A core frustration unites striking workers: Exorbitant CEO pay
New York (CNN) — There’s a common thread linking the two biggest labor protests in America right now: Workers want a living wage after years of stagnant or falling pay, while across the bargaining table sit executives whose compensation has been growing wildly year after year.
Exorbitant CEO pay is a frustration shared by Hollywood creatives and Detroit autoworkers alike.
It’s not that anyone expects the bosses to be paid the same as everyone else, but the gulf between the C-suite and the rank-and-file has been widening at an alarming rate for decades, with regular workers’ wages often stagnating or falling when adjusted for inflation.
Since 1978, the CEO compensation among America’s 300 biggest companies has gone up 1,460%, while the typical worker’s pay grew by just 18% (both adjusted for inflation), according to the Economic Policy Institute, a progressive think tank.
In the same period, those CEOs’ compensation grew 37% faster than stock market growth, according to EPI.
That frustration is particularly acute in the US auto industry, which nearly collapsed in 2008 before the federal government injected $80 billion in taxpayer money into bankrupt Chrysler and GM.
At the time, President Barack Obama emphasized how the government assistance would ensure “a new beginning for a great American industry” that would create new jobs and unleash “new prosperity.”
To save the auto industry, union workers agreed to temporarily freeze wages and give up certain pension and health care benefits.
Their reward? Average hourly earnings for workers in car manufacturing have fallen about 19%, adjusted for inflation, EPI Senior Economist Adam S. Hersh wrote last week.
Over the same period, CEO pay at the Big Three Detroit automakers — GM, Ford and Chrysler parent Stellantis — has jumped an average of 40%, or roughly how much of a raise striking workers are now demanding.
GM CEO Mary Barra, the highest-paid executive among the Big Three, made $29 million last year, representing a 34% increase over the last four years.
In an interview with CNN on Friday, Barra sought to defend her compensation package, noting that “92% of it is based on performance on the company.”
That comment refers to the fact that most of her compensation is tied to GM’s stock and bonus incentives set by the automaker’s board. (Barra enjoys a base salary of $2 million.) Critics of performance-based executive pay say those metrics are less than objective.
For example, a CEO may get a multimillion-dollar bonus as a reward for the company hitting a profit target (as Barra did in 2021). But a company’s profit depends not only on bringing in hearty revenue, but also on keeping costs — including workers’ pay — low.
Among the other Big Three: Stellantis’ CEO Carlos Tavares made $24.8 million last year, a 22% increase from the year before. And Ford CEO Jim Farley took in $21 million in compensation last year, a figure that has nearly doubled since 2020, when he was promoted to the top role from chief operating officer.
Similarly, the average pay for Hollywood’s top executives climbed to $28 million in 2021, up 53% from 2018, according to a Los Angeles Times analysis. The Writers Guild of America, which has been on strike since May, says the median pay for screenwriters has dropped 14% when adjusted for inflation over the past five years.
UAW President Shawn Fain has argued that the union workers are simply asking for a similar raise that reflects the companies’ performance in recent years.
“In the last four years, the price of cars went up 30%. CEO pay went up 40%… No one had any complaints about that, but God forbid the workers ask for their fair share,” he told CNN’s Jake Tapper last week.
This year, the Big Three are expected to bring in more than $32 billion in collective profit.
The companies argue those profits are needed to finance the biggest change in the industry in nearly a century: the shift to electric vehicles.
None of the legacy automakers’ EVs make up more than a sliver of their current sales, but they expect growing demand in the coming years and tougher environmental regulations imposed by governments around the world.
They also see it as a path to be more profitable, in part because an EV has far fewer moving parts than a gasoline-powered car with its complex engines and transmission. (EVs require about 30% less labor to assemble than a gasoline-powered car, according to industry estimates.)
And the automakers are poised to receive taxpayer-funded incentives to support their EV transition.
Union leaders agree that EVs are part of the future, but they worry the Big Three may simply move EV manufacturing to states in the American South that are overwhelmingly non-union. Ford, for one, has already poured billions into production campuses in Kentucky and Tennessee that will produce EV batteries and trucks.
“Despite all the company tricks, there is more than enough money for them to make EV investments, to pay their workers a fair share, and to maintain healthy profits,” Hersh wrote. “Their interests would be better served by quickly resolving these negotiations, building our transportation future with their own workers fully vested in a shared vision, and signaling to workers in competing foreign ‘transplant’ producers and new upstarts like Tesla what their labor is really worth.”
—CNN’s Chris Isidore contributed to this article.