Americans just scored a big win against CEOs who don't like sharing their salary info.
'When they read that number, employees are going to say, "Why is this person getting paid so much more than me?"'
Corporations, in general, don't enjoy sharing how much their CEOs make.
Probably because the numbers are borderline embarrassing, to be honest.
As Upworthy reported, a study from the Economic Policy Institute found American CEOs have benefitted from staggering pay raises over the past few decades. The rest of the country? Not so much.
CEOs at top U.S. firms made about 303 times more than what their average worker made in 2014. That figure — the CEO-to-worker compensation ratio — has shifted dramatically since 1965, when top CEOs made just 20 times more.
What a difference 50 years makes, huh? Take a look:
With an exception for sluggish economic times after 9/11 and the Great Recession, the CEO-to-worker compensation ratio has surged in recent American history. Graph courtesy of Economic Policy Institute.
Big businesses rarely disclose this information voluntarily. But now, many will have to.
On Aug. 5, 2015, the Securities and Exchange Commission voted 3 to 2 in favor of a rule that, starting in 2017, will require most public companies to regularly disclose their CEO-to-worker compensation ratio.
The rule was actually part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which passed in response to the Great Recession. But after years of resistance from companies hesitant to comply, it's (finally) becoming a reality.
And that's a good thing.
Consider it a big win in the fight against income inequality.
While the ruling does nothing to limit CEO pay, it does make CEO pay more transparent. That's an important factor in closing the ever-growing gap between America's haves and have-nots.
Photo by Spencer Platt/Getty Images.
The New York Times' Gretchen Morgenson asked experts if the ruling will actually result in tangible change. And, according to them, we have every reason to hope so.
“When they read that number, employees are going to say, 'Why is this person getting paid so much more than me?'"Charles Elson of the John L. Weinberg Center for Corporate Governance at the University of Delaware told the outlet.
"I think the serious discontent will force boards to reconsider their organizations' pay schemes."
This ruling is no accident. Income inequality has taken center stage in America.
Income inequality: Presidential candidates are making it a core issue of their platforms. Cities like Seattle and counties like Los Angeles are fighting it with hikes in their minimum wage laws. Fast food workers in some places — yeah, I see you New York — have had enough of it, demanding their paychecks match the work they put in.
Workers in New York City will be getting paid $15 an hour by the end of 2018. Workers in the rest of the state will be getting paid $15 an hour by the end of 2021. Photo by Spencer Platt/Getty Images.
CEOs deserve a healthy paycheck, don't get me wrong. But one that's 303 times bigger than their average employee's?
Unacceptable. Experts agree — we have every reason to hope this new rule will help curb that unjust disparity so every American has the opportunity to thrive.