http://kissaneasylum.typepad.com/workforce_development/2008/09/why-the-worker.html
You
can expect both Presidential candidates to be turning up the heat on
overpaid CEOs, a new report from the Institute for Policy Studies and
United for a Fair Economy documents for the first time the extreme pay
gaps that have opened up not just between U.S. business leaders and
American workers, but between U.S. business leaders and leaders
elsewhere in American - and European - society.
Both parties will be prepared to launch into this issue based upon the
findings of the ""Executive Excess 2007" report, recently released.
American workers are hurting right now and the data gathering in the
report that have been widely reported are pushing this issue into the
political arena.
Among the findings are:
CEO-WORKER PAY GAP: CEOs of large U.S.
companies last year averaged $10.8 million in total compensation, over
364 times the pay of the average U.S. worker, a calculation based on
data from an Associated Press survey of 386 Fortune 500 companies.
The top 20 private equity and hedge fund managers, pocketed an
average $657.5 million, Forbes magazine estimates. That's 22,255 times
the pay of an average U.S. worker.
Workers on the bottom rung of the economy have just received their
first federal minimum wage increase in a decade. But the
inflation-adjusted value of the new minimum, despite the hike, stands 7
percent below the minimum wage level a decade ago. CEO pay, in that
decade, has increased over inflation by roughly 45 percent.
"The CEO-worker pay gap is finally getting some high-profile
attention from Presidential candidates," says report co-author Sarah
Anderson of the Institute for Policy Studies. "But lawmakers still
aren't doing nearly enough to tackle the gap."
PENSION AND PERK GAPS: CEOs at major U.S.
corporations enjoyed, on average, $1.3 million in pension gains last
year. By contrast, only 58.5 percent of American households led by a
45-to-54-year-old even had a retirement account in 2004. Between 2001
and 2004, the retirement accounts of these households gained an average
of only $3,775 in value per year.
CEOs of S&P 500 companies retire with an average $10.1 million
in their special Supplemental Executive Retirement Plans, accounts not
open to average workers. By contrast, only 36.3 percent of American
households headed by an individual 65 or older held any type of
retirement account in 2004. The accounts that did exist averaged only
$173,552 per household.
The top 386 CEOs took in perks worth an average of $438,342 in 2006.
A minimum wage worker would need to work 36 years to earn as much as
CEOs obtained just in perks last year.
THE LEADERSHIP PAY GAP: Compensation for
American business leaders now wildly dwarfs the pay that goes to
leaders in other sectors of American society. The 20 highest-paid
individuals at publicly traded corporations last year took home, on
average, $36.4 million. That's 38 times more than the 20 highest-paid
leaders in the nonprofit sector and 204 times more than the 20
highest-paid generals in the U.S. military.
The 20 highest-paid figures in the private equity and hedge fund
industry collected 3,315 times more in average annual compensation in
2006 than the top 20 officials of the federal government's executive
branch, a group that includes the President of the United States.
"Today's soaring pay gap between business executives and elected
leaders in government essentially makes corruption inevitable," notes
Sam Pizzigati, an Institute for Policy Studies associate fellow. "With
such huge windfalls at stake, business leaders have a powerful
incentive to manipulate the political decisions that affect corporate
earnings."
THE US-EUROPEAN EXECUTIVE PAY GAP: In 2006,
the 20 highest-paid European corporate managers made an average of
$12.5 million, only one third as much as the 20 highest-earning U.S.
executives took home last year. These 20 top European execs led
companies that generated $19 billion more in sales revenue than the
corporations led by their higher-paid American counterparts.
Clearly, there will be a good deal of conversation and several
promises made to deal with this important issue which is at the very
root of the viability of US companies to survive and prosper. Will
anything productive be accomplished? Hard to tell at this stage.
In any case, these will be interesting issues to follow, especially with the economy on everybody's mind.