The government gets involved in private sector salaries

The government, through the Securities & Exchange Commission, has passed a regulation requiring that all publicly-trade companies have to publish the ratio between how much the chief executives get paid as compared to their average worker.  On the other end of the pay scale, a number of Democrats are pushing for and some local governments are implementing a $15 per hour minimum wage.

Do you think these policies will reduce income inequality?  Should the government be meddling in salary decisions with no regard for how the marketplace sets wages and prices?

From Drew Harwell, In win for income-gap fight, SEC approves rule comparing CEO and worker pay – The Washington Post:

The Securities and Exchange Commission on Wednesday made it official: Public companies will soon have to say exactly how their chief executives’ payday compares with a typical employee’s.

In a 3-to-2 vote, the commission backed a long-delayed rule demanding that companies publicly share their “pay ratio,” a potentially embarrassing corporate revealing that will highlight the country’s growing workplace pay gap.

Calling it “one of the most controversial rules” to arise out of the sweeping Dodd-Frank reform following the financial crisis, the rule’s approving members, including SEC chair Mary Jo White, called it a thoughtful and reasonable measure that would help investors and workers better understand how companies reward both sides of their workforce.

But the SEC’s two Republican commissioners belittled the rule as an easily misconstrued burden built to embarrass big businesses. Commissioner Michael Piwowar called it “a page out of the playbook of Big Labor.”

Commissioner Dan Gallagher decried it as a “low-quality” number that was “likely to be useless for anything but naming and shaming” well-paid corporate execs, and desired largely by “ideologues, special-interest groups … and idiosyncratic investors.” He added, “Addressing income inequality is not the province of the SEC.”

Companies will have to share how the chief executive’s pay compares to the median pay of workers—the middle line in which half of all employees make more and half make less. At America’s biggest companies, the top boss makes more than $300 for every $1 its typical worker earns, up from a $20-to-$1 split in 1965, Economic Policy Institute data show.

The new measure will cover all of a company’s full-time, part-time and temporary employees, though the business can use statistical sampling and reasonable estimates, without needing to compile their workforce’s entire payroll. . . .

Companies will have to share the ratio starting in 2017, seven years after Congress first mandated the rule go into effect. Supporters of the rule — including Congressional Democrats, workers’ unions, good-governance advocates and some institutional investors — have questioned what took so long for the simple ratio to become law, with Democratic presidential candidate Hillary Rodham Clinton saying last month, “There is no excuse for taking five years to get this done.”