CEOs: You can restore the good name of capitalism

Why do executives in big public corporations keep crapping the nest by taking exorbitant packages that run as much as 70 times that of the average pay of their workers.

The gap between executives and employees has shrunk a tad in recent years because of the severe labor shortage that gives hourly workers more leverage. They can walk down the street and find a better job. Therefore, employers have had to walk the talk that their “people are their most important asset.”

Hourly pay rose 4.7% in 2023.

That reality plays into the big political picture in the United States. Volumes have been written about the resentment politics that have given Donald Trump a platform that nothing is going right in the country in the absence of his leadership.

Note that he takes millions out in salaries from companies he owns even when they are heading for insolvency. He could be one of the biggest corporate salary pigs of all time.

On a more positive note, there are many ways for executives to put the virtues of capitalism and collaborative prosperity ahead of themselves for the good of the country:

  • Limit top salaries for executives to 10 to 20 times that of their average workers. In Wisconsin, average worker pay is $27 per hour. That computes at those multiples to roughly a half a million to a million dollars per year for CEO pay. There are many competent business people who would jump at the challenge of running a corporation for that tidy sum.
  • Institute profit sharing so troops and leaders are rewarded for a good year. That worked great in the U. S. auto industry when it clawed its way back from deep trouble during the Great Recession of 2007 to 2009.
  • Raise the company match for employees savings in 401K plans to four to five percent of payroll. Those plans in turn invest largely in the U.S. economy, which again puts leaders and workers rowing the same prosperity boat.
  • Accelerate investments in education/career paths for every ambitious employee.
  • Follow through by promoting from within. It’s a far safer bet than hiring from the outside.
  • Instead of lobbying for and using every tax loophole imaginable to avoid paying corporate income taxes, as giant companies like Tesla, Netflix and Ford manage to get away with, pay a fair share to support government services. Go further and support a minimum corporate tax on earnings before subsidies and loopholes. Pay at least the minimum state and federal taxes at the same level as that paid by small and medium sized companies.
  • Support a crackdown on collusion and anti-competitive consolidations in the Medical Industrial Complex (MIC). The collusion between and sellers in health care drives up the soaring costs for businesses and workers alike. Stop cost shifting to employees in lieu of tough management of MIC vendors. Get off the boards of hospital corporations – they are vendors! That prohibition includes non-profit health care entities that act like for-profit companies, especially when it comes to executive compensation. They aren’t run by nuns anymore.

Long and short, fellow executives, look at the big picture when It comes to divvying up the profits of your corporations.

To be sure, the dividends and climbing stock prices of your corporations greatly help the growth of worker assets in their retirement plans. Thanks for that! But CEOs can do much more to give capitalism a good name. Perception is all-important when it comes to the political dynamics of the country. Some billionaires, like Warren Buffet, Bill Gates and Mackenzie Scott are doing just that by giving away the bulk of their fortunes at ends of their lives. But that impact is indirect; it often goes to good causes, not directly to worker family checkbooks.

The direct gains flowing from profitable companies – compensation and benefits — is the job of current executives. It is not all about shareholder gains. A top priority of highly paid executives has to be restoring capitalism to high regard in the arena of public opinion. The era of resentment cannot stand.

This entry was posted in Business Ethics. Bookmark the permalink.