One Issue That Unites a Divided America—Curbing Excessive CEO Pay | Opinion

At a time of intense political divisions, Americans across the political spectrum share enormous common ground on at least one problem—the extreme divide between CEO and worker pay.

A recent Bentley University-Gallup survey of likely voters found that 96 percent of Democrats, 83 percent of independents, and 67 percent of Republicans agreed that businesses should narrow their CEO-worker pay gaps.

That tracks with what I’ve been hearing. Over the past two years, I’ve traveled to small towns in three swing states for a series of nonpartisan dialogues about the economy. My role was to lead discussions with residents on CEO pay, an issue I’ve been analyzing for 30 years.

On my first trip to Whiteville, N.C., in a county where Donald Trump won 64 percent of the vote in 2020, I came prepared to rebut the most common arguments in defense of sky-high CEO pay. Over the years, I’ve heard them all.

“If these companies don’t fork over 10-figure paychecks, they won’t be able to retain top talent.”

“As long as shareholders are happy, CEOs are worth every penny.”

“Most CEO pay is tied to performance metrics, so they only get huge paychecks if they’re doing good work.”

In Whiteville—and in subsequent dialogues in other mostly red small towns in North Carolina, Wisconsin, and Pennsylvania—I heard none of that.

“What do you think would be the ideal gap between CEO and worker pay?” I asked about 50 folks at the local seafood joint in Whiteville. “Five to one,” said one military veteran. As I looked around the mostly Republican crowd, I saw nearly every head nodding.

Last year’s average CEO-worker pay ratio at S&P 500 firms was 268 to 1.

In my conversations, I’ve found that people get most incensed when CEOs pocket massive paychecks while their employees are struggling to get by.

A report I recently published with the Institute for Policy Studies focused on the 100 S&P 500 corporations with the lowest median wages, a group we’ve dubbed the “Low-Wage 100.” Last year these firms paid their CEOs an average of 538 times what they paid their most typical workers.

Ross Stores had both the lowest median worker wage and the widest pay gap in the group. In 2023, Ross CEO Barbara Rentler hauled in $18.1 million—2,100 times more than the $8,618 that went to her firm’s median employee, a part-time store associate.

It’s not as though the discount retailer has been scrimping to stay afloat. Over the past five years, Ross has blown $4.2 billion on stock buybacks, a financial maneuver that artificially inflates a company’s share price, and in turn, the value of CEO stock-based pay.

In a discussion I led in Richland Center, Wis., a worker for a big box home improvement chain shared his frustrations with understaffing and low pay.

Both Lowe’s and Home Depot are extreme examples of companies that enrich CEOs and shareholders while shortchanging workers. With the $42.6 billion Lowe’s alone spent on buybacks between 2019 and 2023, the company could’ve instead given all of its employees a $30,000 annual bonus for five years.

As a whole, the Low-Wage 100 spent $522 billion on stock buybacks between 2019 and 2023. That’s over a half a trillion dollars when many of their workers were struggling to put food on the table.

Buybacks not only siphon resources from worker wages. They also sap long-term productive investments, such as upgrading technologies, equipment, and properties—the capital expenditures widely known as CapEx.

At 47 Low-Wage 100 companies, outlays for stock buybacks actually exceeded total capital expenditures over the past five years. I was surprised to see several tech companies near the top of this list.

Johnson Controls, a major federal contractor and producer of “smart building” technologies, spent $8.8 billion more on stock buybacks than on CapEx over the past five years. Share repurchases exceeded CapEx by $6.2 billion at Analog Devices, a semiconductor manufacturer. Half of employees at both firms make under $50,000.

Can Americans move past our differences and come together to tackle these obscene pay divides? Among ordinary people, no problem.

A May 2024 survey found widespread support for a tax hike on corporations with CEO-worker pay gaps of more than 50 to 1. Some 89 percent of Democrats, 77 percent of independents, and 71 percent of Republicans gave the proposal a thumbs up. San Francisco and Portland have already passed similar taxes at the local level.

In Washington, it’s another story. Hyper-partisanship and CEO political power have blocked numerous bills to use tax policy, federal contracting dollars, and other tools as leverage for reining in excessive executive pay.

Perhaps this will change as political candidates spend more time with constituents on the campaign trail. In between the state fair corn dogs and the baby kissing, I’m guessing they’ll hear more than a few choice words about overpaid CEOs.

Sarah Anderson directs the Global Economy Project and co-edits Inequality.org at the Institute for Policy Studies. She’s the author of the IPS Executive Excess report series, which studies CEO pay, and has testified before the Senate Budget Committee on the issue.

The views expressed in this article are the writer’s own.