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November 18, 2013 |
THIS WEEK | |
American corporations, the lament goes, aren’t manufacturing much in the way of broad prosperity any more. True enough. They’re too busy manufacturing legions of power-suited millionaires.But Americans are starting to push back against that manufacturing of inequality, on a variety of fronts. Want to help? You can get going by making a few choice clicks to support requiring corporations to annually disclose the gap between what they pay their CEOs and what they pay their most typical workers.The Securities and Exchange Commission is now accepting comment on proposednew federal regulations that would mandate this pay ratio disclosure, and nearly 50,000 Americans have so far chimed in. You can join them, via online campaigns that labor and other public interest groups are now mounting.Need some inspiration to join the fray? Just take a look at the landmark battle for corporate pay equity that young activists are waging in Switzerland. We have that Alpine story — and much more — in this week’s Too Much. | About Too Much, a project of the Institute for Policy Studies Program on Inequality and the Common GoodSubscribe to Too MuchJoin us on Facebook or follow us on Twitter |
GREED AT A GLANCE | |
A year ago, in the 2012 elections, voters in California opted to up tax rates on the state’s highest incomes. The vote left California’s deepest pockets with a 13.3 percent tax rate on income over $1 million, the nation’s highest state tax rate. That new rate, opponents of California’s tax-the-rich initiative had predicted, would force a massive exodus of the well-heeled off the left coast. What actually has happened in the year since last November’s voting? California, says a new report, has experienced the nation’s largest increase in residents worth over $30 million. Either the super rich are crying wolf when they vow to flee higher taxes,quips New York magazine’s Kevin Rose, or they just take a long time to pack . . .![]() |
Quote of the Week“We are living in the world Occupy made. We are the beneficiaries of what they did in terms of making this about inequality, which is from our point of view the core issue of our time.” Dan Cantor, executive director, Working Families Party, The Progressive Electoral Wave of 2013,The Nation, November 13, 2013 |
PETULANT PLUTOCRAT OF THE WEEK | |
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IMAGES OF INEQUALITY | |
Web GemThe World Top Incomes Database/ Hosted by the Paris School of Economics and several other research institutions, this easy-to-use site lets online readers graphically compare and contrast how the rich in different nations have fared over the last century. | |
PROGRESS AND PROMISE | |
California’s ten highest-paid hospital CEOs averaged $2.6 million last year. A bit too much? A union that represents state hospital workers thinks so. United Healthcare Workers West has launched a campaign to place on next November’s ballot an initiative that would cap nonprofit hospital pay at the $400,000, plus $50,000 expenses, that the President of the United States takes home. At the other end of America, the Massachusetts Nurses Association has collected over 200,000 signatures for November 2014 ballot initiatives that would, among other provisions, levy fines against any hospital in the state, profit or nonprofit, that compensates its CEO over 100 times the hospital’s lowest-paid worker. | Take Action on InequalityTell the U.S. Securities and Exchange Commission that you want to know the pay gap between corporate CEOs and their workers. |
INEQUALITY BY THE NUMBERS | |
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Stat of the WeekThe 2,170 billionaires in the world today own on averagefour homes each, notes the just-released Billionaire Census 2013, with each residence worth nearly $20 million.
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IN FOCUS | |
A Daring Bid to Stomp Out CEO Pay ExcessYoung activists in Switzerland have plutocrats hyperventilating — and spending a fortune to beat back a ballot initiative that would establish a legal limit on the pay gap between top execs and their workers.Something astounding is happening in Switzerland. For the first time ever, voters in a modern developed nation are going to be voting on whether to create what essentially amounts to a “maximum wage.”The vote will come this Sunday, November 24, on a ballot initiative that bans any Swiss corporate executive compensation that runs over 12 times worker pay.
In effect, under this “1:12 Initiative for Fair Pay,” no Swiss company would be able to pay its top executives more in a month than the company’s lowest-paid workers make in a year. Swiss corporations currently compensate their top execs more generously than any other nation in continental Europe. At pharmaceutical giant Roche, CEO payruns 236 times the firm’s lowest wage. At Nestle, the divide spreads 188 times. Gross margins like these four years ago caught the attention of activists in Juso, the youth wing of Switzerland’s Social Democratic Party. The activists sensed growing public outrage at a corporate pay system that has, as former Juso president Cédric Wermuth recently told Too Much, “greedy managers earning millions while other people earn too little for living.”
The “1:12” initiative that Wermuth and his Juso vice-president Mattea Meyer organized would go on to gain broad union support and backing from Switzerland’s top two progressive parties, the Social Democrats and the Greens. This past spring, the 1:12 effort filed enough signatures for ballot status — and Corporate Switzerland has been feverishly attacking the initiative ever since. Any move to limit CEO pay to 12 times worker pay, charges SwissHoldings, the federation of Swiss-based multinationals, would constitute “a frontal attack on freedom” — and “prosperity,” too! If the measure passes, the SwissHoldings anti-1:12 manifesto declares, “almost all” of Switzerland’s 57 corporate giants “would be forced to restructure or move parts of their companies abroad.” One Swiss lawmaker, Zurich’s Ruedi Noser, has ratcheted up the hysterics to an even higher level. A “yes” vote on the 1:12 proposition, he’s claiming, would turn Switzerland into the “North Korea of Europe.” But Swiss society, 1:12 supporters counter, has functioned quite successfully in the not-so-distant past with quite narrow gaps between executive worker compensation. In 1984, points out the Swiss Denknetz think tank, CEOs in Switzerland only averaged six times more in pay than average Swiss workers. Many Swiss today still remember those more equal times, one reason why headlines about 21st century executive paydays — like the $100.5 million Credit Suisse CEO Brady Dougan grabbed in 2010 — so infuriate the general public. In 2007, Swiss chief execs nationwide averaged 56 times more than average worker pay. But big companies pay their execs far more, the Swiss trade union federation points out, and these execs desperately want their gravy trains to continue. Nestle, the drugmaker Novartis, and other Swiss companies have been bombarding their employees with letters decrying the dangers 1:12 poses. Swiss corporate execs unleashed a similar political blitz earlier this year when corporate gadfly Thomas Minder, a successful entrepreneur, led a campaign to give shareholders more say over top executive pay — and ban executive new-hire and “golden parachute” bonuses. Swiss multinationals bitterly opposed Minder’s proposal. But his initiative passed anyway this past March, with a stunning 67.9 percent of the vote. Corporate interests don’t have to reveal how many millions they’re pouring into the campaign to kill the 1:12 initiative, and some observers are estimating that initiative opponents may be outspending supporters by as much as 50 times. Adding to the huge drumbeat against 1:12: official opposition from Switzerland’s Federal Council, the country’s ministerial cabinet. The Swiss media, meanwhile, have been overwhelmingly hostile as well. “No major Swiss newspaper is supporting the 1:12 initiative,” Juso activist Mattea Meyer tells Too Much, and only about 15 percent of major media coverage, she estimates, has been friendly to the pay cap effort. Remarkably enough, given this deeply unequal political playing field, the 1:12 initiative has remained competitive in the opinion polls. In October, one survey had the measure in a virtual dead-heat, with 44 percent both pro and con. Polling released last week does have the “no” side gaining ground, and passage this Sunday, observers feel, remains a longshot. But however the vote goes, activist Cédric Wermuth stresses, egalitarians have made substantial progress. “We’ve launched,” he notes, “a major debate about wage equality and a just income distribution, a subject regarded as taboo before.” Advocates for the 1:12 initiative see their effort as part of a broader “strategic counter-project” to reverse top 1 percent-friendly rule changes that have made Switzerland so much less equal over recent decades, and next steps are filling the Swiss referendum pipeline. Among these next steps: an initiative to create a basic minimum income for everyone in Switzerland — at the equivalent of $2,800 a month — and campaigns to put in place both a stiff inheritance tax and a new tax on foreigners using Switzerland as a tax haven. Like this article? Sign up Switzerland’s 1:12 activists also see themselves as part of a global effort, and 1:12-like campaigns, they note proudly, have taken root in France and Germany. “We stay in close contact with them,” says Cédric Wermuth, who currently serves as a member of Switzerland’s federal parliament. The Swiss 1:12 activists are also staying in close contact with leading global egalitarian thinkers. They’ve hosted talks in Zurich, Basel, and Bern, for instance, from the British epidemiologist Richard Wilkinson, one of the world’s foremost authorities on the impact of inequality on our daily lives. The 1:12 effort, Wilkinson told Too Much last week, has already made a major contribution — by helping all of us understand that businesses “do not have to be organized as systems for the undemocratic concentration of wealth and power.” Interested in helping support the 1:12 initiative? Supporters can make donations through the campaign’s online presence. |
New Wisdom on WealthJed Rakoff, Why Have No High Level Executives Been Prosecuted in Connection with the Financial Crisis?New York Bar Association, November 12, 2013. A riveting address by the U.S. district judge most willing to challenge corporate power.Jason Salzman, Drawing a Lesson from Colorado’s Conflicting Tax Votes,OtherWords, November 13, 2013. Many voters tired of America’s huge income gap have decided they’d rather be selfish than pay even part of a bill they feel the rich ought to be paying. John Quiggin, Wall Street Isn’t Worth It, Jacobin, November 14, 2013. Any strategy that hopes to yield real change in income distribution must involve a substantial contraction in the size, wealth, and power of the financial sector. Rick Newman, If America Were Switzerland, These CEOs Could Lose Big, The Exchange, November 15, 2013. Applying the proposed Swiss 1:12 executive pay cap to the United States. Dean Baker, Bubbles Are Not Funny, Beat the Press, November 16, 2013. Asset bubbles lead to massive redistributions of wealth. Tavia Grant, How one company levels the pay slope of executives and workers, Toronto Globe and Mail, November 16, 2013. A Canadian firm with over $100 million in annual sales has never paid its top exec over 10 times its lowest-paid worker.
“Make room for The Rich Don’t Always Win on your bookshelf right next to Howard Zinn’s A People’s History of the United States.” Check the publisher’s discount on this acclaimednew history of the forgotten triumph over America’s original plutocracy. |
NEW AND NOTABLE | |
The Biggest Charade in the Tax Code?Adam Crowther, Thanks a Billion (or So): A Small Loophole Inserted 20 Years Ago Helps Companies Avoid Paying the U.S. Treasury Big Money, Public Citizen, Washington, D.C., November 12, 2013.![]() So how will Oracle determine whether Ellison has “performed” adequately enough? The company, notes this welcome new report from the watchdog group Public Citizen, has set 23 performance criteria that “can be considered when granting equity awards.” Oracle execs can collect their “performance” pay if they meet just one of these criteria! In other words, Oracle has stacked the performance deck — and the biggest loser in this heads-I-win, tails-you-lose charade will be the U.S. taxpayer. This new Public Citizen paper spells out just how much Oracle and the rest of America’s most generous-to-CEO corporations are saving off their taxes thanks to a 1993 loophole that lets corporations deduct however much they compensate their top executives in “performance-based pay.” This loophole, Public Citizen details, will save U.S. corporations as much as $235 million off their taxes on last year’s 20 highest-paid CEOs alone. The fix for this outrage? Public Citizen has one: passage of legislation newly introduced by senators Jack Reed and Richard Blumenthal, the Stop Subsidizing Multi-Million Dollar Corporate Bonuses Act. Their bill would simply deny all U.S. firms any deductions for annual pay that runs over $1 million per executive. |
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ABOUT TOO MUCH | |
Too Much, an online weekly publication of the Institute for Policy Studies | 1112 16th Street NW, Suite 600, Washington, DC 20036 | (202) 234-9382 | Editor: Sam Pizzigati. | E-mail: editor@toomuchonline.org | Unsubscribe. | Subscribe to Too MuchForward to a Friend |
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