How do you change pay inequality when the people who could don’t care?

US Outlook

An extended break in Miami Beach may be tempting, but US employees are taking less time off (Getty)

At last, something fun to look forward to. This week the Securities and Exchange Commission voted to finalise a new rule that will force American publicly traded companies to reveal the ratio of median worker pay to chief executive pay. It’s part of the Dodd-Frank Act, the much-maligned (by Wall Street anyway) but much-needed package of financial reforms introduced by Congress following the 2008 recession.

Not surprisingly, American executives aren’t very keen on the idea. It’s meant to embarrass them, they say, which tells me that they have something to be embarrassed about. Kind of like your girlfriend asking to take a look at your web browsing history – nothing to worry about if you’ve been looking at wedding planning; embarrassing if you’ve been browsing Russian brides.

Amazingly, the US Chamber of Commerce, mouthpiece for the poor and persecuted executive class, also thinks it’s a bad idea. According to the chamber, compliance will cost companies $700m (£450m); the SEC estimates a tenth of that cost.

However, it is hard to disagree with the chamber’s conclusion that this measure is a way to “name and shame” executives while promoting the income-inequality message that has become a big ideological talking point. Unfortunately, the chamber is probably also correct when it claims that this new disclosure will have no impact on executive salaries or income inequality.

Executive compensation is already public knowledge. Without wishing to insult the average American employee, the median company wage (which could be very different to the mean wage) is fairly meaningless. People who actually care how their pay compares with that of the chief executive already know and are in a minority; those who don’t care, or have been brainwashed into thinking that the board deserves several hundred times their pay, are already a significant majority. What matters to them is the next pay cheque, nothing else.

So while it is going to be fun to see bosses squirm a little more, the overall result is likely to be an exercise in futility. Barring the odd minor revolt, the people who can really do something about it – investors – are on the same team as executives. If investors cared about not giving entrepreneurial rewards to managers, they would have stopped years ago.

The only thing that might end obscene compensation and windfalls for executives is a proper long-term bear market, and that will hurt everyone. In a bull market, investors get what they want and don’t rock the boat, no matter how ludicrously top-heavy the boat has become.

In the long term, excessive executive pay at the expense of everyone else is counter-productive to society, but the chances of any executive board acting independently to close the pay gap are pretty much zero. They’ll shrug their shoulders and say “so what?” and it will be business as usual.

The truth is that only the working poor can fight battles for the working poor – and probably to the relief of the shameless executive class, ain’t nobody got time for that.

The politics of fear makes proper holidays a pipe dream

Summer holidays. Most Europeans are blissfully unaware of just how good they’ve got it. According to data compiled by Glassdoor, the job-search website, average paid leave for the American worker is 16 days per year – but a quarter don’t take all of it and 15 per cent take none at all. For low-wage Americans, it’s far worse. I know someone who has worked for the same big retailer for 16 years and has now “earned” 22 hours of paid annual holiday leave. So, back at work by Wednesday afternoon or it’s unpaid.

As for mandatory paid maternity or paternity leave, forget it. Most mothers are back at work six weeks after giving birth and fathers are lucky to get a day or two.

So on the face of it, Netflix’s decision to give employees unlimited paid maternity and paternity leave, announced with much fanfare this week, seems extraordinarily generous. The trend towards giving unlimited paid vacation has grown in hipster companies, although Netflix is the first big company to offer a similar postpartum deal.

The evidence about unlimited vacation is that it’s far less generous in reality than on paper. Rather than take more leave or even the same amount of leave, many employees end up taking less. They’re stuck – they don’t know how much is too much and how much is too little, so inevitably err on the side of too little.

Employment laws are stacked in favour of employers and union representation is increasingly rare, so people rightly worry about coming back to work after a leisurely three weeks by the sea to find their name plate gone.

If Netflix really wanted to be generous, it would give a generous paid maternity, paternity and vacation allowance and leave it at that. That’s actually what employees want. Netflix has tried to make itself appear more magnanimous than it actually is, the result being that staff are now probably just as badly off as they were before.

Money will talk with the Export-Import Bank

Just as this column predicted a few weeks ago, some of the biggest businesses affected by congressional Republicans’ refusal to reinstate the Export-Import Bank’s charter are now talking with their chequebooks. The bank, which lends money to foreign buyers of US goods, will cease to exist in December if Democrats and the few sane Republicans left in Congress can’t get a Bill passed.

GE and Boeing are among the bank’s biggest beneficiaries. That’s not a surprise because few companies, domestic or foreign, can afford to buy a jumbo jet or a hydroelectric plant using the petty cash. Both have now stopped giving donations to several key politicians who opposed the bank’s reinstatement. Presumably they have also mentioned it to their suppliers and partners, all of which cut cheques to begging political campaigns on a regular basis.

On the upside, this appears to be one way to get corporate money out of politics. On the downside, the Ex-Im Bank is one form of corporate welfare that makes perfect sense. Now that politicians are hurting in the most sensitive place of all, their pockets, we can probably expect a big enough show of hands to get a Bill passed.