New report details how corporations inflated the pandemic pay of executives while workers suffered - Milwaukee Independent

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Dozens of the largest low-wage employers in the United States manipulated their own rules during the coronavirus pandemic to hand wealthy CEOs substantial raises while their vulnerable frontline workers struggled to get by with inadequate paychecks, meager benefits, and flimsy on-the-job protections.

That is according to the new report Pandemic Pay Plunder, released on May 11 by the Institute for Policy Studies,. It found that 51 of the nation’s 100 biggest low-wage employers—including Tyson Foods, Coca-Cola, Chipotle, and YUM Brands—used numerous tactics to boost executive pay in 2020 while offering their workers few safeguards against the pandemic and resulting economic meltdown.

“Common manipulations included lowering performance bars to help executives meet bonus targets, awarding special ‘retention’ bonuses, excluding poor second-quarter results from evaluations, and replacing performance-based pay with time-based awards,” the report noted. “Companies enlisted an army of ‘independent’ compensation consultants in an effort to give all this rule-rigging a veneer of legitimacy.”

For example, the board of Chipotle, a company notorious for violating worker safety and health regulations, inflated CEO Brian Niccol’s total compensation to $38 million in 2020 by “toss[ing] out the company’s poor financial results from the peak shutdown period and exclud[ing] Covid-related costs, a bit of financial magic that artificially boosted Chipotle’s operating income and helped give Niccola 136% raise.”

At the companies that altered their rules to reward top executives amid the deadly pandemic, CEO pay averaged $15.3 million in 2020, up 29% from 2019. By contrast, the report found that median worker pay at those companies fell by 2% to an average of $28,187.

“The 100 S&P 500 corporations we analyzed all paid median compensation under $50,000 in 2020,” the analysis notes. “Some did offer frontline employees paid leave and small pay increases during the pandemic, usually around $2 per hour, but in nearly all cases this modest extra Covid-19 support was only temporary. The real largesse flowed only to C-suites.”

Sarah Anderson, director of the IPS Global Economy Project and lead author of the report, said in a statement that “it’s time for public policy to shift corporate America away from a business model that creates prosperity for a few at the top and precarity for so many of the rest of us.”

“By inflating executive compensation while their workers struggled during a pandemic,” Anderson added, “corporate boards have strengthened the case for tax penalties on huge CEO-worker pay gaps.”

The report offers several recommendations for reining in massive and growing CEO-worker pay gaps, including passage of the Tax Excessive CEO Pay Act of 2021, legislation introduced by Senator Bernie Sanders in March.

That bill would increase the corporate tax rate by 0.5% for companies that pay their CEOs over 50 times more than the median worker, and 5% for companies that pay their chief executives over 500 times more than the median worker.

“As millions of families struggle to keep food on the table during a global pandemic and economic crisis, it is more important than ever that we close the CEO-worker pay gap and ensure that companies pay their workers the wages they deserve,” Rep. Barbara Lee (D-Calif.), a co-sponsor of the bill, said in a statement.

In a May 11 blog post, Anderson noted that the measure “would generate an estimated $150 billion over 10 years that could be used to create good jobs and meet human needs.”

“If the bill had been in place in 2020, Walmart, with a pay gap of 1,078 to 1, would have owed an extra $1 billion in federal taxes—enough to fund 13,502 clean energy jobs for a year,” Anderson wrote. “Amazon, with a 1,596-to-1 pay ratio, also would have owed an extra $1 billion, enough to underwrite 115,089 public housing units for a year.”

Michél Legendre

The Milwaukee Independent began reporting on what was then referred to as the mysterious “Wuhan Virus” in January 2020. Other local media did not picked-up on the story until many weeks later. Our early features focused on the economic impact, social issues, and health concerns long before other Milwaukee news organizations even mentioned the coronavirus. Over the following year, we have published hundreds of articles about the pandemic and how it has affected the lives of Milwaukee residents. This extensive body of work can be found on our COVID-19 Special Report page, a chronological index of links by month. Our editorial voice remains dedicated to informing the public about this health crisis for as long as it persists.

For medical resources, please visit the CDC’s COVID-19 page or the Wisconsin Department of Health Services. All editorial content published by Milwaukee Independent can be found at mkeind.com/COVID19. With a mission of transformative journalism, our staff is free from commercial bias and are not influenced by corporate interests, political affiliations, or a public preferences that rewards clicks with revenue. As an influential publication that provides Milwaukee with quality journalism, our award-winning photojournalism and features have helped to achieve a range of positive social impact that enriches our community. Please join our effort by entrusting us with your contribution. Your Support Matters - Donate Now

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New report details how corporations inflated the pandemic pay of executives while workers suffered - Milwaukee Independent
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