The old saw about the rich getting richer appears to be truer than ever. Total compensation for corporate chief executive officers has skyrocketed a wallet-popping 481 percent during the 1990s, says a new study by the nonprofit groups Institute for Policy Studies and United for a Fair Economy. Worker pay, in contrast, has risen only 28 percent this decade. That’s just a little ahead of inflation, which has risen 22.5 percent during the same period.
The wage gap has reached equally astounding proportions. According to the study, "A Decade of Executive Excess," top CEOs were making about 85 times the average factory worker’s pay in 1990; by the end of 1998, with executive stock options soaring as a result of a runaway stock market, the executives were reaping compensation worth more than 400 times the pay earned by workers on the factory floor.
If the average worker had seen their pay rise at the same rate enjoyed by CEOs between 1990 and 1998, they would be making $110,399 instead of the current $29,267.
"The minimum wage would be $22.08, rather than the current $5.15 per hour," according to the report.
So where’s the public outrage?
"To some extent people’s senses are dulled," says John Cavanagh, one of the report’s authors. "You can only hear (Disney’s) Michael Eisner is making $500 million a year for so long before people start getting numb and say, ‘So what?’"
There has also been a tendency for the major media – whose executives are among those reaping the extravagant benefits – to downplay such studies.
"What we’re beginning to see," says Cavanagh, "is that the levels of inequality have reached such an outrageous level, it becomes a story major media can’t ignore. That, in turn, gives you a springboard for the kind of activity that can turn this around."
Doing so won’t be easy. Even if the masses start calling for governmental measures to increase pay on the lower end and put downward pressure at the top (such as changing the tax code to limit the deductibility of executive salaries), getting lawmakers to act won’t be easy.
"Given the fact that politicians must raise enormous sums of money to get re-elected," states the report, "the concentration of wealth in the hands of a few wealthy CEOs/campaign contributors throws our democratic system out of kilter. Voters see the ‘wealth primary’ all too clearly for what it is, and increasing numbers stay home on Election Day. Concentrated economic power has translated into concentrated political power."
For additional information visit the United for a Fair Economy Web site or the AFL-CIO’s Executive Pay Watch site.
