Sarah Anderson: Conn. businessman seeks to narrow yawning economic divide with CEO tax

1917 caricature.

Via OtherWords.org

Josh Elliott is fed up with overpaid CEOs. As the owner of Thyme and Seasons, a Hamden, Conn., natural-foods market with 40 employees, he says he could never justify pocketing hundreds of times more pay than his employees.

“I’m very much a capitalist,” Elliott told me in an interview. “But there need to be limits.”

Skyrocketing CEO pay and inequality last year motivated this 32-year-old businessman to launch a successful bid for a seat in the Connecticut General Assembly. Elliott hit back hard on the campaign trail against right-wing claims about high taxes driving wealthy job creators out of his state.

“This is not an issue of over-taxation — it’s an issue of taxing the wrong people and the wrong entities,” he told the New Haven Register. “When the middle class has to subsidize huge corporations like Walmart that criminally underpay their workers, the narrative that we are overtaxed ought to be outed as ludicrous.”

Since taking office, Representative  Elliott has co-sponsored several bills aimed at narrowing our economic divide, including two that directly address the CEO pay problem.

One of these bills mirrors a Portland, Ore., law enacted last December that imposes a tax penalty on publicly traded corporations with CEOs making more than 100 times their typical worker pay.

These laws don’t set a ceiling on how much corporations can pay their executives. But they do provide an incentive to rein in excess CEO pay and lift up workers at the bottom end. They can also generate significant revenue for urgent needs like funding pre-school programs or fixing roads and bridges.

Legislators in Illinois, Minnesota, Massachusetts, Rhode Island, and San Francisco are also considering CEO pay tax proposals.

Elliott’s other bill would use the power of the public purse to reduce pay disparities. If enacted, companies with CEO-worker pay ratios of more than 100 to 1 wouldn’t qualify for state subsidies and grants.

That would help ensure taxpayer dollars are used wisely. Research has shown that narrower pay gaps make businesses more effective by boosting employee morale and reducing turnover rates.

Elliott pointed out that he’s able to go to the state capital in Hartford four times a week when the General Assembly is in session because he trusts his managers to do a good job running the market in his absence. “You need to have good employees to make money,” he told me.

While efforts to narrow CEO-worker pay gaps are spreading around the country, Republicans in Washington are working to undercut them.

How? By killing a federal disclosure law requiring corporations to report the gap between their CEO and median worker pay. This data, scheduled to become available in early 2018, would make the kinds of policies Elliott is promoting much easier to administer.

But overpaid CEOs — and their lobbyists — want to throw up as many obstacles as they can. The massive Financial CHOICE Act, which just passed a House committee, would eliminate the pay-ratio disclosure regulation, along with loosening other regulations on big Wall Street banks. It could come up for a full House vote soon.

But as the debate shifts, Elliott is confident that bold proposals for change will eventually gain traction.

“The conservative narrative is that business owners are the job creators,” he told me. “But if the CEOs and owners of capital have unlimited potential for their own compensation, they’re just taking money away from their employees. And that’s a system that is simply unsustainable.”

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and is a co-editor of Inequality.org. @Anderson_IPS

Marjorie Wood: Greedy CEOs pit Grandma against workers

Who will take care of grandma?

It’s a question we need to answer. As Baby Boomers grow older, the elderly population — seniors who are 80 and older — will increase almost 200 percent by 2050.

Our long-term-care system isn’t ready. Studies show that older Americans prefer home care over institutionalization. But because of low wages and poor working conditions, recruiting and retaining home health aides and personal care assistants is very difficult.

In the end, that means a lower quality of care and fewer home care workers for grandma.

Maybe the home-care industry just can’t afford to pay workers more?

Hardly. The industry has boomed over the past decade. According to the National Employment Law Project, its revenue increased 48 percent, while its CEO compensation ballooned by a whopping 150 percent.

In fact, home care today is a multibillion-dollar industry. Because of rising demand and skyrocketing revenues, Forbes called home health care one of the hottest franchises in the market.

Sadly, home-care workers haven’t shared in the industry’s prosperity. During the same period that revenue soared, average hourly wages for workers declined by 6 percent.

And that’s not the worst of it. Because of a “companionship exemption” to federal labor laws, more than 2 million home care workers today are excluded from minimum wage and overtime pay protections.

Ninety percent of them are women. More than half rely on public assistance to make ends meet.

The Department of Labor has tried to stop the industry from misusing the companionship exemption to pay home care workers less. It passed a new rule that was supposed to make these workers eligible for minimum wage and overtime pay this January.

But before the rule went into effect, several for-profit home-care associations — including the International Franchise Association — successfully sued the Department of Labor to prevent the change.

The industry is claiming that higher wages mean Grandma won’t be able to get the care she needs.

The truth?

Studies show that higher wages mean Grandma will be able to find and keep the best caregiver. And the 15 states that already provide minimum wage and overtime pay for home care workers prove that it’s feasible.

All told, Grandma will be more likely to get the care she needs when her caregivers can earn a living wage.

Marjorie Wood is a senior staff member of the Global Economy Project at the Institute for Policy Studies and the editor of inequality.org. This originated at OtherWords.org.