2015 Executive PayWatch Site Demonstrates How Pay Ratio Would Be Used in Organizing Efforts

May 15, 2015

This week, the AFL-CIO launched its annual Executive PayWatch website, with much of it focused on shaming and bolstering union organizing efforts at a large, well-known retailer, thus providing a tailor-made example of how the pay ratio will be used if and when it is finalized.  The 2015 site notes that the CEO-to-average employee pay ratio increased 12 percent in 2014 to 373-to-1.  However, in a departure from the past editions, which have focused on raising the minimum wage and on income inequality by illustrating the difference between CEO pay and average employee pay at several companies, this year's edition focuses predominantly on Wal-Mart, going as far as to compare the aggregate wealth of the Walton family, which founded the company, with the aggregate wealth of all U.S. families. The site compares Wal-Mart's pay ratio to that of Costco's, noting that "[s]ome big retailers, for example Costco, are able to pass savings onto its customers and provide workers with good pay, benefits and consistent schedules."  The site also includes a comparison of Wal-Mart's CEO's hourly rate to that of the average Wal-Mart worker as well as accusations that Wal-Mart stifles worker organizing efforts, in each case linking an increase in the pay ratio to successful organizing efforts.  The data on the PayWatch site is based on a survey of 472 S&P 500 companies and uses the CEO summary compensation table pay value compared to average employee salary data from the Bureau of Labor Statistics to calculate the pay ratio. The apparent ease with which the AFL-CIO calculates the pay ratio for S&P 500 companies begs the question as to why a company-specific pay ratio is needed.  Even so, the website, due to its organizing focus, provides a glimpse of how certain special interest shareholders plan to use the pay ratio.  The SEC has indicated it expects to promulgate a final pay ratio rule in the latter half of 2015.