Big Labor’s Big Pay Gap: Facts Overrun By Political Fiction

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Luka Ladan Communications Director, Center for Union Facts
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S&P 500 CEOs are responsible for “America’s income inequality crisis.” At least, according to union officials.

The AFL-CIO — America’s largest federation of labor unions — recently released its annual Executive Paywatch report, which blames income inequality on business leaders who are “paying themselves more and more.”

In an attempt to expose “corporate greed,” the AFL-CIO report found that the “average CEO of an S&P 500 Index company” earned $13.94 million in total compensation last year, while the “average production and non-supervisory worker” made just over $38,000. Therefore, union researchers conclude, CEO pay is “361 times that of the average worker.”

Memo to union officials: It’s not exactly groundbreaking that the CEOs of Apple and Time Warner — companies with thousands of employees — make more money than a part-time restaurant worker. But that is the least of many fake comparisons masquerading as real arithmetic.

As the American Enterprise Institute’s Mark Perry explains, the report is “based on a series of flawed statistical assumptions.” For example, the AFL-CIO routinely uses the mean CEO compensation figure, which is always higher than the more sensible median figure.

When you include the chief executives at America’s 30 million small businesses—from neighborhood grocery stores to mom-and-pop diners—the pay gap drops considerably. According to Bureau of Labor Statistics data, the average U.S. “chief executive,” including small business owners, earned $196,050 in gross salary last year — nowhere near the AFL-CIO’s $13.94 million figure.

Experts at the Annenberg Public Policy Center explain that “when all CEOs are included, the pay disparity is far smaller” than union leadership leads on.

Even the Washington Post’s Fact Checker has chimed in: When then-presidential candidate Hillary Clinton repeated the AFL-CIO’s talking points at a campaign stop— claiming that “the average CEO makes about 300 times what the average worker makes”—Fact Checker described her claim as “completely wrong.”

If anything, the AFL-CIO’s flawed research changes the subject — from Big Labor’s own “income inequality crisis.” A review of union financial disclosures filed with the Labor Department found that dozens of union presidents make more than the average CEO. In fact, 146 union presidents earn a higher gross salary than the average CEO ($196,050). Three make more than $500,000 in base salary alone.

And union officials can also expect much more than a salary, including paid-for travel expenses and other business disbursements. In 2017, 193 union presidents earned more than $196,050 in total compensation.

Timothy Canoll, president of the Air Line Pilots Association, made nearly $793,000. He was joined by five other union presidents who collected well over $500,000. AFL-CIO President Richard Trumka, whose labor group put out the Executive Paywatch report, earned more than $315,000 last year—far more than a typical CEO. Throwing stones from glass houses makes little sense for union bigwigs.

In 2017, fewer than seven percent of private-sector employees were union members — down from one-third of all workers in the 1950s. According to Rasmussen polling, nearly 60 percent of current and former union workers consider union officials “out of touch” with their members.

Given fiascos like “Executive Paywatch,” can you blame them?

Luka Ladan is communications director at the Center for Union Facts.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.