The Advisors' Blog

– Liz Dunshee

In today’s political climate, it’s a tricky thing to employ non-US workers to keep costs down – and maybe not something you want to publicize. But when it comes to pay ratios, it could be nice to talk about those segments of lower-paid workers – in order to exclude or explain their impact. And therein lies the dilemma. This recent Cooley blog (and this WSJ article) provides more detail:

According to the WSJ article, in a sample of over 180 companies in the S&P 500, about a third have so far disclosed the proportion of the workforce that is located overseas. (In March, Mercer reported that 51% of companies with global employees were using the de minimis exclusion for non-US employees. And that percentage could increase as companies become aware of practices of their competitors and increase the sophistication of their methodologies over time.)

And in another case, almost 90% of the company’s employees were located overseas – mostly in Central America, the Caribbean and Asia. Consequently, the median employee made only $5,237, while the CEO made just under $10 million. This resulted in a pay ratio of 1,830 to one – certainly an outlier. The company spokesman told the WSJ that “the company provided the extra detail because it is one of the few U.S. publicly traded apparel companies to own a majority of its international supply chain instead of outsourcing the garment work to third parties—which means many company employees live in lower-cost countries.” Because employment of foreign workers in lieu of US workers is a prickly issue, other companies have explained, where appropriate, that “the expansion of their workforce abroad isn’t about shipping jobs to low-cost countries, but rather about employing workers closer to customers.”