Multimillion-dollar CEO pay at these 20 low-wage companies is costing you. This is the only fix.
Walk into any big-box store, fast-food chain, warehouse, or app-based delivery hub and you’ll meet the people who keep the wheels of the consumer economy turning. Many of them are paid wages that can’t reliably cover rent, healthcare, and childcare in their communities. Now open the proxy statement for the same companies and you’ll find something else: CEOs taking home packages worth tens of millions, bolstered by buybacks, stock awards, and “performance” targets that often track the market more than any singular genius.
These aren’t separate stories. They’re the same story about who pays the bill for a business model built on low wages. You do—through higher taxes that backfill basic needs the employer doesn’t cover, through fragile local economies, and through a marketplace skewed by incentives that reward financial engineering over productive investment.
Across 20 of the country’s most prominent low-wage employers—spanning retail, restaurants, hospitality, logistics, and gig platforms—the pattern repeats: CEO pay measured in millions, median worker pay measured in tens of thousands, and a gap measured in the hundreds-to-one. The details vary by company and year, but the structure is consistent, and the spillover costs land on households and public budgets that had no say in the compensation committee’s decision.
How their CEO pay model costs you
– Taxpayer backstops. When large employers pay less than a living wage, workers turn—appropriately—to programs like the Earned Income Tax Credit, SNAP, Medicaid, and housing assistance. Those programs are vital. But when profitable companies design around them, taxpayers effectively subsidize low-wage business models while executives capture the upside. The public backstop becomes a line item in the corporate labor strategy.
– Price and wage suppression. The “save money by paying less” playbook forces competitors to keep wages low or sacrifice market share, especially in sectors where a handful of national chains set the tone. Wage suppression drags on local demand: workers paid too little spend less, weakening the very communities these companies depend on.
– Short-termism over productivity. Executive incentives tied to stock price and buybacks make it easy to juice EPS without building capabilities or paying to reduce costly turnover. That hurts long-run productivity and resilience—the investments that would actually make the economy more competitive.
– Risk transfer to the public. Volatile schedules, high turnover, and lean staffing push risk down the chain—from shareholders who enjoy steady returns to workers and communities who absorb instability and burnout.
The usual defenses don’t hold up
– “We pay what the market demands for top talent.” Corporate boards benchmark CEO pay against other large companies, creating an upward spiral that’s disconnected from unique value. Meanwhile, the “market” for front-line labor is shaped by bargaining power, not just supply and demand—rules favoring anti-union tactics, fissured workplaces, and franchising all keep wages lower than workers’ productivity would justify.
– “If wages go up, prices will soar.” Decades of empirical research show modest cost pass-throughs from raising wage floors, often measured in pennies—not dollars—on a burger or a big-box basket. Lower turnover and higher productivity recoup costs. When firms do raise prices, it’s often because they can, not because they must.
– “Shareholders can discipline pay.” They haven’t. “Say on pay” votes are advisory, compensation consultants normalize excess, and index funds rarely vote against pay plans that track market returns. Voluntary guardrails fail precisely because no single company wants to be the first mover in a talent arms race.
The only fix: Price the externality by tying corporate taxes and public privileges to fair pay
We should stop pretending disclosure and shame will fix a structural incentive problem. The only durable solution is to make the low-wage, high-CEO-pay model more expensive than paying a living wage—through federal policy that links a company’s tax bill and access to public contracts to how it pays its workforce relative to the top.
Here’s how a single integrated reform could work:
– A living-wage floor, locally indexed. Establish a federal living-wage standard pegged to reputable local cost-of-living benchmarks and automatically indexed to inflation. Companies would be free to set any internal pay strategy they choose—but the median pay for their U.S. workforce must at least meet the local living wage (cash + the actuarial value of core benefits like health coverage and predictable hours).
– A CEO pay–ratio surtax that rises with the gap. If a firm’s CEO-to-median-worker pay ratio exceeds defined thresholds, a surtax applies to corporate income. For example, a 0.5% surtax above 100:1, scaling up to 5% above 500:1. The surtax is fully waived if the firm’s U.S. median worker is at or above the local living wage and the company meets baseline standards for scheduling and benefits. In other words: extraordinary executive pay is fine—but only after you’ve met the basic pay standard for the people who make the business run.
– End tax favoritism for outsized executive pay. Make executive compensation above a set multiple of the median worker’s pay (or above a capped dollar amount) non-deductible for corporate tax purposes. Today, taxpayers indirectly subsidize sky-high packages via deductions. That should stop unless and until the firm meets the living-wage floor.
– Tie public privileges to fair pay. Condition eligibility for federal contracts, subsidies, and certain regulatory fast tracks on compliance. Government should not be the customer of last resort for firms that offload labor costs onto the public.
– Small-business carveouts and phase-in. Apply the surtax to large employers, with a clear size threshold (for example, 500+ U.S. employees) and a multi-year phase-in so firms can plan and adapt. Exempt truly small businesses whose margins and local roles differ fundamentally from national chains.
This is one fix, not three. It’s the same principle applied consistently: internalize the social cost of low wages. If you pay fairly, the tax and procurement system rewards you. If you don’t, the system charges you for the costs you’re shifting to everyone else. Boards can still pay their CEO $25 million—but only after they’ve ensured the median worker can afford to live where they work.
Why this approach works where others fail
– It respects business choice while aligning incentives. The policy doesn’t micromanage pay plans. It changes the math so that investing in your workforce becomes the most rational, least risky option.
– It targets the real lever: the gap. The problem isn’t any one paycheck; it’s a compensation structure that tolerates poverty wages at scale while showering the top with windfalls. A ratio-based tax directly addresses that structure.
– It scales quickly. We don’t need to wait for every city to pass a patchwork of ordinances. A federal standard, with local indexing, achieves uniformity without ignoring regional realities.
– It lowers taxpayer exposure. Over time, fewer working families will need public assistance to make ends meet, freeing dollars for schools, infrastructure, and childcare—or for tax relief.
– It rewards firms already doing the right thing. Companies that pay living wages and keep executive pay in check won’t be penalized; they’ll gain a cost advantage over competitors who’ve leaned on the public to subsidize their labor model.
What about jobs?
Raising the wage floor at firms large enough to pay it does not destroy jobs en masse; it changes who pays for them. Turnover falls. Hiring and training costs fall. Productivity rises as experienced workers stay and customer satisfaction improves. Modest price adjustments, where they happen, are spread across millions of customers rather than concentrated on the backs of a few hundred thousand underpaid workers and local taxpayers.
And if a business model truly can’t survive unless its workers qualify for food assistance, that’s not a competitive strategy; it’s a transfer strategy. Investors can do better. So can public policy.
A note about “these 20 companies”
You don’t need a list to know who they are. Think of the national chains built on part-time scheduling, high turnover, and thin margins offset by massive scale. Think of app-based platforms that misclassify labor as “independent” while tightly controlling pay and performance. Think of dollar-store formats that expand in communities with few alternatives, and hotels whose staffing levels haven’t returned even as travel has. Their names rotate in and out of headlines as proxy filings roll in, but the pattern—and the cost to you—stays the same.
We’ve tried disclosure. We’ve tried voluntary codes. We’ve tried asking nicely. The incentives haven’t changed. It’s time to align them with what the economy needs: companies that can compete without relying on poverty wages and public subsidies.
Make firms pay what their labor model truly costs—or reward them for paying a living wage. That’s the only fix that will last.
