The pay issue has recently become a popular topic of discussion. According to the Economic Policy Institute (n.d.), this is the vastest pay gap we have ever seen in history, with it currently being 399:1, up from 59:1 just 33 years ago in 1989 (as cited in The Stand, 2022)

Learning Goal: I’m working on a business discussion question and need an explanation and answer to help me learn.

Student 1(Nequana)

The pay issue has recently become a popular topic of discussion. According to the Economic Policy Institute (n.d.), this is the vastest pay gap we have ever seen in history, with it currently being 399:1, up from 59:1 just 33 years ago in 1989 (as cited in The Stand, 2022). Although, CEO-worker pay is not the only problem this country has to reconcile. The disparity between the wealthiest 1% of society and the poorest is inconceivable. According to the Institute for Policy Studies (n.d.), all the U.S. billionaires combined increased their wealth by more than $2 TRILLION (70%) in 18 months from March 2020 – October 2021 (as cited in Inequality.org, n.d.). Remember, this was during a global pandemic when the world was grappling with one of the deadliest diseases in the last century, unprecedented unemployment, supply shortages, and mortgage moratoriums for the poorest Americans who were losing their homes. During that time, the top five billionaires alone saw their wealth increase by $439 BILLION (123%) combined; three of the richest American men own more than the bottom half of Americans (Inequality.org, n.d.). All this while worker pay has only increased 11% over three years (Field, 2022). To say that is abhorrent is an understatement.

Inflation is currently at an all-time high, and political pundits on either side will have Americans believe it is all one party’s fault over another. However, corporate greed is a major, perhaps even THE, driving factor contributing to inflation. Corporations from multiple industries have seen record-breaking profits over the past two years because of their considerate efforts to price gouge the American people. To put it in a phrase, they are urinating on us and telling us it is raining.

During the supply shortage, they had a plausible and legitimate reason to raise prices due to high demand and low supply. However, supply issues are no longer the problem they once were. So why do they continue to raise prices to increase profits when so many Americans are making life-altering decisions just for the necessities in life or life-saving medical needs? Federal law prohibits companies or people from price-gouging or targeting vulnerable people during natural disasters. Why is there no law banning corporations from doing the same in National and global epidemics?

Corporations are making record profits. So, that would mean they are sharing those profits with their workers. Right? Wrong. Instead, they share those profits with their investors and executives by buying back their stocks (Reich, 2022). That is the thanks the American people and their workers get for their contributions to their wealth. It does not pass the sniff test when combining all of this with the fact that the pay gap between CEOs and workers is exorbitantly high. The tax-equity problem between the rich and poor continues to linger on, and the wealthiest Americans continue to sail their proverbial “yachts” across the water and past the struggling, drowning, poorest amongst us.

References

Field, A. (2022, May 23). CEO-Worker pay gap widens-and employees aren’t happy about it. Forbes. Retrieved from https://www.forbes.com/sites/annefield/2022/05/23/ceo-worker-pay-gap-widens-and-employees-arent-happy-about-it/?sh=6c140a79142c

Inequality.org. (n.d.). Wealth inequality in the United States. Retrieved from https://inequality.org/facts/wealth-inequality/

Reich, R. (2022). Workers are being punished for inflation. The real culprit is corporate greed. The Guardian. Retrieved from https://www.theguardian.com/commentisfree/2022/jul/31/us-inflation-corporate-greed

The Stand. (2022, October 5). CEO-to-worker pay ratio hits an all-time high. Retrieved from https://www.thestand.org/2022/10/ceo-to-worker-pay-ratio-hits-all-time-high

student 2(Daryl)

In today’s society, the cost of living is a worldwide issue affecting today’s economy, where the law of the land is the rich get richer, and the poor get poorer. It amazes me that you can work for a full-time job with full benefits and a total reward package and still possibly not make enough to afford a car, rent, or mortgage, or it is just not a living wage. I agree that the wages of a CEO compensation out value the top-paid employee by almost 80%. The CEO is valued more than human capital, and compensation dictates that perception. The numbers show;

• · 85% agree that one way America’s largest companies can meaningfully act to reduce income inequality is by raising their minimum wage to a living wage;
• · 81% believe large corporations are responsible for ensuring the basic financial security of their lowest-paid workers (Forbes (n.d.)).
• Overpaid CEOs cost the shareholders a share of the profits, which could have been either shareholder dividends or capital gains;
• A divide in executives’ incentive plans motivated them to cause their companies to perform better;
• The executives received higher pay which affected the company’s performance and drove the incentive compensation (Pros And Cons Of Executive Compensation 2018).

There are no benefits to The CEO gap continuing, as it is already affecting the economy. The growth of globalization has increased the wealth of companies and boosters the ideology that the CEO deserves a ridiculous compensation package. It should be a company’s moral and ethical obligation to pay their human capital a living wage providing them with a work-life balance. The economy is continuously being driven in a downward spiral due to greed, and the CEO gap in compensation is an immediate issue needing to be addressed.

References

(n.d.). Forbes. https://www.forbes.com/sites/annefield/2022/05/23/ceo-worker-pay-gap-widens-and-employees-arent-happy-about-it/?sh=2601a27d142c

Pros and cons of executive compensation. (n.d.). Essays, Research Papers, Term Papers | Internet Public Library. https://www.ipl.org/essay/Pros-And-Cons-Of-Executi…