Guess Who Gets the Most Brazen Federal Inflation Adjustment in the Country?

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I learned something new today. Apparently the federal government has a cap on the amount it’s willing to reimburse contractors for the salaries of their employees. If someone makes $50,000 per year, no problem. You can charge the feds for their entire salary if they’re working on government business. But if your company’s CEO makes $3 million per year, you can’t charge it all back to the feds even if 100 percent of the CEO’s time is spent on government contracts. The limit, set in 1998, was $340,000.

This cap was allowed to rise with inflation, so you’d figure that by 2011 it would be around $467,000. But no. It was $763,000. Why? Because ordinary inflation adjustments are for chumps, that’s why. For purposes of charging CEO overhead to the federal government, the cap was set at “the median amount of the compensation provided for the five most highly compensated employees of all publicly owned U.S. corporations with annual sales in excess of $50 million for the most recent fiscal year.”

Isn’t that fabulous? When it comes to the minimum wage, we don’t index for inflation at all. But for CEOs earning top-one-percent pay, we not only index for inflation, we index to the rise in CEO salaries. And since CEOs have been relentlessly voting themselves ever more astronomical compensation over the past few decades, we know that number is going to rise a whole lot faster than piddly old CPI. Ka-ching.

This comes via Lydia DePillis, who’d like to talk about raising the compensation floor, not just cutting the CEO cap back down to size. Good luck with that.

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DEMOCRACY DOES NOT EXIST...

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In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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