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posted: 7/13/2014 5:01 AM

California worth watching on CEO pay

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The gap between CEOs and their employees is growing at exponential rates.

According to the Economic Policy Institute, CEOs in 1965 made 20 times more than the median employee. In 2012 CEOs made 270 times that of their median employee. This spread is obscene. It is obviously an Ole Boys Club at work.

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The CEOs all sit on each others' boards of directors and scratch each others' backs voting in these outrageous compensation packages. Prior to this period, workers with the help from unions, were able to maintain reasonable wages through negotiations. During this period, though, unions have been disappearing to the point that only under 7 percent of workers in the private sector are unionized.

As a result, the workers have lost their ability to share in the increased productivity gains, which have gone to the upper 10 percent of Americans.

To add to the problem, during this same time, taxes were being lowered for the wealthy.

The California legislature intends to put a stop to this inequity with SB 1372. The bill essentially adds a component to the corporate tax rates that will rise or fall depending on the CEO-to-median worker ratio. California's tax rate is 8.4 percent, and under the bill, the rate can go on a scale as low as 7 percent if the ratio is less than 25 to 1 and on the high end 13 percent if the ratio rises to higher than 400 to 1.

If this bill passes, CE0s will have one difficult time receiving outrageous compensation packages that can cost the company millions and millions of dollars. Maybe this approach will start to correct this obscene inequity.

This is a bill to watch; it is a great and fair concept.

Leo A. Dietrich

Lake Villa

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