AFL-CIO’s Pay Ratio Doesn’t Tell The Whole Story

Richard Berman President, Berman and Company
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“The rules of the economy have been set against us for the last 30 or 40 years, and people are just tired of it,” AFL-CIO President Richard Trumka recently claimed.

It’s been Big Labor’s narrative for a while now. In May, the AFL-CIO concluded the CEO-to-worker pay ratio is 335:1 — that is, CEOs of S&P 500 companies received an average of $12.4 million in total compensation in 2015, compared to $36,875 for the “average nonsupervisory worker.” It suggests the average CEO makes 335 times more money per year than the average worker.

But numerous experts — from The Washington Post’s own Fact Checker to the American Enterprise Institute’s Mark Perry — have questioned the math behind the eye-catching pay ratio. Perry points out that the AFL-CIO’s metrics only take into account the highest-paid executives from the S&P 500, not the average pay of all chief executives in the United States. According to the Bureau of Labor Statistics, U.S. chief executives actually earned an average annual salary of $185,850. That’s a far cry from “12.4 million in total compensation,” and it means the actual CEO-to-worker pay gap falls into single digits.

Instead of cherry-picking data to match his pre-conceived notions, Trumka would be better served looking inward. He raked in more than $304,000 in total compensation in 2015. And his salary — $272,250 last year — puts him well above the average chief executive. This isn’t to suggest union presidents don’t deserve a steady income — managing a labor union is no walk in the park. But they shouldn’t cry foul when America’s top executives earn theirs.

Trumka’s not alone. According to a Center for Union Facts analysis of Labor Department filings, 153 union presidents earned more in gross salary than the average CEO in 2015. John Niccolai, president of the United Food and Commercial Workers Local 464, made $598,914 last year. Terry Sullivan, president of the Laborers’ International Union, wasn’t far behind at $501,648. More than 10 union presidents made more than $400,000 in gross salary.

And union bosses — like C-level executives — can expect more than just a salary. Expense accounts and other forms of compensation drove Sullivan’s 2015 earnings to $672,804. Niccolai’s total surpassed $600,000. Labor leaders have been chronicled spending member dues — still mandatory in many states — on anything from $160 entrees and luxury wines to pricy limousine services.

Take Harold Schaitberger, the president of the International Association of Fire Fighters (IAFF). Schaitberger — who has demonstrated “a fondness for first-class airfare and chauffeured travel” — accrues roughly $30,000 a year in hired-car rides all by himself. One year, he spent over $110,000 on little more than 100 meals, including a $245 bottle of wine and $160 rack of lamb.

Yet the key distinction between union bosses and CEOs is that union spending accounts are funded by monthly dues payments which are difficult to untrack, while chief executives — who often enjoy limited tenure — are beholden to their shareholders. This means union members are often forced to sit idly by as their monthly dues — originally intended for collective bargaining — are effectively hijacked to satisfy union bosses’ lavish temptations.

Big Labor is running roughshod over the workforce, despite union bosses’ desperate attempt to change the subject.

Richard Berman is the executive director of the Center for Union Facts.