How Uncle Sam can encourage corporations to be more patriotic

By using the power of the public purse, can we encourage federal contractors to be upstanding corporate citizens?

Image Credit: Glen Lowry

Since the struggle for American independence, times of national crisis have called for shared sacrifice.

In World War II, for example, a number of top business executives became “dollar-a-year men” who donated their know-how to the war effort for a token sum. To those on the front lines, that sort of sacrifice sent a powerful message: “We are in this together.”

This past year of crisis should have been another period of unity and shared sacrifice. Instead, many top corporate executives enriched themselves while their front-line employees shouldered the burden of the pandemic.

At big U.S. corporations, CEO pay soared while COVID raged.

Our Institute for Policy Studies analysis of SEC filings of the 100 largest low-wage employers found that over half rigged their own rules to inflate CEO pay in 2020. Compensation for top executives went up by 29 percent at those firms while median worker pay dropped by 2 percent.

In good times and bad, the corporate incentive system often rewards business practices that sharpen our economic and social divides. Slashing labor costs by shipping U.S. jobs overseas, for instance, increases ordinary American families’ economic insecurity but enhances the value of executives’ stock-based compensation. Slashing IRS bills by recording profits in offshore tax havens can also enrich CEOs while draining revenue for vital public services.

The congressional debate over infrastructure spending offers an enormous opportunity to change these incentives.

Leading companies are positioned to receive a huge infusion of taxpayer dollars to strengthen our nation’s roads, bridges, and mass transit systems and speed the transition to clean-energy technologies. By strategically wielding the power of the public purse, we can encourage these companies to raise the bar for corporate citizenship, too.

Read the full commentary on Marketwatch


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IPS Global Economy Project Director Sarah Anderson’s current work includes research, writing, and networking on issues related to the impact of international trade, finance, and investment policies on inequality, sustainability, and human rights. Sarah is also a well-known expert on executive compensation, as the lead author of 16 annual “Executive Excess” reports that have received extensive media coverage. In 2009, she served on an advisory committee to the Obama administration on bilateral investment treaties. In 2000, she served on the staff of the bipartisan International Financial Institutions Advisory Commission (“Meltzer Commission”), commissioned by the U.S. Congress to evaluate the World Bank and IMF. Sarah is also a board member of Jubilee USA Network and a co-author of the books Field Guide to the Global Economy (New Press, 2nd edition, 2005) and Alternatives to Economic Globalization (Berrett-Koehler, 2nd edition, 2004). Prior to coming to IPS in 1992, Sarah was a consultant to the U.S. Agency for International Development (1989-1992) and an editor for the Deutsche Presse-Agentur (1988). She holds a Masters in International Affairs from The American University and a BA in Journalism from Northwestern University.