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JPMorgan Chase CEO Jamie Dimon looks on during a meeting

JPMorgan Chase CEO Jamie Dimon looks on during a meeting in Versailles on July 11, 2022. (Photo: Ludovic Marin/Pool/AFP via Getty Images)

'CEOs, Not Working People, Are Causing Inflation': Report Shows Soaring Executive Pay

"When you look at those numbers and at CEOs trying to blame workers for inflation, it just doesn't add up," said the secretary-treasurer of the AFL-CIO.

Jake Johnson

The AFL-CIO's latest annual analysis of top executive pay was published Monday with the following conclusion: "CEOs, not working people, are causing inflation."

In recent months, corporate bosses and top Federal Reserve officials have pointed to workers' wages as a factor in surging prices, which have pushed overall inflation in the United States to a four-decade high.

"Runaway CEO pay is a symptom of greedflation—when companies increase prices to boost corporate profits and create windfall payouts for corporate CEOs."

But the AFL-CIO's new report attempts to reframe the national inflation discussion, emphasizing that while wage increases won by ordinary workers are drawing outsized attention from policymakers and executives, CEO pay hikes significantly outpaced the wage increases of rank-and-file employees last year.

Titled "Greedflation," the report shows that "in 2021, CEOs of S&P 500 companies received, on average, $18.3 million in total compensation."

"CEO pay rose 18.2%, faster than the U.S. inflation rate of 7.1%," the analysis finds. "In contrast, U.S. workers' wages fell behind inflation, with worker wages rising only 4.7% in 2021. The average S&P 500 company's CEO-to-worker pay ratio was 324-to-1."

The highest-paid executive among S&P 500 companies last year was Expedia's Peter Kern, who brought in an eye-popping $296 million in total compensation.

Other executives at the top of the 2021 list were Amazon CEO Andy Jassy ($213 million), Intel CEO Pat Gelsinger ($179 million), Apple CEO Tim Cook ($99 million), and JPMorgan Chase CEO Jamie Dimon ($84 million).

"Runaway CEO pay is a symptom of greedflation—when companies increase prices to boost corporate profits and create windfall payouts for corporate CEOs," the new analysis states.

During a conference call outlining the report's findings, AFL-CIO Secretary-Treasurer Fred Redmond said that "when you look at those numbers and at CEOs trying to blame workers for inflation, it just doesn't add up."

In his remarks during an earnings call earlier this year, for instance, Amazon's chief financial officer attributed inflationary pressures felt within the company during the final quarter of 2021 to "wage increases and incentives in our operations."

But Redmond pointed out that "last year, Amazon delivered the highest CEO-to-worker pay ratio in the S&P 500 Index with a pay ratio of 6,474 to 1."

"Amazon's new CEO Andy Jassy received $212.7 million in total compensation," he noted. "What did Amazon's median worker earn last year? Just $32,855... Corporate profits and runaway CEO pay are responsible for causing inflation, not workers' wages."

In a blog post on Monday, economist Dean Baker similarly argued that soaring executive pay is contributing to inflation, which has eroded modest wage gains that many ordinary workers have seen since late 2020.

"We... transfer tens of billions of dollars upward to CEOs and other top corporate executives through the corrupt corporate governance structure that we have instituted," writes Baker, a senior economist at the Center for Economic and Policy Research. "In this context, it is not surprising that even mediocre CEOs can get paychecks in the tens of millions of dollars annually. And, it is not just the CEO. If the CEO gets $20 million, the chief financial officer might get $10 to $12 million, and even third-tier executives may get $2 to $3 million."

"This is all inflationary," he added.

The AFL-CIO's analysis was released as the Federal Reserve gears up to hike interest rates by another 75 basis points at its upcoming policy meeting, a move that economists fear could push the U.S. economy closer to recession.

The second consecutive 0.75 percentage point rate hike is expected despite evidence that key divers of inflation—such as gas prices—are cooling. Wage growth has also slowed substantially in recent months, prompting experts to warn that additional rate increases could slash wages by driving up the unemployment rate—a potential disaster for millions.

"Higher unemployment lowers wage growth much more reliably and by larger amounts than it lowers inflation," notes Josh Bivens, director of research at the Economic Policy Institute, noted last week. "Currently, wage growth is decelerating. This means there is no genuine need for a recession to pull wage growth down to sustainable levels."

The AFL-CIO's Redmond echoed that sentiment Monday, declaring that "we need to raise wages to help working people cope with rising prices, not make working people poorer by causing a recession."


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