$9.54 a Second: Why CEOs Fight on Wages
Surely the businesses that measure their executive pay in dollars per second can afford raises to bring their lowest wage workers above the poverty level.
Imagine being paid $9.54 a second. Sound goofy? Not quite.
Another Disney character, former Chief Executive Officer Michael Eisner, took home $1.4 billion in compensation between 1993 and when he retired from the helm of the entertainment giant. That works out to $9.54 a second.
Today Disney’s leaders are working to block a minimum-wage increase that would require them to pay their low-level employees in an hour what Eisner made in a second.
Disney has a long history of pay largess — for those at the top. Eisner was among the top 25 highest-paid CEOs in six of the last 20 years, according to a new report by the Institute for Policy Studies, which I co-authored. Eisner's successor, Robert Iger, has made the pay-leaders list seven times. The only other company with 13 appearances on the top 25 highest-paid CEO lists over the last two decades was Merrill Lynch.
While Disney was indeed the Happiest Place on Earth for someone with Eisner’s level of pay, it's not so cheery for thousands of the company’s theme-park workers in Orlando, Fla., and Anaheim, Calif.
And Disney's leadership wants to keep it that way. The company is on the board of the National Restaurant Association, which is leading the opposition to raising the federal minimum wage to ten bucks an hour. They say their members, which include firms like McDonald’s and The Olive Garden restaurant chains, can’t afford it.
Disney’s low-wage workers are concentrated at its signature theme parks, both of which have state minimum-wage levels that are modestly above the $7.25 an hour federal minimum wage. Even with an $8 minimum wage in California, many low-wage Disneyland workers would gain significant benefits from a hike in the federal minimum wage to $10.10 an hour, which Congress is considering.
The widening pay chasm between the pay of CEOs and their co-workers has big implications for all of us. Taxpayers are currently subsidizing excessive pay at the top levels and insufficient pay at the bottom.
When companies such as Disney richly compensate their executives, they get to deduct all of that pay as a cost of doing business, effectively shifting 35 percent of the cost from shareholders to taxpayers.
And when corporations fight for a minimum wage that is lower than what it actually costs to live a dignified life, it forces taxpayers to pick up the tab for assistance programs to lift those workers above the poverty line. More than six million American workers earn wages so low they qualify for food stamps. Surely prosperous businesses that measure their executive pay in dollars per second can afford raises to bring their lowest wage workers above the poverty level.
New legislation in Congress would close the CEO pay loophole and begin to address taxpayer support for excessive pay. The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act introduced in early August by Senators Jack Reed (D-R.I.) and Richard Blumenthal (D-Conn.) would cap the executive pay deduction at $1 million without exceptions. This would generate $50 billion in additional tax dollars over the next decade, according to Congress’s Joint Committee on Taxation.
Coincidentally, the $5 billion a year provided by closing the CEO pay loophole would be enough to offset the $5 billion in cuts in spending on food stamps slated to begin in November. Food assistance for a family of three is likely to drop by $300 over the next year.
Labor Day is the time we honor the work of all Americans. If we work together, by next Labor Day we can assure that all who work are paid a dignified living wage, and that companies that insist on fueling the growth of inequality in America do so without taxpayer subsidies for their bloated executive compensation. Now that would be something to celebrate.