Stop me if you've heard this one before: The rich are getting richer and the rest of us are getting poorer. (Shocking, I know.)
But a new report from the top American union group is shedding light on just how much better off the bosses in the C-Suite are versus their employees.
The upshot:
- S&P 500 CEOs on average got a roughly 18% bump in compensation, averaging $18.3 million in 2021, according to the new AFL-CIO Executive Paywatch Report. That's 324 times the median worker's pay at those companies. (In 2020, that ratio was 299 to 1. And in 2019, it was 264 to 1.)
- It doesn't take a mathematician to figure out that's way more than keeping up with inflation, which clocked in at 7.1% for the year.
- Rank-and-file employees broadly saw wages go up about 4.7% in 2021. That'd be a solid raise in a normal year, but not when prices are climbing at their fastest clip in four decades. When adjusted for inflation, real wages among workers actually fell 2.4%.
The rapid rise in CEO pay is a symptom of what the researchers call "greedflation," which occurs when companies raise prices to boost profits, which in turn juices their stock prices and generates "windfall payouts" for CEOs.
The report specifically called out Amazon for having the highest CEO-to-worker pay ratio in the S&P 500 Index: a staggering 6,474 to 1.
"Instead of investing in their workforces by raising wages and keeping the prices of their goods and services in check, their solution is to reap record profits from rising prices and cause a recession that will put working people out of our jobs," said Fred Redmond, Secretary-Treasurer of the AFL-CIO, in a statement.
Amazon's new CEO Andy Jassy, who took over from Jeff Bezos just over a year ago, received $212.7 million in total compensation, which includes salary, stock options and bonuses. (The median pay among Amazon workers, meanwhile, was just $32,855 in 2021. The company also jacked up the cost of its Prime membership by nearly 17% earlier this year and introduced new fees for Whole Foods deliveries.)
An Amazon spokesperson chalked the extreme pay gap up to financial reporting rules. "We are required to report that grant as total compensation for 2021, when in reality it will vest over the next 10 years," the spokesperson told my colleague Vanessa Yurkevich." What this equates to from an annual compensation perspective is competitive with that of CEOs at other large companies and was approved by the Amazon Board of Directors."
BOTTOM LINE
Many forces contribute to inflation, including supply chain bottlenecks, climate change, federal monetary policies, geopolitical turmoil, and, yes, greedy corporations.
But at the core of the "greedflation" argument is the idea that some big companies are taking advantage of this inflationary moment to jack up prices and/or reduce the amount of stuff you're getting (the latter scourge is called "shrinkflation," which is a cute-sy way of saying you the customer are getting absolutely hosed by mega-corporations and you have no way around it because of a decades of market consolidation reducing competition that would, in a fair system, discourage such practices…but I digress).
Is greed the only culprit behind inflation? Far from it. Is it among the more nefarious/shameful? 100%.
It's not just the optics that are bad. Experts say it's also legitimately bad for business. At a time when companies all over are complaining about staffing shortages and unionization efforts — why not try to stand out as the one that's making peace with workers and narrowing that gap?
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