A Harsh Reality Of Capitalism: The widening gap between CEO and worker pay
In a society where economic growth is the goal, often CEO pay grows and workers’ wages remain stagnant or decline. This can create a rift between CEO and worker pay, which may lead to resentment among employees. In this article, A Harsh Reality Of Capitalism: The Widening Gap Between CEO And Worker Pay, author John Ball looks at the way capitalism has been structured in recent decades to understand how this gap has been created and what we can do about it.
What is the widening gap?
In recent years, the gap between CEO and worker pay has widened dramatically. In 2016, the top 0.1% of earners took home 20% of all income while the bottom 50% of earners only received 1%. This widening gap has led to widespread protests and calls for reform. What is causing this trend?
One contributing factor is the proliferation of CEO-centric organizations. For example, in the US there are now over 120 million shareholders in Fortune 500 companies, but only around 4,000 directors. This means that boards are more focused on maximizing profits for their shareholders than on ensuring that employees are fairly rewarded. Another reason is that Wall Street has become increasingly lucrative for those with a financial background. Between 1995 and 2017, the average pay for a Wall Street banker increased by 275%. This has led to a situation where CEOs are often better paid than workers in comparable positions, even when their companies are performing poorly.
What can be done to address this issue? There are a number of proposals being made to address the widening gap between CEO and worker pay.
Corporations love economic growth, but not workers’ wages.
America has been a country built on the premise that anyone can achieve anything if they work hard. But this idea is unraveling, as the gap between CEO and worker pay widens. According to a report from the Economic Policy Institute, the average CEO received 288 times more compensation than the average worker in 2017. This is up from just 20 times more in 1980.
The widening gap between CEO and worker pay isn’t just an issue in America. Across developed countries, CEOs earn much more than their workers. In fact, according to a report from Oxfam, the top 1 percent of earners own more wealth than the bottom 90 percent of earners combined. This income inequality is creating a harsh reality for workers: They’re not able to afford basic needs like food and shelter, and they’re not able to save for their future.
There are some steps that companies can take to address the growing wage gap between CEO and worker pay. For example, they can raise wages for low-income workers or offer better benefits like 401(k)s. But ultimately, it’s up to lawmakers to create policies that help reverse the trend of increasing income inequality.
What are the ways to fix this issue?
The widening gap between CEO and worker pay is an issue that has been on the rise for some time now. CEO pay has increased considerably while workers’ wages have not kept up, leading to an overall increase in wealth inequality. There are a number of ways to fix this issue, but it will likely require a collective effort from society as a whole. One potential solution is to create more jobs, which would help to improve worker morale and wages. Additionally, policymakers could look into policies that would make it more expensive for companies to outsource jobs overseas, which would help to combat the trend of large pay disparities between CEOs and workers. Ultimately, fixing the widening wage gap will require a mix of strategies that target both CEOs and workers.
How does this affect you?
As the gap between CEO and worker pay widens, it becomes increasingly difficult for people to live on a single salary. In fact, according to a report from the Economic Policy Institute, in 2017 the median worker earned $37,170, while the median CEO earned $9.3 million. This widening gap has serious consequences for workers and our economy as a whole. Studies have shown that when wages are low, workers are less likely to invest in their skills and grow their careers, which results in lower productivity and slower economic growth. Additionally, when wealth is concentrated in fewer hands, it becomes easier for elites to manipulate government policy in their favor, which can lead to increased inequality and other social ills.
This issue is particularly important at a time when our economy is expanding rapidly but many people are not seeing any real benefits. According to the Economic Policy Institute, since the recession ended in 2009 the top 1 percent of earners have seen their incomes grow by 27 percent while the bottom 90 percent have seen their incomes grow only by 2 percent. This divide is not going to be solved by trickle-down economics; it will only be solved by raising wages for all working Americans.
Conclusion
In recent years, there has been a widening gap between CEO and worker pay. In 2018, the median salary for CEOs was $13.1 million, while the median salary for workers was $27,283. This is a stark contrast from 2007, when the CEO-worker pay gap was only $4.9 million. The reason for this disparity is complex and multi-faceted, but one key factor is that executive compensation has skyrocketed in recent decades.
While we should applaud companies like Amazon for their innovative business models and rising stock prices, it’s important to remember that these gains haven’t trickled down to everyone in the form of higher wages. Many workers are seeing little to no benefits from these increases in company wealth, and this situation needs to change if our economy is going to continue thriving into the future.
