SR112

WHEREAS, according to the Economic Policy Institute (EPI), compensation of the top chief executive officers (CEOs) has skyrocketed 1,209 percent from 1978 to 2023, while the typical worker's pay has risen only 15.3 percent; and

WHEREAS, research from the Associated Press and other sources found that the ratio of CEO pay to typical worker pay was twenty- or thirty-to-one in the 1960s and 1970s and has widened to two hundred sixty-eight-to-one for S&P 500 Index companies in 2023, about which the American Federation of Labor and Congress of Industrial Organizations remarked "it would take more than five career lifetimes for workers to earn what CEOs receive in just one year; and

WHEREAS, local news outlets have reported in recent years on significant increases to executive pay at companies based in the State, with some executives being paid several million dollars per year, including some increases that occurred during and shortly after the COVID-19 pandemic when these companies' workers were laid off, their hours reduced, and some positions were terminated; and

WHEREAS, according to the EPI's report "Reining in CEO compensation and curbing the rise of inequality", excessive CEO pay exacerbates inequality, is not linked to increasing CEO productivity, and highlights that the labor market is broken for the typical worker; and

WHEREAS, the unbalanced CEO-worker pay ratio reflects income that is not available for broader growth for other workers, with the EPI finding that wages for the bottom ninety percent of workers would be twenty-five percent higher had wage inequality not increased between 1979 and 2021, and that the rise in wage inequality is due to the redistribution of wages from the bottom ninety percent of workers; and

WHEREAS, legislation to address this pay disparity has been introduced in United States Congress, such as the Curtailing Executive Overcompensation Act in 2023 and the Tax Excessive CEO Pay Act in 2024; and

WHEREAS, tax penalties and incentives, enhanced shareholder authority, greater public transparency, and re-assessment of special tax privileges granted under state law to certain companies may be helpful in restraining CEO pay and narrowing the ratio of CEO-to-worker pay; now, therefore,

BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, that the University of Hawaii Economic Research Organization (UHERO) is requested to conduct a study of the CEO-to-worker pay ratio in the State; and

BE IT FURTHER RESOLVED that the study is requested to:

(1) Determine the ratio of CEO and company executive pay to typical worker pay for companies operating in the State, preferably by industry;

(2) Assess the impact of the various pay ratios on the State's economy; and

(3) Identify and evaluate options for the State to reduce the ratio of CEO pay to typical worker pay for companies operating in the State, including options specific to companies that are classified by the State as a nonprofit and companies that are regulated by the Public Utilities Commission; and

BE IT FURTHER RESOLVED that UHERO is requested to submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than forty days prior to the convening of the regular session of 2026; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of Business, Economic Development, and Tourism; Executive Director of the University of Hawaii Economic Research Organization; Insurance Commissioner; and Chairperson of the Public Utilities Commission.

	OFFERED BY:	_____________________________

Report Title:

Pay Inequality; CEO-to-Worker Pay; UHERO; Study; Report

THE SENATE	S.R. NO.	112
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII