10 Top Companies With The Biggest Wage Inequalities In America
How much money do you think CEO’s of Fortune 500 companies make in comparison to their average workers? Chances are what you think they make is a lot less than what they actually make. A Harvard Business School study has revealed that most Americans believe that an average CEO earns about 30 times more than his or her employees.
Here’s a reality check: According to the Equilar 100 CEO Pay Study, the average S&P 500 CEO in 2014 earned $14.3 million. That’s nearly 300 times the income of the average employee. The income disparity in the United States is the one of the largest in the world and growing larger; by 2018, the amount of U.S. millionaires is anticipated to increase by 41 percent.
Wage inequality isn’t simply about the rich getting richer; even with recent minimum wage increases, the working poor have to stretch their incomes further as the cost of living rises. Living near or below the poverty line has serious effects upon one’s mental health and family life.
Let’s take a look at which American companies have the biggest gaps, and what kind of impacts these wage inequalities have upon workers.
AT&T pays its CEO Randall Stephenson 291 times its average employee. While productivity since 2009 has increased by 25 percent, communication workers wages only increased by 16.8 percent over the past six years.
Boeing chief W. James McNerney, Jr.’s total compensation package is 296 times his typical worker’s. Boeing froze pensions of union workers in 2014, despite record profits.
21st Century Fox figurehead Rupert Murdoch earns 340 times more than his average employee. The entertainment corporation’s profit-per-employee is estimated to be higher than Google’s.
Hewlett-Packard’s CEO, Meg Whitman takes in 316 times more than HP’s median employee income. Despite being the only woman on this list, Whitman heads a company that has significant discrepancies in its wages for women, who are often paid lower salaries than male employees with less experience.
Capital One’s Richard D. Fairbank earns 682 times more than the typical credit card company’s employee. To put this in perspective, if just 2 percent of Fairbank’s salary were split equally amongst Capital One’s 28,000 employees, they would each have $179, and Fairbank would still have almost a quarter-billion dollars.
Starbucks CEO Howard D Schultz earns 1,037 times more beans than his average coffee slinger. However, Starbucks has long been a stand-out for providing fair wages and benefits to its employees, and in 2014 agreement with for-profit online college Arizona University, Schultz has offered to reimburse the college tuition for any Starbucks worker.
Qualcomm’s Stephen Mollenkampf has a salary that is 1,111 times his average employees. Like HP, Qualcomm offers lower compensation packages for women than men.
Oracle head honcho Lawrence J. Ellison earns 1,183 times more than his workers. In 2014 he was the highest paid executive in the country, and it’s been noted that the highest paid woman CEO, Carol Meyrowitz of TJX, still earns less than a third than Ellison.
Microsoft has the second-highest income gap, with CEO Satya Nadella getting paid 2,012 times more than his employees. Nadella apologized last year after saying that women shouldn’t ask for raises, and insists that Microsoft offers equal pay for women. The numbers don’t back up his promise, however: according to job site Glassdoor, the average male software engineer at Microsoft earns about $8,000 more than a female with the same position and experience.
Walt Disney CEO Bob Iger’s salary is 2238 times higher than the $19,530 Disney pays its average “cast member” (what the company calls its employees). Although Iger was originally supposed to transition out of his CEO position by 2016, he has recently extended his contract to 2018.
So how does this extreme disparity between the haves and the have-nots effect the average worker? Research shows that any CEO-to-worker income ratio greater than 20:1 can cause resentment and lower morale in employees. Lower morale means lower productivity, which is bad for business. When businesses fail, jobs get cut and unemployment is a major source of depression.
According to studies, most people around the world believe the ideal pay ratio for a CEO to employee to be about 4.6 to 1. Most people don’t even realize in their wildest dreams how much more CEO’s actually make, perhaps because such high numbers are beyond comprehension for the average worker.