In 2017, Portland, Oregon, will become the first city to impose a surtax on companies with CEOs who make more than 100 times their workers’ median pay—an idea that was floated by Prospect executive editor Harold Meyerson two years ago.
“If congressional liberals want to diminish economic inequality, they should also promote legislation that would link corporate tax rates to the ratio between CEO pay and the firm’s median pay,” Meyerson wrote in 2014. “They [CEOs and their boards] would … have a self-interest in raising their workers’ wages.”
The Portland rule, which Councilmember and City Commissioner Steve Novick told Meyerson was inspired by Meyerson’s writing, requires companies to pay an additional 10 percent in taxes if their CEO pay is 100 times their median worker’s pay, and an additional 25 percent if the ratio is more than 250 to 1. Novick told Meyerson that there were 540 such corporations doing business in Portland—five of which are based there.
A similar bill was proposed in California in 2014, but died on the state Senate floor. The 2010 Dodd-Frank financial-reform law required the Securities and Exchange Commission to publish U.S. corporations’ CEO-to-worker pay ratios.
“When I first read about the idea of applying a higher tax rate to companies with extreme ratios of CEO pay to typical worker pay, I thought it was a fascinating idea,” Novick told The New York Times after the measure passed on December 7. In The Guardian, economist Branko Milanovic was also quoted praising the idea, saying “it seems [to be] the first tax that targets inequality as such. … It treats inequality as having a negative externality like taxing carbon emissions.”
What is the correct figure for how much women are paid relative to men? Is it 80 cents to the dollar? Or is it 83 cents?
The answer, it turns out, is both: There are alternative methods for measuring the gender wage gap, and a Wednesday panel discussion at the Economic Policy Institute in Washington, D.C., focused on the myriad ways the gap shortchanges female workers. The event centered on a new EPI report entitled “What is the gender pay gap and is it real?”
“Different gender wage gaps are answers to different questions,” said EPI senior economist Elise Gould, a co-author of the report, during the discussion. “It doesn’t mean [the wage gap] is not real.” While 80 cents to the dollar reflects the median discrepancy for women working full-time, Gould said that EPI uses the 83 percent figure because it looks at per-hour wages and includes part-time workers.
In practical terms, that means that women’s median take-home pay amounts to $15.67 an hour, compared with $18.94 for men. Over the course of her lifetime, the gender pay gap costs the average woman worker more than $530,000 in lost wages. The lifetime wage losses are even greater for college-educated women, averaging close to $800,000. The wage gap reflects not just employers’ decisions to pay women less, the panelists stressed, but also institutional barriers and the work-life decisions that women make.
The gap tends to widen with education levels in part because of wage floors like the federal minimum wage, but also because women face penalties throughout their professional lives for having children or caring for family members. “Women can’t simply educate themselves out of the gender wage gap,” said Gould.
Nor can women simply choose different and higher-paying careers, agreed Wednesday’s panelists, who also included Sarita Gupta, the executive director of Jobs With Justice; Heidi Hartmann, president of the Institute for Women’s Policy Research; and Latifa Lyles, the director of the Women’s Bureau at the Department of Labor.
Occupational segregation still contributes to large pay discrepancies across similar fields, and subtle gender discrimination can inhibit women from crossing over—Hartmann cited the examples of a female machine operator who could make $13,000 more as a welder, and a library assistant who could make $24,000 more as an IT specialist. Gould also noted that as women enter a particular field in increasing numbers, the pay will often decrease as the work becomes devalued.
One of the most consistently devalued occupations is caregiving, a field dominated by women and people of color. Gupta, who is also the co-director of Caring Across Generations, emphasized the need for a better “care infrastructure” that would help both low-paid workers and women who are unpaid caregivers to family members.
In the absence of better paid leave policies for both women and men, said Lyles, “a lot of women are going to have some reason to leave the workforce” in their lifetimes, and that translates into “lost earnings that compound over a lifetime.”
Better paid leave policies would also alleviate a barrier faced by women in high-profile professions that demand longer hours. “I do believe that these long hours were created to reserve these jobs for men,” Hartmann said. Gould added that the willingness to work late is often “an incorrect signal” for productivity.
The EPI report also highlighted the uptick in economic inequality since 1980, which is what primarily accounts for any narrowing of the gender pay gap over those decades. “The stagnation and decline of median men’s wages has played a significant role in the decline in the unadjusted gender wage gap,” the report states. Also Wednesday, Gould unveiled the EPI’s gender pay gap calculator, which tells users how much money they would be making in the absence of a gender wage gap, and how much they would be making if wages had increased with economic growth, as they in the three decades after World War II. For example, a 30-year-old woman with a Bachelor’s degree and an annual salary of $40,000 would be making $44,785 in the absence of a pay gap, and $64,420 if inequality hadn’t increased.
But regardless of gender, the conclusion was the same: “Had workers’ wages continued to keep pace with productivity, both men and women would be earning much more today.”
(Photo: Kyle Johnston) A protester on Monday night in Cleveland's Public Square demonstrates against police brutality holding toy guns. The name on his shirt, Tamir Rice, is that of the 12-year-old Cleveland boy who was shot by police by Cleveland police in November 2014 while playing with a toy gun in a park. T he Republican National Convention wrapped up on a calm note Thursday night, despite predictions that one of the most controversial party gatherings in decades would draw enormous crowds and potentially violent clashes between opposing groups. Cleveland had braced for the worst, bringing in thousands of law enforcement officers from across the country and using part of a $50 million federal grant to purchase riot gear, handcuffs, and other equipment. Along the way, the city was also hit with a lawsuit from the American Civil Liberties Union, which charged that the designated parade route was too small and infringed on protesters' right to free expression. In the end, Cleveland'...
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Bill Clark/CQ Roll Call via AP Images Morris Pearl, chair of the group Patriotic Millionaires , and John Pudner, executive director of Take Back Our Republic , took the stage on the “speaker’s platform” set up in Public Square, a few blocks from where the convention was being held at Quicken Loans Arena, and spoke about the need for reducing the influence of money in politics. Pearl was a managing director at BlackRock, one of the largest investment firms in the world, before turning full-time to campaign-finance reform work two years ago. Pudner spent decades as a Republican campaign strategist, having worked most recently on the campaign of Dave Brat who unseated then-House Majority Leader Eric Cantor, despite being outspent 26 to 1. Both Pearl and Pudner sat down with The American Prospect in Cleveland to discuss their shared effort to reform the U.S. campaign-finance system. This interview has been edited and condensed. T he Prospect : How are Republicans responding to your call...