By Richard Reeves
Times are tough. Do the numbers: Chief executive officers (CEOs) of the country’s biggest companies experienced pay increases of a minuscule 15 percent in 2012, compared with the 28 percent their pay rose in 2011.
Only 15 percent. Ah! I’m sure they’ll make it up in bonuses and stock options this year. The rich will get richer and the poor will get porridge, cold porridge.
Those statistics are from GMI, Global Market Insite. Meanwhile, the earnings of workers (adjusted for inflation) declined by 2 percent, according to the U.S. Department of Labor.
You might say there’s a trend, or a tidal wave. CEO compensation has increased by more than 725 percent since 1978. In that same period, the compensation for "average" workers in their companies has increased by less than 6 percent. One might even say that the folks running companies are running down the country, or at least everyone else, with the possible exception of professional athletes and other entertainers.
Looking at it another way, the Pew Research Center, studying new census data, reported last Tuesday that from 2009 to 2011, average wealth among the top 7 percent of the country rose by 28 percent—that number again. Boy, these recessions are tough, at least for the other 93 percent, whose wealth declined by 4 percent in the same period.
My favorite statistic on earnings is the ratio between the compensation of American CEOs and American workers. I traveled the country in the late 1970s and early 1980s collecting data on that ratio. What I found then was that the big bosses in America were paid approximately 20 to 30 times as much as their average employee. At that time, I checked the ratio for other developed countries, basically in Western Europe. There the ratio ranged from about eight to 12 times what their employees made.
American figures, available for publicly owned companies, indicate that the CEO-to-worker earnings ratio is now more than 200-to-1. That means bosses are now paid 200 times more than their "average" employees. The ratio, or earnings gap, has increased by more than 750 percent. To put it another way, CEO pay has grown 127 times as fast as employee pay.
For the record: The ratio in Great Britain is 22-to-1. In France it is capped, by law, at 15-to-1. In Germany it is capped at 12-to-1.
Back to the good old U.S.A. The new Pew study reports that the nation’s growth since the end of the Great Recession has gone principally to rich people. Among other things, the real estate bust hit "average" Americans much worse because most of their "wealth" was in homes, which lost huge chunks of their market value. Pew reported: From 2009 to 2011, the average net worth of the nation’s 8 million most-affluent households jumped from an estimated $2.7 million to $3.2 million. For the 111 million households that form the bottom 93 percent, average net worth fell 4 percent, from $140,000 to an estimated $134,000.
"The uneven recovery," wrote Michael A. Fletcher of The Washington Post, "has only accelerated a decades-long trend of growing wealth inequality in the country, despite rising popular and political awareness of the dynamic." That means the upper 7 percent emphasized in the Pew study now control at least 63 percent of the national wealth, compared with 56 percent only three years ago.
"It has been a very good recovery for those at the upper end of the wealth distribution," said Paul Taylor, executive vice president of the Pew Research Center and co-author of the report along with Richard Fry, a senior research associate. "But there has been no recovery for the lower 93, which is nearly everybody."
You don’t even have to include the stock speculators and hedge funders, same thing, or memorize all these numbers to understand that there is indeed raging class war in the United States. And the upper classes are winning big time.
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