Over 120 communities, big and small alike, have now enacted ordinances that require businesses that win government contracts to pay a living wage. These victories have made an undeniable impact. Low-wage workers from Baltimore to Los Angeles have seen their annual take-home pay rise by hundreds, even thousands, of dollars.
Yet, as a sobering new report reminds us, the pay gap in America's workplaces"¹ between workers and top executives - has actually widened, and significantly so. Last year, notes "Executive Excess 2006," a just-released report from the Institute for Policy Studies and United for a Fair Economy, top executives at major U.S. corporations took home 411 times more than average workers.
In 1994, at the birth of the living wage movement, chief executive pay outpaced pay for average workers by only 142 times.
The impact of executive pay jackpots on our great divide actually goes far beyond the sheer immensity of this $290 billion. To fatten corporate bottom lines and hit those jackpots, executives have downsized workers, outsourced jobs, gutted pensions, trimmed benefits, and slashed R & D. These executive decisions, taken together, have left American workers appreciably poorer "¹ and American companies considerably less competitive.
How have progressives responded? Trade union and activist religious groups have taken the lead. They've pressed resolutions against CEO pay excess at annual corporate shareholder meetings. And they've lobbied for new rules that could help shareholders challenge corporate boards that wink at executive pay outrages.
And what might that approach be? The new "Executive Excess 2006" report offers a provocative suggestion: Let's build on the successes of the living wage movement.
Living wage campaigns all start from the same basic assumption. Our public tax dollars should not, as activists from ACORN put it, "be subsidizing poverty-wage work."
Our public tax dollars should not be subsidizing executive jackpots either. But right now they are. Corporations routinely pocket government contracts and subsidies that translate into mega-paydays for their top executives.
Just one example: CEOs at the nation's top 34 defense industry companies, the new "Executive Excess" report documents, have seen their average pay double since the "War on Terror" began.
This sort of profiteering is going on throughout the U.S. economy. Nearly every major corporation in the United States today is taking in substantial revenue from government contracts, subsidies, tax breaks, or grants.
One member of Congress is already moving in this direction. Rep. Martin Sabo from Minnesota has proposed legislation that would deny corporations tax deductions on any executive compensation that runs over 25 times what a company's lowest-paid workers receive. Under current law, the more corporations lavish on their executives in "incentives," the more they can deduct off their corporate income taxes.
Sabo's Income Equity Act offers a precedent that could be extended to any situation that involves the transfer of tax dollars to private corporate entities. In a jurisdiction that has already enacted a living wage ordinance, for instance, progressives could insist that no government contracts ought to go to companies that pay their top executives over 25 times that jurisdiction's living wage.