By Cydney Posner
Remember the effort in the House to repeal the internal pay equity disclosure provision (Section 953(b)) of Dodd-Frank? (See my email of 6/24/11.) Recently, four Senate Democrats, Robert Menendez (New Jersey), Tom Harkin (Iowa), Sherrod Brown (Ohio) and Carl Levin (Michigan), have said they would oppose the repeal of that provision. The quartet sent a letter to the CEO of a leading lobbying group, the Center on Executive Compensation, urging that it to drop its opposition to this provision. The letter suggests that the organization opposes this "common sense provision" in part because it will reveal information that could be embarrassing to its corporate members. While repeal of Section 953(b) may look like easy sledding in the House, there will certainly be stiffer opposition in the Senate.
The letter stresses that generation of a long-lasting recovery depends on the ability of the middle classes to share in their companies' successes through rising wages and benefits; Section 953(b) was designed to help to further this goal by increasing transparency of the rising pay discrepancies between CEOs and their workers. The senators' letter specifically cites data showing that in 1980, the ratio of CEO pay to median factory worker pay was 42:1; by 2010, the ratio was 319:1. Over the last ten years, they argue, while CEO pay skyrocketed, median family incomes actually fell for the first time since the Great Depression.
The letter also observes that some companies have voluntarily disclosed pay ratio information (Whole Foods Market and MBIA). Note, however, that the calculations used by those companies are much simpler than the calculation required under section 953(b) as it currently stands and are closer to the version proposed by Barney Frank in his failed amendments to the Republican House bill (described in the email identified above).