI analysis finds. This increase was not matched by increased pay for typical workers: The ratio of CEO-to-typical-worker pay soared to 399-to-1 under EPI’s realized measure of CEO pay, the highest ratio on record, up from 366-to-1 in 2020 and a massive increase from 59-to-1 in 1989.
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The Stand October 7, 2022 -
The teacher shortage problem has been going on for 50 years. Why are so few entering the profession?
Average weekly wages for public schoolteachers have been stagnant for years, according to Economic Policy Institute analysis from this summer.
And it’s only gotten worse. Since the 1990s, what’s called the teacher pay penalty has been on a worsening trajectory, the Economic Policy Institute wrote. The penalty shows how much less teachers earn compared to those with college degrees. If, in comparison, teachers are earning more, it’s called the teacher pay premium.
By 2021, the pay penalty hit historic levels.
Male teachers, though, have always faced a pay penalty compared with their nonteaching counterparts. “The large wage penalty that men face in the teaching profession goes a long way toward explaining why the gender makeup of the profession has not changed much over the past few decades,” the EPI wrote.
Teachers often receive a larger share of their compensation as benefits, compared with other professions. But even when accounting for benefits, teachers still see a 14.2 percent penalty.
Grid News October 7, 2022 -
CEO pay continues to spike, according to a new report from the Economic Policy Institute. In 2021, the average CEO earned $27.8 million.
A report from the Economic Policy Institute (EPI), a left-leaning think tank, found CEO pay was “exorbitant,” continuing a decades-long upward trend that has widened the income gap between the top 1% of the population and the bottom 90%. The authors, who looked at America’s 350 largest publicly owned companies, recommend policies that could discourage CEOs from seeking excessive pay, helping to redistribute wealth back to average employees.
In 2021, the average CEO earned $27.8 million, a figure that has increased 1,460% since 1978. (The EPI’s measurements are based on salary, bonuses, and stock benefits—importantly, the value of those stocks when cashed in, not when they were first granted.) But workers’ earnings did not trend similarly: CEOs made 399 times more than an average worker, up from 366 times in 2020 and 30 times in 1978.
The most glaring example of how stock rewards result in inordinate pay is Elon Musk, the richest CEO in the U.S., who exercised $23.5 billion of stock options in 2021. Because this represented an incomparable “extreme outlier,” the EPI chose to exclude Musk from the report (as it did with Mark Zuckerberg in 2013, after Facebook’s IPO). The authors admit that some stock options can make sense because they incentivize CEOs to make business decisions that generate shareholder returns. “But,” they wrote, “is it really necessary to give a CEO options on 16 million shares of stock to achieve this goal?”
Fast Company October 7, 2022 -
The most glaring example of how stock rewards result in inordinate pay is Elon Musk, the richest CEO in the U.S., who exercised $23.5 billion of stock options in 2021. Because this represented an incomparable “extreme outlier,” the EPI chose to exclude Musk from the report (as it did with Mark Zuckerberg in 2013, after Facebook’s IPO). The authors admit that some stock options can make sense because they incentivize CEOs to make business decisions that generate shareholder returns. “But,” they wrote, “is it really necessary to give a CEO options on 16 million shares of stock to achieve this goal?”
The Street October 7, 2022 -
While workers’ wages have stagnated in comparison to productivity over the past four decades, CEO pay in the U.S. has skyrocketed at a rate far outpacing the growth of the economy and productivity, a new report by the Economic Policy Institute (EPI) finds.
According to research released by EPI on Tuesday, CEO pay has skyrocketed by a staggering 1,460 percent since 1978. This has far outpaced the growth of the economy and even the pay of the top 0.1 percent, EPI finds, with the S&P stock market growing by 1,063 percent in the same time and the earnings of the top 0.1 percent growing 385 percent between 1978 and 2020.
By contrast, worker pay has remained relatively unchanged since 1978, rising by a mere 18.1 percent over the past 43 years, EPI finds. As a result, the gap between CEO pay and typical worker pay has grown significantly. While CEOs at the top 350 U.S. firms had an estimated average pay of $27.8 million in 2021, the average worker at the same firms made $70,400, the report shows. This is a ratio of about 400 to 1 in 2021 — itself a major multiplication of 1965’s ratio of 20 to 1 and 1978’s ratio of about 30 to 1.
EPI’s data doesn’t even include the pay of CEO Elon Musk, who has been one of the pandemic’s biggest winners. Researchers specifically chose to exclude Musk and Tesla from their analysis because, if his realized salary, including stock sales, had been included, his pay would have been almost 1,000 times that of the average CEO of a large company. This would have boosted the average CEO pay increase between 2020 and 2021 by over 300 percent.
As EPI notes, it doesn’t have to be this way. “Exorbitant CEO pay is a contributor to rising inequality that we could restrain without doing any damage to the wider economy,” EPI economists Josh Bivens and Jori Kandra write. “CEOs are getting ever-higher pay over time because of their power to set pay and because so much of their pay (more than 80 percent) is stock-related. They are not getting higher pay because they are becoming more productive or more skilled than other workers, or because of a shortage of excellent CEO candidates.”
EPI recommends that Congress implement policies to reign in CEO wealth, like setting a higher corporate tax rate for corporations with large CEO pay ratios and setting higher marginal tax rates for the richest Americans.
Truthout October 7, 2022 -
According to the Economic Policy Institute, the federal minimum wage in 2021 was worth 34% less than in 1968, when its purchasing power peaked.
Associated Press October 7, 2022 -
Heidi Shierholz: Raise the minimum wage
Some economists are claiming that in order to curb inflation, the Federal Reserve must engineer an extended period of elevated unemployment — throwing millions out of work so that consumption drops and wage growth slows.
The impact of that would be terrible. High inflation is causing great hardship, but a recession would be far worse. Elevated unemployment churns out misery, lost opportunities and inequality. In light of these consequences, it would seem absurd to call for an extended period of elevated unemployment in the name of curbing inflation if it is likely to come down on its own. But that is exactly what is happening.
Growth in the price of food is slowing, and the price of energy has recently been dropping. Wages grew 4.8% at an annualized rate over the last three months, down from 6.1% at the end of 2021. Supply chain pressures — which have been a key driver of inflation — are easing. And consumer spending patterns are now normalizing — which is important because pandemic spending patterns had been a key driver of inflation as consumers shifted their spending from services to goods.
To help people hardest hit by today’s high inflation, the government should raise the minimum wage. In the last two years alone, the federal minimum wage’s purchasing power has dropped 12.2% — a massive hit to the living standards of working people. Raising the federal minimum wage to $15 over the next few years would be an important step toward a more equitable recovery, and it would contribute virtually nothing to inflation.
Thankfully, a return to more normal inflation appears likely to happen on its own. The costs of a Fed-engineered period of elevated unemployment would be far greater than any benefit that would come from reducing inflation somewhat faster than what is already occurring.
Heidi Shierholz is the president of the Economic Policy Institute and the former chief economist at the US Department of Labor during the Obama administration.
CNN October 7, 2022 -
There are fewer job openings in the U.S. That could be a sign that the Fed’s rate hikes are working.
The job openings part of the report was pretty significant, according to Elise Gould, with the Economic Policy Institute.
“It dropped from about 11.2 million to 10.1 million,” Gould said. “That kind of 10% drop, it’s very large in historical perspective.”
Marketplace October 7, 2022 -
These moves have increased the likelihood of a recession if we are not already in one, says the Economic Policy Institute. They tell us that a “common argument runs that inflation harms everybody in the economy, but only those who lose their job are harmed by recession. This is the opposite of truth. A recession directly reduces economy-wide incomes while inflation does not.”
Association of Mature American Citizens October 7, 2022 -
But it turns out those critics weren’t being critical enough. Now it’s time to revise their analysis. CEO pay no longer rises with the stock market; it rises well in excess of the stock market—more than one-third faster, according to a new report by Economic Policy Institute (EPI) research director Josh Bivens and research assistant Jori Kandra. It’s still true that a typical pay package for the CEO of a major corporation outperforms whatever company the CEO happens to run. But in addition to that, it outperforms the entire frigging stock market. You want to keep your retirement money safe? Sure, an index fund is a fine investment for now. But once we figure out how to corral America’s top CEOs into an initial public offering (IPO) and convert their collective persons into stock, pull your money out of that index fund and put it into CEOs, Inc. You won’t be sorry.
That isn’t the first time EPI has reported that capitalists out-earn capital. It’s found CEO pay exceeding stock market growth for several years now. But we’ve all become so inured to outrageous stories about CEO pay that this finding didn’t attract much attention. I didn’t notice it until this past week. The concept so astonished me that I checked EPI’s math. From 1978 to 2021 realized CEO compensation increased, EPI says, by 1,460.2 percent, adjusted for inflation. How does that compare to stock market performance? Well, from January 1978 to January 2021 the Dow Jones Industrial Average rose, adjusted for inflation (and assuming no dividend reinvestment) by 842.814 percent. The S&P 500 rose 904.378 percent. These rates of growth are impressive, but they are much slower than 1,460 percent.
Thomas Piketty shocked the world by suggesting that r > g, where r is capital accumulation and g is economic growth. EPI’s contribution is that c > r, where c is CEO compensation and r is capital accumulation. Capital good; capitalist better.
But EPI’s latest report demonstrates that CEOs make even this plutocratic 0.1 percent look like poseurs. As a group, CEOs get paid nearly seven times as much as the 0.1 percent, and their pay is rising at a rate that’s nearly four times as fast. As Bivens and Kandra point out, it’s a serious insult to the 0.1 percent to suggest that higher and faster-growing pay for CEOs is even vaguely meritocratic. You want to tell a guy earning $3 million bucks a year that he is mediocre compared to a CEO, be my guest.
“The growing pay differential between CEOs and top 0.1 percent earners,” Bivens and Kandra write,
does not reflect the greater productivity of executives but the specific power of CEOs to extract concessions—a power that stems from dysfunctional systems of corporate governance in the United States. Because so much of CEOs’ income constitutes economic rent, there would be no adverse impact on the economy’s output or on employment if CEOs earned less or were taxed more.”
New Republic October 7, 2022