CEO Pay Shoots Up At Expense of Workers

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Here’s the latest on how much richer the rich have gotten: Last year, according to a USA Today analysis of corporate filings, median CEO pay jumped 27 percent. Compare this to the paltry 2.1 percent pay raise earned by the typical American worker.

Stock options have rewarded CEOs for layoffs instead of growth.

In general, CEOs did so much better than everyone else due to their generous stock options, which surged in concert with last year’s bull market. Wall Street argues that there’s nothing wrong with such incentive-based pay; it alignes the interests of corporate execs with their companies’ shareholders.  But is that all that matters? UMass economics professor William Lazonick notes that a huge chunk of corporate profits last year came not from legitimate gains, but from downsizing:

The fact that CEOs’ pay is rising along with stock prices underscores the disconnect between pay and companies’ true underlying performance, Lazonick says. While companies in the S&P 500 boosted profit 47% last year, much of that was due to cost-cutting and layoffs, not from the creation of businesses and growth, Lazonick says. Revenue, a gauge of the money flowing into businesses for selling goods and services, grew at a much slower pace than profit — and ended the year up just 7%.

So in other words, a 7 percent pay hike for CEOs might have been fair; a 27 percent raise looks a lot more like profiting off the misery of the people who once worked for you.

A BETTER WAY TO DO THIS?

We have an ambitious $350,000 online fundraising goal this month and we can't afford to come up short. But when a reader recently asked how being a nonprofit makes Mother Jones different from other news organizations, we realized we needed to lay this out better: Because "in absolutely every way" is essentially the answer.

So we tried to explain why your year-end donations are so essential, and we'd like your help refining our pitch about what make Mother Jones valuable and worth reading to you.

We'd also like your support of our journalism with a year-end donation if you can right now—all online gifts will be doubled until we hit our $350,000 goal thanks to an incredibly generous donor's matching gift pledge.

payment methods

A BETTER WAY TO DO THIS?

We have an ambitious $350,000 online fundraising goal this month and we can't afford to come up short. But when a reader recently asked how being a nonprofit makes Mother Jones different from other news organizations, we realized we needed to lay this out better: Because "in absolutely every way" is essentially the answer.

So we tried to explain why your year-end donations are so essential, and we'd like your help refining our pitch about what make Mother Jones valuable and worth reading to you.

We'd also like your support of our journalism with a year-end donation if you can right now—all online gifts will be doubled until we hit our $350,000 goal thanks to an incredibly generous donor's matching gift pledge.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate