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Commissioner Steve Novick

Official Website for Commissioner Steve Novick

Phone: 503-823-4682

fax: 503-823-4019

1221 SW 4th Ave. Suite 210, Portland, OR 97204

NEWS RELEASE: Portland City Council Combats High CEO Pay

NEWS RELEASE: Portland City Council Combats High CEO Pay

(December 7, 2016)—Today, Portland, Oregon, became the first jurisdiction in the United States to use the tax code to address the phenomenon of outrageous CEO pay. The City Council passed an ordinance, sponsored by City Commissioner Steve Novick, that requires publicly traded corporations to pay a surtax if they pay their CEO more than 100 times their median worker.

The U.S. Securities and Exchange Commission adopted a rule in 2015 requiring public companies to disclose the ratio of the compensation of its chief executive officer to the median compensation of its employees. Companies will begin reporting the data for tax years beginning in January 2017. The new disclosure will help shareholders better evaluate chief executive officer compensation based on performance, and it offers local, state, and federal governments a tool for establishing policies that address increasing ratios of chief executive officer to median worker pay.

“When I first read about the idea of applying a higher tax rate to companies with extreme ratios of CEO pay to typical worker pay, I thought it was a fascinating idea—the closest thing I’d seen to a tax on inequality itself,” Commissioner Novick said.

World renowned economist Thomas Piketty stated in his book, Capital in the Twenty-First Century, that “60 to 70%...of the top 0.1% of the income hierarchy in 2000-2010 consisted of top managers’ in large firms.” Piketty goes on to say that “the increase [in inequality in the United States] was largely the result of an unprecedented increase in wage inequality, and in particular the emergence of extremely high remunerations at the summit of the wage hierarchy, particularly among top managers of large firms.”

Novick believes that Piketty’s comments affirm the idea that extreme CEO pay is not just an eye-catching example of, but a major cause of, extreme economic inequality. “Extreme economic inequality is—next to global warming—the biggest problem we have in our society,” said Novick. “The top 1%, and especially the top one-tenth of one percent, have a far larger share of wealth and income than they did forty years ago.”

In an interview with the Guardian, Branko Milanović, a former lead economist at the World Bank and a professor at New York University who specializes in income inequality, reflected on Portland’s surtax: “What I find quite interesting is that it seems [to be] the first tax that targets inequality as such.”

For Milanović, the idea was novel because “it treats inequality as having a negative externality like taxing carbon emissions.”

The surtax will also benefit the city by generating an estimated $2.5 million to $3.5 million per year. Portland’s Revenue Bureau has identified more than 500 publicly-traded firms that do business in the city and therefore will be subject to the tax if their CEO-worker pay ratios are above 100 to 1. The list includes major corporations known for sky-high CEO pay, including Wells Fargo, Walmart and General Electric.

Portland City Council passed the surtax thanks to the support of Mayor Charlie Hales and Commissioner Amanda Fritz. Novick credits Steve Silberstein, a member of the Patriotic Millionaires, and U.S. Congressman Mark DeSaulnier, who first proposed the idea as a California State Senator, for developing the idea for the surtax. Novick also thanks Sarah Anderson from the Institute for Policy Studies for her expert advocacy and support for this proposal.

Without the partnership and innovation of these leaders, adoption of this surtax in Portland wouldn’t have been possible.

Standing in Support of Sexual Violence Survivors

October 19, 2016

RESOLUTION No. Declare that no form of sexual violence should be tolerated and that Portland City Council stands in support of survivors of sexual assault and rape. (Resolution)

WHEREAS, the Department of Justice defines sexual assault as, “any type of sexual contact or behavior that occurs without the explicit consent of the recipient. Falling under the definition of sexual assault are sexual activities as forced sexual intercourse, forcible sodomy, child molestation, incest, fondling, and attempted rape;” and

WHEREAS, according to the Rape, Abuse & Incest National Network (RAINN), 288,820 Americans are raped or sexually assaulted every year. Of those victims, 90 percent are women. This means that one in five American women have been sexually assaulted or raped in their lifetime. Meanwhile, only three out of every 100 rapists will spend time in prison for their crimes; and

WHEREAS, on September 21, 2016, the Women’s Foundation of Oregon released a report “About Women and Girls in Oregon.” The study concludes that women in Oregon are raped and sexually assaulted at a much higher rate than the rest of the country: more than 50 percent, compared to the national average of 20 percent; and

WHEREAS, the Department of Justice estimates that less than 40 percent of rapes and sexual assaults are ever reported to police. This figure is largely attributed to a fear of retaliation, a belief that reporting the experience to police will not help, or that the crime is not “important enough” to warrant an official report; and

WHEREAS, a report published in the Violence Against Women journal in 2010 stated that of the 40 percent of rapes that are ever reported, less than 8 percent are considered “false;” and

WHEREAS, End Violence Against Women International (EVAWI) launched the “Start by Believing” public awareness campaign in April 2011 to create a positive community response to reports of sexual violence and rape by informing the public, uniting allies and supporters, and improving personal reactions—strategies that focus on changing the outcomes for survivors one response at a time; and

WHEREAS, there are many opportunities to get involved and support sexual assault survivors, including believing survivors who share their story, or by donating or volunteering with sexual assault advocacy organizations. The Multnomah County District Attorney’s Victims’ Assistance Program holds annual trainings for on-call Sexual Assault Victim Advocates, while local non-profits such as Call to Safety and the Sexual Assault Resource center can always use volunteers; and

WHEREAS, President Obama’s April 2016 National Sexual Assault Awareness and Prevention Month proclamation states:

“At our country's core is a basic belief in the inherent dignity of every person. Too many women and men of all ages suffer the outrage that is sexual assault, and too often, this crime is not condemned as loudly as it should be. Together, we must stand up and speak out to change the culture that questions the actions of victims, rather than those of their attackers. As their relatives, friends, neighbors, and fellow Americans, it's on us to support victims and survivors by providing them with the care they need, bringing perpetrators to justice, and ensuring our institutions are held responsible and do not look the other way. This month, we reaffirm our commitment to shift the attitudes that allow sexual assault to go unanswered and unpunished, and we redouble our efforts to prevent this human rights violation from happening in the first place;” and

WHEREAS, it is the responsibility of Portland’s leaders to build on national efforts and assure survivors that we believe you, and you are not alone.

NOW, THEREFORE, BE IT RESOLVED, that the Portland City Council declares that no form of sexual violence should be tolerated, and stands in support of survivors. We call on others in Portland to do the same.

Bringing Portland a Fair Workweek

I first started reading about the terrible impacts of unpredictable scheduling for retail and food service employees a couple of years ago.  Increasingly, research and media reports have shown that many workers in these and other sectors are scheduled without any input from the worker, often receiving their schedule only a day or two before the schedule begins.  Often, the workers most affected by these scheduling practices earn low hourly wages at or just above the minimum wage.  This kind of volatile scheduling makes it impossible to organize your life, including arranging for child care or taking college classes.

This afternoon in City Council, we will consider a resolution that defines the problem of unpredictable employer scheduling practices in Portland, highlights and thanks local businesses that are already using predictable and fair scheduling practices, and encourages all employers in the city to review how they schedule workers and make changes to improve predictability and reduce volatility.  I hope this resolution starts a community conversation about how we can all work together to make scheduling more predictable for employees – and compensate employees fairly for unpredictability.

I’d like to see policy that sets standards for employee scheduling, especially for the workers most affected by volatility.  Right now, State law prevents cities in Oregon from passing this kind of legislation while a group of stakeholders meets to discuss statewide legislation.  The state preemption is due to expire next summer, allowing cities to consider our own local legislation at that time.  I know that worker scheduling is a challenge for many employers as well as employees, and if we consider policy in this area in Portland, I’m committed to a transparent process that results with a proposed policy that gets to predictable schedules for the most affected workers, while taking into account employer challenges.  Here in Portland we’re not yet to the point of developing policy.  However, it’s safe to say I’m most interested in common sense predictability measures to give workers more than a few days’ notice of when they’ll be working so they can plan their life and their budget --- not policies that would, for example, force employers to move to set schedules that never change.

I’d like to thank the coalition of advocates, stakeholders, workers, employers, and researchers who have already weighed in on this resolution and agreed to speak on the topic.  Specifically, I’d like to thank UFCW and the Working Families Party for their work with employees who are speaking out about the need for a Fair Workweek, New Seasons Market for their willingness to testify about their existing commitment to fair employee scheduling as well as what they would want Council consider in a future ordinance, and Dr. Mary King from Portland State University for her insights about demographic data and employee surveys.  Future policymaking depends on the efforts of these people and many others.

Taking a Step to Address Income Inequality

Inequality in the United States has exploded in the past four decades. In the 1970s, the top 1 percent collected about 9 percent of total income in America; by 2010, the disparity had grown even larger, and the top 1 percent had 20 percent of total income. Most of the concentration has gone to the very richest of the top 1 percent—the top 0.1 percent. 

In addition to income inequality, wealth inequality is also growing as wealth concentrates among the richest 0.1 percent of Americans. Even conservative estimates of wealth show that in 1992 the top 0.1 percent had 11 percent of the wealth in the United States, and that percentage grew to 14 percent by 2013.

Moreover, the dramatic growth of inequality has been fueled by very high compensation of a few managers at big corporations, as illustrated by the fact that 60 to 70 percent of people in the top 0.1 percent of income in the United States are highly paid executives at large firms.

The huge divide in income and wealth has real-world implications. Too many real Americans cannot get a leg up. Too many mothers and fathers are working two jobs to try to earn enough money to keep a roof over their kids’ heads. A few extra dollars in those workers’ paychecks would go a really long way to helping that family stay housed and keep food on the table. But increasingly, those dollars are going to the people who already have it—and who aren’t at any risk of losing their housing or going hungry. Income inequality undermines the American dream.

That’s why I was glad to learn that the U.S. Securities and Exchange Commission adopted a rule in 2015 requiring public companies to disclose the ratio of the compensation of its chief executive officer to the median compensation of its employees. The new disclosure will help shareholders better evaluate chief executive officer compensation based on performance, and it offers local, state, and federal governments a tool for establishing policies that address increasing ratios of chief executive officer to median worker pay.

I want Portland to be among the first local governments in the country to begin using the new SEC data about CEO and worker pay to address growing income inequality. I have proposed adding a surtax on the City’s existing Business License Tax for publicly traded companies that report a ratio of CEO to median worker pay of 100:1. The tax code is often used to promote certain social policies. The deduction for charitable giving, for example, promotes charitable giving. If adopted, this proposal would promote a more equitable distribution of income.

The City’s Revenue Bureau estimates that this proposal will raise $2.5 to $3.5 million annually, and I’m proposing to use that revenue to pay for services that help people who are homeless get housing—or, help people avoid homelessness altogether. This year, the City Council and the County created the new Joint Office for Homeless Services, which will help at least 4,300 people move off the streets into permanent housing and assist 5,600 people at risk of becoming homeless. As part of the Intergovernmental Agreement to form the office, the City committed $15 million in funding. In the current budget however, the City has only allocated $11.5 million beginning next year, leaving a $3.5 million gap that will need to be filled in order to honor our commitment to the County and ensure the continued success of the office.  The revenue from the proposed surtax will help fill this funding gap.

The surtax I’m proposing would give companies an incentive to narrow the economic divide within their own firms—by lowering CEO pay and/or by lifting up their workers’ wages. Of course, this reform alone will not close our nation’s economic divide. But it would send a powerful message that our community is ready to take a stand against the extreme inequality that harms all of us. And if other local and state governments, as well as Congress, begin to use the SEC information to drive policy, we will see change as shareholders recognize the collective effect of policies like my proposed surtax. California and Rhode Island have both considered policies, and I’m hopeful Portland could help lead the way on this critical issue.

Other Facts About Income Inequality and CEO Compensation

  • Research indicates that companies with high estimated chief executive officer-worker pay ratios have lower employee morale and lower shareholder returns compared to companies with lower ratios.
    • For example, the job site Glassdoor analyzed 1.2 million chief executive officer ratings from current and former employees, finding that higher chief executive officer compensation is statistically linked with lower approval ratings for those executives. 
    • A review of pay ratios and long term shareholder returns by CtW Investment Group found that companies with high pay ratios perform worse than companies with lower ratios over a five-year research period. 
  • Pay inequity isn’t just unfair.  It has significant ramifications for individual workers and families. A 2008 paper by researchers Janna Matlack and Jacob Vigdor concludes that when incomes at different socioeconomic levels rise at different rates (when rich people get higher percentages of raises than poor or middle income people), the cost of goods also rises. This means that poor people and middle income people have the same money available to them, but their cost of living rises, creating a wage gap that only gets worse as more time goes by. This is particularly true when it comes to housing.
  • Income inequality specifically hurts housing affordability, especially in tight housing markets like Portland’s.  In the same paper referenced above, Matlack and Vigdor conclude, “in the United States, tight housing markets tend to be those where incomes are rising rapidly at the high end of the distribution, while incomes at the low end trend upward only slowly, if at all. In these areas, the poor have experienced greater crowding, higher quantity-adjusted rents, and have less income available for savings or other consumption once they have covered their housing costs.”

My proposal will come to Council for a public hearing on October 26th at 2 pm. If you’d like to support it but are not able to attend the hearing, you can e-mail feedback to me and the rest of City Council.  My email address is novick@portlandoregon.gov, and email addresses for the rest of Council are available online at www.portlandoregon.gov/25999.  Finally, you can watch the hearing live at www.portlandoregon.gov/28258.

Call If You Can, Text If You Can't

Everyone should be able to access emergency services. But historically, accessing emergency services by calling 9-1-1 has been difficult or unsafe for a significant swath of our community. Today, we were able to announce that emergency services will be easier and safer to access for many more people, thanks to the official launch of “Text to 9-1-1” in Portland.

In our current model in Portland, and most cities around the country, contacting a 9-1-1 dispatcher to request medical, fire or police services requires a phone call. People who are deaf or hearing impaired have to use a “Text Telephone Device” (TTD) to request help. These devices might work fine in day-to-day life when time isn’t a matter of life or death, but in an emergency, it’s easy to see how these devices can be cumbersome, inconvenient and life-threatening.

Currently, contacting 9-1-1 without a phone call is impossible for anyone who doesn’t have a TTD device. In some contexts in which people are facing a threat of violence, making a phone call could put them in greater danger.

For example, a person stuck in an abusive and violent relationship might find it difficult to call for help, for fear that their partner would hear the conversation with the dispatcher and hurt them further. Or, a person who wakes up in the middle of the night and hears a home invader might not call for police assistance for fear that the invader might overhear.

For individuals living with mental illness, a conversation on the phone could represent an insurmountable psychological barrier, and a necessary and life-saving phone call might never happen.

The ability to text 9-1-1 dispatchers is an essential and potentially life-saving service for many people in Portland. Today’s launch of Text to 9-1-1 fills an important gap for people who need help from a medical, police, or fire first responder, even if they cannot talk.

It's important to note that people who can make a phone call should call, rather than text, 9-1-1, because a phone call remains a faster way of transmitting information.

Remember, call 9-1-1 to stop a crime in progress, report a fire, or call an ambulance. If the situation is not an emergency, you should call 503-823-3333, which is the non-emergency number for all of Portland and Multnomah County.

You can learn more about the program on Clark Regional Emergency Services Agency's website