The coronavirus pandemic hasn’t exited yet. But it’s ebbing. With our greed pandemic, on the other hand, no such luck. Avarice is still spreading at levels seldom ever seen.
This past week, for instance, we learned that small armies of lawyers are routinely charging over $1,000 an hour for handling claims in the ongoing massive Boy Scouts bankruptcy, litigation that involves thousands of child abuse victims and myriad Scouting personages and subdivisions.
“The world of big-ticket bankruptcy court,” the New York Times reports, “has developed into a particularly lucrative practice for top law firms.”
The legal fees so far filed in the Boy Scouts bankruptcy now total over $100 million and will, at the current rate, hit $150 million by August. Those fees have run as high as $1,725 an hour, with one lawyer’s billable hours adding up to $267,435 for a single month’s work.
How does a greed grab this staggeringly immense get going? Where do the grabbers get their nerve? Those grabbers, new research from the Institute for Policy Studies suggests, are getting their inspiration from America’s corporate suites.
Our IPS inequality team has just put a microscope on the 100 lowest-wage corporations in the S&P 500. We found that 51 of these firms, over the course of the 2020 pandemic year, bent their own pay rules to ensure their top execs windfalls at the same time their workers were losing wages and jobs.
These 51 giant firms saw their top executive pay rise 29 percent — to $15.2 million — in 2020. The most typical workers at these same firms watched their average compensation drop by 2 percent.
These days, of course, sky-high corporate executive pay hardly rates as shocking news. CEO pay has been skyrocketing since the 1970s.We’ve gone — over the last half-century — from an economic world where major corporate chief execs took home 20 times what their median workers were making to an economic environment that has top corporate brass averaging well over 300 times what their typical workers earn.
Cheerleaders for our contemporary CEOs have a ready rationale for these enormous executive rewards. CEOs only prosper, the line goes, when they perform. Those execs who meet their performance goals completely deserve the rewards their board of directors have promised them.
The 2020 pandemic year, the new Institute for Policy Studies Pandemic Pay Plunder study details, neatly obliterates that rationale’s basic premise. “Performance” turns out to be completely optional. Over the course of the past year, at one major corporation after another, corporate board decision-makers have either manipulated or simply ignored their CEO performance targets. Their compensation priority: to keep their chief execs flush by any means necessary.
At Hilton, for instance, CEO Christopher Nassetta failed to meet his 2020 performance goals. But the Hilton board ever so thoughtfully modified Nassetta’s stock awards to offset the rewards his poor “performance” cost him. Nassetta ended up with $55.9 million for the year. Over 30,000 Hilton workers, in the meantime, ended up without jobs.
Similar tales of greed grabbing have emerged at companies that range from Tyson Foods and Chipotle Mexican Grill to Dollar Tree and Coca-Cola. At a time of pandemic, all these stories reveal, workers are losing hours, jobs, and even lives. Their top execs are getting pumped-up paychecks.
People notice this sort of pumping up, especially those people who hang out with corporate execs, folks like the attorneys who do corporate legal work and the university presidents who have CEOs populating their boards of trustees. Affluents like these get to see CEOs up close. They come to realize that top corporate execs have no magical talents. Why should these top corporate execs, these affluents start wondering, be taking home more in a month — or even a week — than I can be making in a year?
Why shouldn’t I, lawyers ask themselves, be billing a $1,000 an hour? Why shouldn’t I, university presidents ask, be making at least an annual $1 million? At the point, delusions of grandeur take over. The greed grabs begin. Ugliness flowers.
Higher education makes for a stunning case in point. In academia’s 2018, the most recent year with full data, 12 presidents at private colleges and universities pocketed over $2 million. Another dozen presidents at public universities that year made over $1 million.
These seven-digit paychecks dwarf the compensation that went to top higher ed administrators a generation ago — and do higher education’s core mission no good. At the public universities with the highest executive pay, one study has found, student debt has “increased much faster than the national average.”
Compensation at blue-chip law firms and in the offices of university presidents isn’t increasing because these attorneys and administrators are performing at some exceptionally noble level. This compensation is soaring because Corporate America’s outrageous executive pay packages have emboldened our elites in other spheres of American life and redefined what they feel they deserve.
We need to push back at that redefinition, and the newly released Institute for Policy Studies Pandemic Pay Plunder report spotlights one particularly promising piece of federal legislation, the Tax Excessive Pay Act, that could move us in that direction. This bill, if enacted, would subject corporations to higher tax rates if they pay their top execs over 50 times what their most typical workers are making.
We could adopt that same principle to other institutions with widening pay ratios. One example: Universities that pay their presidents over 25 times what their typical employees are making could be off-limits to federal aid dollars. A half century ago, no university in the United States paid its top execs over 25 times what its most typical employees were making.
Most Americans, polling shows, feel corporate executives are making much too much. Most of us can also readily understand how out-of-whack pay differentials within corporations contribute mightily to making the United States more unequal. But the corporate contribution to America’s income inequality goes far beyond the executive-worker income differentials within individual corporations.
Corporations have, in effect, unleashed a corona greed virus throughout our land. The outrageous rewards corporate boards bestow upon their executive elites have poisoned workplaces and institutions the nation over. Those who sit in positions of professional and administrative power have come to believe they deserve whatever rewards they can grab just as much the CEOs they rub shoulders with.
This greed pandemic must end and can end. We just need to start getting serious about discouraging — about limiting — corporate executive compensation.
Sam Pizzigati co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.