But one of them, it turns out, isn’t true after all. Forget about that rising tide. Clearly, this rising economic tide hasn’t lifted all boats. As just-released figures on executive compensation reveal, a handful of yachts may be riding high, but the vast majority of working-class skiffs are still stuck in the mud.
According to the 100 CEO Pay Study conducted for The New York Times by the California-based research firm Equilar, “the median compensation of a chief executive in 2013 was $13.9 million, up 9 percent from 2012.” All together, those 100 top CEO’s took home a hearty $1.5 billion last year.
As they say, nice work if you can get it. But the AFL-CIO’s website shows how far that elevated compensation is from the reality most workers face today. The gap between compensation for the very, very wealthy and the average American worker keeps growing wider and wider.
Get this. Today, according to the AFL-CIO, the average American worker, man or woman, makes $16.94 an hour. That’s $35,235 a year. Compare that to the CEO’s median annual $13.9 million pot of gold and you realize that we have, indeed, become “Two Americas” — one for the 1 percent; the other, for the 99 percent.
Or get this. In 1950, the ratio between CEO pay to average worker pay was 20 to 1. By 2000, it had swelled to 120 to 1. Today, that same ratio is 331 to 1. The ratio between CEO pay to minimum wage worker pay is a staggering 774 to 1. Which means a full-time minimum wage worker would need to work 1,372 hours — 191 eight-hour days, or six months, half a year! — in order to make as much as Michael T. Duke, the head of Wal-mart, makes in just ONE hour. And he’s hardly the highest wage-earner. Oracle’s Larry Ellison tops the list at $78.4 million.
No wonder President Obama and Pope Francis spent so much of their March 27 meeting talking about income inequality. It’s a worldwide problem. In January, the World Economic Forum identified worsening income inequality as the risk most likely to cause serious damage around the globe in the coming decade — ahead of extreme weather events, unemployment and underemployment, climate change and cyber attacks. But it’s a particularly serious problem here in the United States, where the richest 1 percent own nearly 40 percent of the wealth, and where we lead the developed world in the greatest disparity in distribution of wealth. President Obama, who labels it a “deficit of opportunity,” has called income inequality a bigger threat to the U.S. economy than the budget deficit, which is shrinking.
Identifying the problem is one thing, however. Figuring out what to do about it is another. And that’s where there are no easy answers. In his bombshell new book, “Capital in the Twenty-First Century,” French economist Thomas Piketty surveys economic data from 20 countries and concludes that income inequality may always be with us for one simple reason. As Michael Tomasky, writing in the Daily Beast, sums it up: “In all times and places under study, the rate of return on capital increases at a faster rate than general economic growth. Growth averages 1, 1.5 percent. Rate of return averages 4 or 5 percent. So, presto, the people with the capital — money and assets of all kinds, land and equipment and what have you — are getting richer a lot faster than the rest of us.”
Still, Piketty and other economists, heeding the World Economic Forum warning, stress the urgency of government action to expand economic opportunity and level the playing field. Piketty suggests a global wealth tax. President Obama’s proposed the “Buffett Rule,” requiring a minimum tax rate of 30 percent on those making more than a million dollars a year. Both of which may be politically impossible.
Short of that, there’s one obvious and immediate answer: raising the minimum wage. Fifty-eight Republicans now in Congress voted for a wage increase in 2007 under President Bush. There’s no reason, other than pure politics, for them to oppose it today. Raising the minimum wage may not do much to close the income inequality gap, but at least it’s a good start.
Bill Press is host of a nationally-syndicated radio show.