Are greedy corporate CEOs driving inflation? It might seem like a stretch, but the fact is, their behavior has a major impact on the cost of goods and services.
The question is, how much blame do they deserve for what’s happening with inflation? Let’s take a look at this issue from the perspective of both corporate CEOs and average Americans.
by David Stone
The Cost of Doing Business
When it comes to running a business, there are certain costs involved.
Some of these costs are unavoidable and can include things like rent, payroll, taxes, and utilities. Other costs are more discretionary in nature and relate directly to the decisions made by corporate executives.
These can include executive pay packages and stock buybacks—both of which have skyrocketed in recent years. Just like inflation.
A Recipe for Inflation?
The recent increase in stock buybacks has been linked to rising inflation levels.
That’s because companies that buy back stocks essentially reduce their own supply—which can lead to higher prices for consumers since demand remains unchanged or increases over time as the population grows.
Simply, when fewer stocks are available on the market, prices tend to go up.
It’s a cycle that benefits corporate executives while leaving average Americans feeling the pinch when it comes time to pay their bills or purchase essential items such as food or clothing.
Rising Executive Pay Packages
Another factor contributing to inflation in America is rising executive pay packages.
According to data collected by Bloomberg, CEO compensation increased by 4% between 2018 and 2019—a rate that far outstrips wage growth for most other workers during this same period (which was only 2%).
CEOs are getting paid more than ever before while other workers struggle just keeping up with the cost of living.
This trend appears unlikely to change anytime soon given that annual pay packages for top executives continue to inch upward year after year despite public outcry against such behavior from both sides of the political aisle.
The Pandemic Supply Chair Effect
Multiple reports have corporate CEOs on public earnings calls boasting of raising prices. They find it easy because news reports on supply chain issues cushioned the moves.
While it’s true that stalled supply chains drive prices up because there’s more money chasing fewer goods, some CEOs use this shield to push profits even higher.
A U.S. Senate committee report confirms this.
Greedy Corporate CEOs?
At the end of the day, it’s clear that greed plays a role in driving up inflation levels in America today.
Executives who receive excessive pay packages or engage in stock buybacks do so at the expense of average Americans who find themselves having to stretch every dollar just to make ends meet each month.
Greedy corporate CEOs have driven up prices on essential items such as food and clothing while also taking home larger salaries than ever before—all while wages remain stagnant for most other workers across the country.
Clearly, something needs to be done if we want our economy truly thrive instead of just barely surviving!