Editor’s Note: A version of this story appeared in CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.
In today’s business news: A new report highlights the gap between CEO and worker pay; a $25 toy is now selling for $28,000; and RIP Twitter Fleets.
Here’s your midweek outrage fuel: The gulf between what your boss makes and what you make got even wider during the pandemic. How much wider? *cracks knuckles*
Let’s dig in: The average CEO of an S&P 500 company made 299 times the average worker’s salary last year, according to AFL-CIO’s annual Executive Paywatch report.
Breaking that down a bit more…
- The average CEO’s compensation: $15.5 million. That’s a 5% increase from the previous year.
- The average worker’s: $43,512. A 1% increase.
- CEO raises: Been getting an average raise bump of $260,000 every. single. year. for the past decade. (Just as an aside: the federal minimum wage hasn’t been raised once since 2009.)
- Worker raises: Been getting an average raise increase of $957 a year.
And before you @ me with your “But if the free market has determined that a CEO’s skills are of a certain value, why shouldn’t he” — and it’s almost always a he — “be entitled to that compensation?” Absolutely, sure, hurray capitalism, etc. But this isn’t a pure free market. Here’s why.
Executives’ base pay, which actually decreased slightly last year, is only a fraction of their total compensation. The rest is “performance-based” in the form of stocks, options and bonuses. Equity compensation, especially in stock-based pay, increased over $1 million last year.
I put “performance-based” in quotes there for a reason. Because while I’m sure many of them did a fine job, and corporate earnings are up a ton, CEOs shouldn’t get all the credit for their companies’ equity growth. A good deal of credit goes to our boy, Fed Savage himself, the Silver Fox of finance, Jerome Powell.
To keep financial markets from imploding last year, J-Money and his team of nerds over at the Federal Reserve staged an unprecedented intervention to buy up corporate bonds and keep cash flowing. Stocks have been going gangbusters ever since, and that’s kept CEOs from having to degrade themselves by shopping off the rack or drinking wine from outside the Loire Valley.
QUOTE OF THE DAY
“If we do see that … inflation is on a path to remain well above our goals and risks setting us off on a period of high inflation, then we’ll use our tools to guide inflation back to 2%.”
All eyes were on Federal Reserve Chairman Jerome Powell Wednesday as he assured lawmakers, as well as jittery investors, that the central bank would move swiftly to halt inflation if it gets out of hand. “In the end, it will be transitory,” Powell said. “And people need to have faith in the central bank that we will do it.”
US markets closed mixed after the remarks.
‘RIGHT TO REPAIR’
Your phone shatters. The repair costs too much money. You give up and buy a new device. That’s just the way Apple (or whoever) planned it.
The same design flaws plague just about everything from tractors to hospital equipment. It’s one of those nefarious business strategies that flies under the radar often because we’ve all become conditioned to it. Not only is it a huge headache for consumers, it’s an environmental nightmare.
But a movement called “right to repair” has been gaining traction in recent years, and last week it got a huge bump from the White House itself.
ICYMI: President Joe Biden on Friday signed an executive order aimed at promoting competition in the US economy. It includes a provision that would prevent manufacturers like Apple from imposing restrictions on independent device repair shops and DIY repairs. Granted, cellphone makers aren’t the only companies obstructing repairs, but the EO specifically calls them out for practices that make repairs “more costly and time consuming.”
At least 27 states have also considered right-to-repair legislation. The European Union and Australia have thrown their weight behind the issue. Even Apple co-founder Steve Wozniak came out in support of it, saying companies inhibit third-party repairs “because it gives the companies power, control over everything.”
CNN Business’ Clare Duffy has more.
NUMBER OF THE DAY
Here’s yet another quirk of the pandemic’s impact on supply chains and prices: A children’s toy that used to cost $25 is now priced at more than a thousand times that. The toy is an “Under the Sea”-themed foam jigsaw puzzle. Apparently it was a popular one, but the company that makes it, Premium Joy, said it’s discontinuing production because it’s become too expensive to manufacture and import. There’s one left, so the owner’s seeing just how much he can get for it and selling the puzzle for $28,000.
WHAT ELSE IS GOING ON
- That didn’t last long: Twitter is killing its Snapchat-like story feature Fleets next month, less than a year after introducing it.
- FIGS, the scrubs maker that went public in May, has nearly doubled in value since then.
- India’s biggest tech IPO is here: Food delivery startup Zomato is looking to raise almost $1.3 billion this week in an initial public offering in Mumbai.
Enjoying Nightcap? Sign up here and you’ll get all of this, plus some funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day week around here.)
™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.