CEO Pay Soars, Workers Toil in Capitalism's New Gilded Age
Ratio of CEO-to-worker pay is 'unconscionable,' says AFl-CIO as prominent economist argues this level of inequality proves current capitalist system 'cannot work'
Here's the first number to know: 331.
That, according to a new report, is the number of times more the average CEO in the United States made in 2013 compared to the average worker.
Here's the second number: 774.
That's the number of times more those same CEOs—some of the wealthiest individuals on the planet—made compared to the nation's minimum wage workers.
"I have proved that under the present circumstances capitalism simply cannot work." —Thomas Piketty
These two numbers are central to the AFL-CIO's latest 'Executive Paywatch' report, released Wednesday, which shows the astronomical disparity between the annual pay of the nation's top executives—which continue to rise year after year—and the stagnant wages that middle class and the working poor continue to suffer.
On average, according to the report, U.S. CEOs earned $11.7 million in 2013 while the U.S. worker earned $35,293. That means CEOs were paid 331 times that of the average worker.
"Many of the CEOs highlighted in PayWatch head companies, like Walmart, that are notorious for paying low wages," said the AFL-CIO in a statement. "In 2013, CEOs made 774 times more than those who work for minimum wage. And while many of these companies argue that they can’t afford to raise wages, the nation’s largest companies are earning higher profits per employee than they did five years ago. In 2013, the S&P 500 Index companies earned $41,249 in profits per employee, a 38% increase."
The AFL-CIO says its findings are contained in a "comprehensive searchable online database" which allows visitors the unique ability to compare their own pay to the excessive pay of executives at the nation's top companies.
As Dave Johnson, a fellow at the left-leaning Campaign for America's Future, points out, the study shows that as workers continue to scrape by in an economy that has left them out of the so-called recovery, "CEO pay just keeps climbing and climbing and climbing (and climbing and climbing and climbing and climbing and climbing and climbing)." It is this very real and growing inequality, says Johnson, which is "destabilizing" the entire U.S. economy.
The PayWatch report, which uses data from 2013, highlights five companies—Walmart, Kellogg’s, Reynolds, Darden Restaurants and T-Mobile— all of which which continue to reap huge profits and pay enormous executive salaries while exploiting a low-wage labor force.
“America’s CEOs—as exemplified by the individuals of these companies—are cannibalizing their own consumer base. It’s wrong. It’s unfair, and it’s bad economics.” —Richard Trumka, AFL-CIO president
“These companies are run by short-sighted business leaders, because people who earn minimum wage, for instance, can’t afford cell phones from T-Mobile or dinner at Red Lobster or the Olive Garden, both of which are owned by Darden Restaurants,” said AFL-CIO President Richard Trumka. “America’s CEOs—as exemplified by the individuals of these companies—are cannibalizing their own consumer base. It’s wrong. It’s unfair, and it’s bad economics.”
Analyst Jim Lobe, responded to the report by noting the growing national conversation over inequality that soared into popular consciousness during the short-lived rise of the Occupy movement in 2011, but has been increasingly buttressed by numerous studies by academics, economic think tanks, and both labor and social justice groups.
Lobe notes the recent publication of an English edition the "epic" book ‘Capital in the Twenty-First Century’ by French economist Thomas Piketty, "that compares today’s levels of inequality to those of the Gilded Age of the late 19th century."
Piketty's book, says Lobe, "is gaining favorable reviews in virtually every mainstream publication" as it highlights the intrinsic perils of capitalism with a focus on the inevitable rise of income and wealth inequality.
In an interview last week, Piketty himself summarized the basic tenet of his book by saying, "I have proved that under the present circumstances capitalism simply cannot work."
Placing both the AFL-CIO findings and Piketty's argument in context, Lobe continues:
Piketty, whose work is based on data from dozens of Western countries dating back two centuries and argues that radical redistribution measures, including a “global tax on capital,” are needed to reverse current trends toward greater inequality, is speaking to standing-room-only audiences in think tanks here this week.
In addition, the Supreme Court’s ruling earlier this month lifting the aggregate limits that wealthy individuals can contribute to political campaigns and parties has added to fears that, in the words of a number of civic organisations, the U.S. political system is moving increasingly towards a “plutocracy”.
Of all Western countries, income inequality is greatest in the United States, according to a variety of measures. In his book, Pikkety shows that inequality of both wealth and income in the U.S. exceeds that of Europe in 1900.
The 331:1 ratio between the income of the 350 corporate CEOs in the Pay Watch survey and average workers is generally consistent with the pay gap that has prevailed over the past decade.
As the AFL-CIO argues in their report:
America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families a middle-class standard of living. But in recent decades, corporate CEOs have been taking a greater share of the economic pie while wages have stagnated and unemployment remains high.
High-paid CEOs of low-wage employers are fueling this growing economic inequality. In 2013, CEOs of the Standard & Poor’s (S&P) 500 Index companies received, on average, $11.7 million in total compensation, according to the AFL-CIO’s analysis of available data from 350 companies.
Today’s ratio of CEO-to-worker pay is simply unconscionable.