Senate Bill Punishes CEOS for Making Much More Than Workers

A former Secretary of Labor has come out in favor of a California Senate Bill that would punish companies for paying CEOS more than 100 times the median wage of workers.

Robert Reich, US Labor Secretary under the Clinton administration, was quoted as being in favor of the bill in Associated Press stories. He said the widening income gap between the top money-makers and their average worker is becoming an issue because the disparity is so large.

The bill will require a two-thirds majority to pass the legislature. Democratic senators say it’s important that California lead a national conversation about income disparity.

Introduced by Democrats Mark DeSaulnier of Concord and Loni Hancock of Berkeley. It takes the compensation for a company’s Chief Executive Officer (or highest paid employee) for the year and divides it by an average of the median pay for all employees for the previous taxable year. Those with too high a ratio face higher income tax rates.

It also singles out those who choose to cut employees here in favor of going with cheaper workers in another country. Those who hire workers overseas shall face an increase in their applicable tax rate by 50 percent, under the version of SB 1372 currently under discussion. Of course, for taxpayers who start a business in California, their first year’s number of full time employees overseas will be zero. This benefits new businesses who move to California.

But the legislation begs the question – who is going to be doing all this math? Won’t this create a new bureaucracy charged with determining whether or not each business is subject to the new rules? Possibly. The bill was introduced at the end of February.

2017-03-02T23:56:58+00:00 May 17th, 2014|General Labor Law|