That America’s income distribution has grown dramatically more unequal in the past 40 years is beyond debate. The share of the top 1 percent has doubled since 1980, to over 20 percent of all income.
Could it get any worse? A look at America’s large, privately held corporations suggests it could.
When Americans think of large corporations, most of us think of corporations like Pepsi or ExxonMobil, whose shares are publicly traded.
We can know a fair amount about these companies from the reports they file with the Securities and Exchange Commission. Thanks to an Obama-era rule that recently went into effect, we even know how much their CEO makes compared to typical workers.
Many large corporations, however, are privately owned. Typically a single shareholder, members of the same family, or perhaps a small group of investors owns all the stock of one of those corporations.
These private owners aren’t required to release much financial information, and few do so voluntarily. So their finances are much more opaque.
According to Forbes, there are over 200 privately held corporations in America with over $2 billion in annual revenue. The largest, Cargill, had $109 billion in revenue in 2016.
Unlike at publicly traded corporations, we don’t know just how unequal things are between the employees of those privately held corporations and their owners. Might those owners be stingier with workers?
I began to wonder about this when I saw an announcement by Ronald Cameron, the owner and CEO of the poultry processing Mountaire Corporation, of bonuses he’d decided to give his hourly employees. Those bonuses, he said, were made possible by the tax legislation recently passed by the Republican Congress.
Mountaire, according to Forbes, has 6,000 employees and just over $2 billion in annual revenue. If every employee qualified for the maximum bonus of $1,000 Cameron announced, Mountaire’s employees would receive $6 million in bonuses total.
Cameron, I’d noticed, is also a major Republican donor. He contributed over $14 million to Republican candidates for the 2016 election, including $2.4 million to Trump.
In other words, he was substantially more generous with politicians than with the 6,000 employees whose hard work has made him a very rich man.
What then, I wondered, might the income distribution be for the population at Mountaire — that is, the 6,000 employees and Cameron? What percentage of Mountaire’s profit does Cameron pay to his 6,000 employees, and how much does he keep for himself?
Mountaire doesn’t release that information. But we can make an educated guess based on what we know about similarly sized, publicly traded poultry processing companies.
Based on profit margins from those companies, along with data from a recent salary survey of Mountaire employees, Mountaire likely is paying $180 million or less in wages to its 6,000 employees each year — leaving about $200 million in pre-tax profits for CEO and owner Cameron.
In other words, over half the income at Mountaire may go to one person. That’s 600 times as concentrated as in the country overall.
Mountaire could be an outlier. But consider this: CEOs at publicly traded corporations resisted reporting their ratio of CEO compensation to median worker pay for seven years. Honeywell recently became the first corporation to report its CEO to worker pay ratio, an eye-popping 333 to 1.
That’s how bad it is at the companies we know about. How bad might it be at the companies we don’t?