The $16.5 trillion national debt does not strike AFL-CIO president Richard Trumka as the country’s leading economic problem.
Income inequality tops the list for the labor union leader and confidante of President Obama. Trumka said the deficit hawks in corporate America are trying to “scare” voters and “distract attention from America’s real economic problems.”
The AFL-CIO released Monday its 2012 “Paywatch” survey of the compensation of 350 CEOs with companies in the Standard & Poor’s 500 index. Their compensation averaged $12.3 million last year, 354 times more than what a typical American earns according to the Bureau of Labor Statistics. But the union’s political push has yet to make a serious dent in the decades-long trend. Organized labor finds itself playing defense—less than two years after the Occupy Wall Street movement drew attention to the issue.
Stagnant wages have a disturbing ripple across the economy. As incomes barely change for much of the country, more and more Americans must either take on debt, save less, or downgrade their lifestyle—all of which becomes an impediment to economic growth.
The AFL-CIO has yet to succeed in pushing the Securities and Exchange Commission to implement a requirement from the 2010 Dodd-Frank law that companies disclose their own CEO-to-employee ratios in filings.
Trumka blamed intense corporate lobbying against the rule, but he said that wasn’t “100 percent” of the reason for the delay. The AFL-CIO is hoping the confirmation of Mary Jo White as the new SEC chairwoman will end the stalemate.
Some corporate representatives argue that the requirement would add millions of dollars in new compliance costs. Trumka noted that he faces more public scrutiny than these executives, saying, “Since 1959, labor leaders have had to disclose everything that they get.”
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The AFL-CIO also has a White House that submitted a 2014 budget with a less generous cost-of-living adjustment for Social Security recipients and cuts to Medicare, two policies meant to reduce the deficit that the union staunchly opposes for their impact on middle class retirees.
“I talked to him before the budget was released,” Trumka said about his conversation with the president. “I told him why we thought it was bad policy and why we thought it was a bad strategy. He obviously chose not to follow the wisdom that I tried to impart.”
Shareholders can hold say-on-pay-votes to express their displeasure with CEO compensation. But even when the majority oppose a generous package, the vote is merely symbolic, Trumka noted.
The CEO pay ratio was higher in 2011 than last year at 380 times an average salary, but that figure was distorted by Apple CEO Tim Cook’s $378 million pay package and on the whole CEO salaries continue to outpace wages nationwide. It’s a somewhat crude metric, since the AFL-CIO can only compare the CEO pay packages with the salaries tracked by the Labor Department. But it does reflect a growing chasm, since the ratio was 42-to-1 in 1982.
This year’s edition of Paywatch specifically targeted the CEOs who are part of the Business Roundtable and the Campaign to Fix the Debt.
The AFL-CIO looked at the retirement benefits of CEOs on the board of the Business Roundtable, which favors increasing the retirement age to 70 and realizing savings by the use of chained CPI to measure inflation for Social Security recipients.
Trumka singled out Honeywell Chairman and CEO David Cote—a member of the Business Roundtable with a retirement package worth more than $134 million that begins at the age of 60. “The hypocrisy never ceases to amaze me,” Trumka said.
The union also attacked the non-partisan Campaign to Fix the Debt—a project that receives funding from Pete Peterson, who also owns The Fiscal Times. Among the recommendations from members of the Campaign to Fix the Debt would be a move to a territorial tax system—where companies would not pay U.S. taxes on foreign profits.
In January, John Engler, president of the Business Roundtable, a CEO lobbying group, said that President Obama was open to considering a new territorial tax system in order to encourage companies to bring trillions of dollars back to the U.S. that are being sheltered abroad. Most foreign companies pay no U.S. taxes on overseas earnings.
