One Pacific Northwest city will go beyond pay shaming
Dec 20, 2016, 6:51 AM | Updated: 8:52 am
Starting next year, a new federal rule kicks in, which requires that all publicly-traded companies not only report how much their CEOs make but how it compares to what their employees make.
They have to publish the ratio between the pay of the people at the top, and the pay of people in the middle.
The numbers are expected to be breathtaking.
Related: Portland wants Seattle to adopt its CEO tax
And the idea is to shame companies into balancing their lopsided payrolls by either paying their CEOs less, or their employees more.
But one city is going beyond shame.
“Nobody has ever done anything quite like this before,” Portland, Ore. Commissioner Steve Novick said.
Novick won approval for a tax surcharge to punish companies with large pay gaps. So, starting next year, if a CEO makes 100 times the typical employee pay, the company’s local tax goes up 10 percent; if the pay gap reaches 250 times, the local tax goes up 25 percent.
“Fifty years ago people would have just thought it was unseemly for a CEO to make hundreds of times a typical worker made,” Novick said.
Yes, but can one city really make a difference?
“If only Portland does it, then it won’t,” Novick explained. “But if a lot of other jurisdictions follow us, eventually the shareholders of America will have to recognize the after-tax profits they get to divvy up is going down because they are paying their CEOs enormous amounts.”
Just one possible problem with the plan: it depends entirely on companies being forced to report those pay ratios. And we might someday have a president who thinks corporations deserve their privacy. You never know.
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