Rep. Keith Ellison (D., Minn.) said Wednesday that the government should "start talking about" regulating pay disparities between CEOs and other employees.
Ellison touted his report about newly disclosed figures showing CEOs make on average 339 times as much as the median employee. The Securities and Exchange Commission (SEC) mandated the pay disclosures as part of the Dodd-Frank banking reform legislation, and Ellison said transparency is just the beginning.
"Are you favoring the government actually regulating the relationship between CEO pay and the average worker?" Bloomberg host David Westin asked.
"I think it is a very good idea, and I think we should start talking about it," Ellison replied.
The congressman went on to say the country should be having a larger conversation with companies about the social cost of income inequality and pay disparities. He said shareholders should be critical of dividends obtained through risky practices that "end up imperiling the company."
"This is a broad conversation that needs to, of course, take in policymakers like me," Ellison said. "But shareholders and investors need to be worried about this too because I do not think this leads to the overall health of the company. I think it takes care of a few people at the tip-top."
Ellison based his argument on the "exorbitant amount of money" CEOs make compared to workers, as shown in the SEC-mandated disclosures.
Ellison argued the pay discrepancies were "bad and extreme," citing Mattel’s CEO being paid "almost 5,000 times more than the average worker."
He also said some companies try to hire part-time workers to whom they do not have to offer health care and retirement benefits, and he lambasted those that practice offshoring instead of paying American workers more.
"Other companies come back and say, ‘Well, what about our workers overseas? They have a lower cost of living,’" Ellison said. "That just means you are offshoring to places where the wages are low, the environmental protections are low, the workers’ rights are low, the human rights are low, so you can make a lot of money."
Published under: Dodd-Frank , Financial Industry , Keith Ellison , Regulation , Securities and Exchange Commission