Research shows that from 1978 to 2021, the average pay of CEOs in the top 500 firms has risen by 1400%, while the pay of bottom-level employees has increased by just 18%. This huge gap is creating big problems. Employees are becoming less trustful and less loyal to their organizations. This directly increases whistleblowing—when workers report mistreatment or other discrepancies. As a result, firms suffer politically and face regulatory challenges. For example, Amazon has great customer satisfaction, but its warehouse employees have complained to OSHA (Occupational Safety and Health Administration) about poor working conditions.
Why This Matters
The growing pay gap doesn’t just hurt employees—it harms companies too. When workers feel mistreated, they speak out. Whistleblowing can expose issues like fraud or safety violations, which damage a firm’s reputation and invite government scrutiny. While this is bad for individual companies, it can benefit the overall economy by catching big problems early.
Real-Life Example
Take Amazon: customers love the service, but warehouse workers have raised serious concerns. Their complaints to OSHA show how unhappy employees can create internal issues, even in successful firms. This proves that focusing only on external stakeholders (like customers) while ignoring internal ones (like employees) is a mistake.
Ways to Resolve the Pay Gap
Here are simple solutions to fix this problem:
To the Board of Directors:
- Cut CEO pay to reduce the gap.
- Give pay increments to bottom-level employees.
- Provide health benefits and other facilities to workers.
- Maintain a balance between satisfying external stakeholders (customers) and internal stakeholders (employees).
To Government Policymakers:
- Offer tax cuts or incentives to organizations that treat their employees well.
- Encourage fair pay practices to keep workers happy and loyal.
My Opinion
I believe the government should step in with regulatory changes. They could set a pay ratio for employees based on the type of work or sector. For example, a rule could ensure that CEO pay doesn’t grow too far ahead of workers’ wages. Also, whistleblowing is crucial—it helps catch large-scale fraud early, like in some urban corporate banks in Mumbai and other states. Instead of punishing whistleblowers, the government should incentivize them. While whistleblowing may hurt firms in the short term, it fosters well-compliant organizations and strengthens the economy in the long run.
Conclusion
The pay gap between top executives and bottom employees is a growing issue that leads to distrust, disloyalty, and whistleblowing. Firms like Amazon show how this imbalance can backfire. Boards and governments need to act—by cutting CEO pay, raising worker wages, and rewarding fair treatment. A balanced approach will benefit everyone: companies, employees, and the economy.
