Income divide splitting country into haves, have-notson April 25th, 2011 at 6:00 am
Most Americans are dealing with living with less, small businesses are dealing with commercial struggles, and elected representatives are dealing with deficit arguments while ignoring the economy’s need for jobs. Meanwhile, those who profited most from the 2008 financial collapse and Great Recession are doing GREAT.
One can hear the “poor winner” vibe like Bush backers after the Supreme Court named him President in 2001: “Deal with it!”
On the same day last week (Tuesday, April 19), it was revealed that in 2010 the average annual pay of a corporate executive at a company on Standard & Poor’s 500 Index went up to $11.4 million – a 23% raise – and the median weekly earnings of all of the country’s 98.3 million full-time employees was $755, or $39,260 yearly – a 0.1% increase.
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According to those government figures, CEOs make 285 times the midpoint of everyone else’s pay (numbers that, of course, include those highly paid execs).
The AFL-CIO Executive PayWatch also provides data from the Federal Reserve showing that CEOs are sitting on a record $1.93 trillion in cash on their balance sheets instead of creating badly-needed jobs.
More than 25 million U.S. workers are unemployed and underemployed.
PayWatch features the compensation of 299 S&P 500 company CEOs and directly compares those CEOs and the median pay of nurses, teachers, firefighters and others. For instance, while a secretary makes a median annual salary of $29,980, someone like Wells Fargo CEO John Stumpf rakes in $18,973,722 million – 632 times the secretary’s pay. The income gap between Wall Street and Main Street has widened dramatically – as recently as 1980, CEOs made “only” 42 times that of blue-collar workers.
Based on numbers provided by the nonpartisan Salary.com, Executive Paywatch totaled seven categories of average CEO compensation – Salary ($1,093,989), Bonus ($251,413), Stock Awards ($3,833,052), Option Awards ( $2,384,871), Nonequity Incentive Plan Compensation ($2,397,152), Pension and Deferred Compensation Earnings ($1,182,057), All Other Compensation ($215,911 – to reach a sum-total of $11,358,445.
A few CEOs from companies based in west-central Illinois did very well in 2010. In Decatur, Archer-Daniels Midland’s P.A. Woertz made $11.4 million; in Peoria, Caterpillar’s Doug Olberhelman made $10.5 million; and in Moline, Deere & Company’s Samuel Allen made $13.3 million.
As a class, the few grabbing such a big slice of revenues generated by the many has helped drive the widening income divide in the United States, where the disparity have worsened considerably in the last 10 years. It’s as bad as the Roaring Twenties ( which led to the Great Depression of the ’30s).
In its report, “Usual weekly earnings of wage and salary workers, first quarter 2011,” the Bureau of Labor Statistics noted that the increase of 0.1% for all wage earners compares unfavorably to even modest hikes in the Consumer Price Index – 2.1% over the same period. We lost 2%, in other words.
(Click on chart above to see it larger plus additional charts)
Also, the weekly median pay of $755 actually is the dollar amount for workers 16 years and older. If younger workers are added so that all employees are represented, the weekly median pay is lower: $749. Further, those pay amounts are in current dollars. Adjusted for inflation (in constant dollars, 1982-’84), median weekly earnings are $337 – the same as the median level of pay in the third quarter of 2002.
Such information – news, really, if it’s broadcast or published – may be easier to find from now on. This year for the first time, every publicly traded corporation must give its shareholders an advisory note on its CEO pay. Soon, such companies will also have to disclose the ratio of CEO-to-worker pay levels for their median level.
That news will be easier to find – that is, unless the highly paid CEOs and their mouthpieces in the U.S. Chamber of Commerce, other Big Business lobbies and the GOP kill the new disclosure rules.
“It shocks me they have the nerve to argue for these policies in public – and lobby for them – after their companies drove our country off an economic cliff,” said AFL-CIO president Richard Trumka.
No doubt, some will defend colossal pay to CEOs as justified because corporations compete to hire upper management to lead them. Maybe that’s not an unreasonable premise, but 285 times as valuable?
Others may criticize wage earners for “settling” for a midpoint of $755 (or being jobless), but that blames the victim.
Still others will complain that President Obama isn’t doing enough to strengthen the economy and without missing a beat also call him a socialist Druid born on Mars or worse if his involvement increases.
Bottom line: the middle of U.S. workers’ pay is less than $40,000 a year – about what the average S&P 500 CEO makes in a day and a half. Can we deal with that?