From 1966 to 2001, the median wage in the United States rose only 11%. Income related to the increase in productivity during this period went more to the entitled top 1% of households than to the entire bottom 50%. Even those in the 90th to 99th percentile had only a minimal increase, while those in the 99th and 99.9 percentiles saw their income jump dramatically. In 2005, the most affluent 300,000 Americans made as much as the bottom 150 million. The income gap was almost double that existing in 1980. (Economists suggest these figures actually underestimate the true difference in inequality, as only about 70% of business and investment income, which goes mainly to the wealthy, is accurately reported.)
The remuneration for a hard day’s work for the average worker may be just enough to keep his or her head above water. Yet they see other entitled men and women, sometimes because of drive and effort, but often through connections and luck, or manipulation and chicanery, earn enough discretionary income to keep hundreds or thousands of people clothed, fed and housed. (A chief executive in one of top one hundred corporations in America in 1977 made about fifty times the pay of its average worker. Thirty years later, these entitled CEOs made about 1100 times the wages of an average employee.) In 2015, it was reported that the average CEO of an S&P 500 company earned 204 times the wage of its average workers. Though the financial industry, the energy sector and high tech companies have the largest annual payouts for their officers, virtually all corporations have been rewarding their entitled top executives with increasingly high salaries. The mantra “a rising tide lifts all boats” has not proven to be true.
Many of the high ratios comparing top executives to workers may be skewed even more if some of the company’s work is performed overseas, where the labor is cheaper. While workers in America struggle, it seems as if the CEOs of most companies are winning the lottery year after year, whether profits are up or down. The workers in low wage jobs are hurting the most, sometimes juggling two or three jobs to support their families, but having little time to spend with their children. Yet entitled top executives incomes keep rising, the inequality gap expanding with society’s sense of fairness missing.
The CEOs at many corporations pick the compensation committees and boards of directors who decide executive remuneration, and have particularly benefited from corporate largesse. In 2005, the average American CEO paycheck was almost $11 million with about $5.6 million in exercised stock options. In the last decade, many CEOs earned much more, a number of them above the $100 million range. While compensation was once supposed to be tied to company performance, this idea has been mostly abandoned. In good times and bad times, executive compensation keeps rising, even while many of these corporations slash pensions and health care benefits, lay off workers, and sometimes flirt with bankruptcy. Clive Crook in The Atlantic Monthly describing corporate governance noted- “pay schemes that rewarded chief executives generously when share prices were soaring continued to do so as prices tanked. CEOs fired for incompetence, leaving injured companies and distressed investors behind them, sometimes walked away with multimillion dollar payments.” (The entitled CEOs and top executives of the investment banks, whose bungling was responsible for the huge losses that precipitated the 2008 recession, received hundreds of millions of dollars in compensation for their ineptitude.)
In addition to their salaries, entitled CEOs and high level corporate executives have been given huge packages, including stock options, bonuses and pensions, special retirement plans, and “golden parachutes” if the company is taken over. (There has been an outcry over backdating and preferential pricing of stock options for executives in a host of corporations, providing them with even greater compensation without risk.) On top of this, executives have gotten enormous perks, from the use of corporate jets, membership in exclusive clubs, living expenses while traveling, and so forth.
Shareholders, though supposedly owners of the corporations, exert little influence over executive pay, with corporate regulations written to keep them on the sidelines and out of the executives’ hair. Proxy voting and shareholder meetings are rigged to allow CEOs and corporate boards to maintain control and set their own salaries, thwarting the wishes of those people who supposedly employ them. Cases of excessive compensation without shareholder approval, magnanimous stock options and pension plans unrelated to performance are too numerous to list, indicative of the greed and hubris of many privileged corporate executives. (And the compensation achieved by entitled hedge fund managers and private equity personnel dwarfs that of CEOs.)
Though there have always been differences in wealth and standards of living amongst U.S. citizens, those who struggled were sustained with the belief that America was a meritocracy and that anyone could rise to the top based on intelligence, competence and drive. Whether these perceptions were valid didn’t matter, as they infused Americans with an optimism about their ability to transcend origins and status, with the possibility of realizing whatever their dreams might be. This is in the process of changing (aside from high-tech savants) as an entitled aristocracy of wealth is developing, its members having the power and ability to shape the world to fit their needs and expectations. Fairness and equity are no longer catchwords for legislators as they write the laws that guide American lives, particularly in the realm of taxes and finances. People in low-wage jobs are fighting, often unsuccessfully, to pay for housing, health insurance, and child care, even if working multiple jobs. Entitlement rather than equality is the catchword for the times.
Resurrecting Democracy
www.robertlevinebooks.com
Political junkie, Vietnam vet, neurologist- three books on aging and dementia. Book on health care reform in 2009- Shock Therapy for the American Health Care System. Book on the need for a centrist third party- Resurrecting Democracy- A Citizen’s Call for a Centrist Third Party published in 2011. Aging Wisely, published in August 2014 by Rowman and Littlefield. Latest book- The Uninformed Voter published May 2020