Here’s another reason to do away with runaway CEO pay. A study shows bloated CEO pay can make the boss mean.
The study examined the corporate behavior of 261 companies and found a close correlation between pay inequality and poor treatment of workers. In companies where CEOs made much more than their average workers, the companies were more likely to underfund pensions or cut corners on health and safety. Often, according to the study, the bosses engaged in a cost-benefit analysis, calculating that a fine would be a cost of doing business, compared with the profits they could make.
“You end up basically thinking of those at the bottom as numbers,’’ Sreedhari Desai, a Harvard research fellow who co-authored the study, told The Boston Globe columnist Joanna Weiss. “You feel somehow that they aren’t even worthy of the normal people that you’d meet. They’re disposable.’’
Writing about the study last summer for the Campaign for America’s Future, Sam Pizzigati sums it up this way:
The…data and the lab games, in the end, would both generate findings that point to the same conclusion. Wide pay gaps between executives and workers…enhance the sense of power executives feel and cause them to “objectify lower level employees.”
Or, to put the matter more plainly, “executives with higher income treat employees more meanly.”
Click here to read the study, “When Executives Rake in Millions: Meanness in Organizations.”
This article was originally published on AFL-CIO Now Blog.
About the Author: James Parks had his first encounter with unions at Gannett’s newspaper in Cincinnati when his colleagues in the newsroom tried to organize a unit of The Newspaper Guild. He is a journalist by trade, and worked for newspapers in five different states before joining the AFL-CIO staff in 1990. His proudest career moment, though, was when he served, along with other union members and staff, as an official observer for South Africa’s first multiracial elections.