Mainstream pundits continue to offer muddled explanations for the ongoing inflation crisis. A new report from the AFL-CIO highlights a major factor that often flies under the radar: greedy CEOs and their record profits.
The average American employee would have had to start working in 1755 to make as much as their CEO does in a year. (PeopleImages / Getty Images)
Stunning political events have taken place over the past month. A major presidential candidate who seemed poised to win survived an attempted assassination, after which the other major candidate dropped out, and his replacement precipitated a wild swing in momentum — all in only a few weeks’ time.
These events have accented an election that already involved important issues framed in existential terms, from the future of reproductive rights to the very continuation of our democracy. But as the smoke settles (for now) and the main presidential contenders have become established, this election may turn on one central issue: inflation.
While everyone agrees that inflation is happening — less intensely than at its recent peak, but still with major impacts on American households — the Joe Biden administration has struggled to articulate a clear explanation of its central causes and effective solutions. Closer to the beginning of his term, the Biden team and establishment media blamed supply chain issues. More recently, they have resorted to wonky statistics to explain that actually Americans don’t realize how good they have it. The solution has essentially been outsourced to the Federal Reserve and their one-trick pony approach of increasing interest rates.
The AFL-CIO, the country’s major labor union federation, has put forward a much clearer and more compelling message, placing the blame for crippling price increases squarely on rapacious CEOs and their outlandish compensation. In its annual Executive Paywatch report, it finds that CEO pay at S&P 500 companies has actually increased 6 percent over the last year to an average of $17.7 million.
The statistics put the economy’s weaknesses in shocking perspective. Workers at these companies would need to work more than five career lifetimes to earn what their CEOs make in only one year. The report frames it another way: the median employee would have needed to start working in the year 1755 to catch up to their CEO. An average worker at Gap would have had to start in 137 BCE (no, that’s not a typo) to match their boss’s pay in 2023.
The report includes detailed examples of price gouging by corporations in some of the most important sectors of our economy. Air travel has been a nightmare for Americans, as flight cancellations and higher prices have become the norm. While Delta Air Lines CEO Ed Bastian announced in 2022 that flight prices would increase by 30 percent, he received a 256 percent increase to his own compensation.
The median employee would have needed to start working in the year 1755 to catch up to their CEO.
Gas price hikes have been one of the major causes of consumer pain. They’ve often been portrayed as an inevitable result of the war in Ukraine. But this AFL-CIO report shows that between 2021 and 2023 the compensation of Exxon Mobil CEO Darren Woods increased from $23.6 million to $36.9 million. The company itself boasted record profits in 2022, the same year that global energy prices increased.
Housing costs for both renters and homeowners are a major source of economic anxiety and an overall indicator of a broken system, especially for younger people trying to gain a foothold in the housing market. Here, too, the story is incomplete without a look at the earnings of people at the top of the industry. For example, Thomas Toomey, CEO of apartment rental company UDR, increased his pocketbook by 44 percent in 2023 while the company enjoyed a 16 percent increase in rental income going back to 2022.
The AFL-CIO report compiles a host of other stunning examples involving companies across the economy. In case after case, the very industries that have experienced price hikes have funneled huge sums of money to owners, CEOs, and other wealthy stakeholders. No account of the current affordability crisis is adequate unless it illuminates how consumers are paying the price for massive payouts at the top of the corporate pyramid.
Everyone should read the report, but especially the Kamala Harris–Tim Walz team. It provides the ammo for the campaign to focus the economic angst and anger of voters where it should be: the elite corporate class.
The excitement and general good vibes around vice-presidential candidate Tim Walz offers the possibility that this message could excite both the Democratic base and independent voters. Walz made a name for himself by passing populist economic measures in Minnesota and can serve as a credible fighter for average consumers. This line of attack would also continue the heightened enthusiasm from the labor movement ever since Walz joined the ticket.
Taking on corporate price gouging would mean continuing the laudable work that both the Federal Trade Commission (FTC) and Consumer Finance Protection Bureau have done under the Biden administration. However, there have been worrying signs that Harris may bow to pressure from wealthy donors to replace FTC chair Lina Khan, who has made a name for herself by boldly going after the very corporate villains mentioned in the AFL-CIO’s report.
Corporate gouging is not the only cause of inflation, but it certainly is a bigger factor than was initially acknowledged. Wealthy CEOs have taken us for a ride, cynically using the widespread expectation and acceptance of inflation as a way to hoard more wealth. Now is the time for the Democratic Party to effectively speak to this issue and, more importantly, do something about it.