According to Business Week magazine, average top executive pay in 1996 surged again -- by 54% to top out at $5.8 million. While CEOs gorged themselves, profits rose by just 11%. And factory workers' pay rose only 3%, falling behind a 3.3% increase in consumer prices. Since 1980, the average CEO has seen pay packages rise 768% to $5.8 million or $2,788 on an hourly basis. During that time the minimum wage grew by only 53% to $4.75 per hour.
The pay disparity between top execs and U.S. workers is widening by leaps and bounds. In 1965, CEOs made 44 times the average factory worker's pay. Today, Corporate America's bigdogs make 209 times the average worker's pay. If chemical workers had received increases comparable to CEOs between 1980 and 1996, they would now be paid $160,500 annually. And oil workers would now average $211,600 without overtime. Even a worker at the minimum wage would now be paid over $60,000 annually.
Good Old Boy Executive Boards
The board of directors of a company, which consists of
executives and invited friends, is responsible for
setting and approving each other's pay packages. In the
past, the natural tendency for these people to write each
other blank checks was held in check by the fear of
public perception and shareholder objections. Because of
the rising stock market, and the callousness bought on by
a decade of greed, the fear is gone.
More Executives Paid with Stock Options
Stock options allow executives to buy stock in the future
from the company at today's price and pocket the
difference. If it goes down, the executive loses nothing.
If it goes up, the boss can buy it cheap, sell it high
and clean up. Today, stock options make up two-thirds of
a CEO's pay versus one-third in the 1960s. Since a quick
way to jump a stock price is to announce layoffs and
restructuring, executives are encouraged to dump workers
and cash out options.
The Imbalance of Corporate Power
Workers have less power in today's economy, which means
that executives can take far more for themselves. That
wasn't always the case. When unions represented a third
of the workforce 30 years ago, workers had an effective
counterweight to executive greed.
The real solution to closing the income gap between workers and corporate bosses is the restoration of political power to workers and their unions. As the two existing political parties continue to undermine these rights, workers have responded by forming the Labor Party which calls for a restoration of workers' rights to organize, bargain, and strike, an end to corporate welfare, and a constitutional guarantee to a job at a living wage.
For more information on CEO pay on the Internet:
AFL-CIO's Executive Paywatch
http://www.paywatch.org
American Compensation Association
http://www.ahrm.org/aca/aca.htm
United For A Fair Economy
http://www.stw.org