AFRICANGLOBE – I wrote a college paper almost 32 years ago on the growing gap between rich and poor in America. It was replete with all kinds of warnings about the social, political and economic consequences of this gap, almost all of which have come to pass.
Conspicuously missing, however, was any reference to CEO-to-worker pay. I hasten to clarify that this was not due to my failure, or to my thesis advisor’s oversight. It’s just that this ratio did not figure as prominently back then (as other factors like technology, regressive taxation, and offshoring did) in driving the growing gap between rich and poor.
My how things have changed.
How Much Can I Get?
The ratio of CEO-to-worker pay has increased 1,000 percent since 1950, according to data from Bloomberg. Today Fortune 500 CEOs make 204 times regular workers on average … up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950.
‘When CEOs switched from asking the question of ‘how much is enough’ to ‘how much can I get,’ investor capital and executive talent started scrapping like hyenas for every morsel,’ Roger Martin, dean of the University of Toronto’s Rotman School of Management, told Bloomberg. (Bloomberg April 30, 2013)
For a little perspective, it might be helpful to know that CEO-to-work pay in Germany, the country with the largest economy in Europe and third largest in the world behind the United States and China, is 12-to-1. But nothing betrayed the mindset behind America’s growing economic apartheid quite like Republican candidate Mitt Romney notoriously lambasting 47 percent of Americans during last year’s presidential campaign as lazy, entitled people just looking for government handouts.
He did this simply because they earn so little that even this country’s regressive tax system deemed it unconscionable to require them to pay income tax (on top of payroll, state, local and other taxes they’re still required to pay). And bear in mind that his audience of “one percenters” nodded amen to his expression of utter contempt for America’s poor, notwithstanding that: But I digress.
Let Them Eat Cake
The point is that this ratio of CEO-to-worker pay merely compounds a profound normative shift in America. For we have gone from the 1950s when CEOs had vested interests not only in the welfare of their workers but that of the communities in which they lived as well, to today when they have vested interests only in the bottom line and share value … because these provide the economic pretext for their exorbitant pay.
This let-them-eat-cake mindset has misled Walmart to pay its CEO, Michael Duke, over 1,000 times more than the average worker and still insist, with nary a pang of guilt or hypocrisy, that it makes no business sense to pay its workers a fair minimum wage.
Hell, J. C. Penny thought nothing of paying Ron Johnson a CEO-to-worker ratio of 1,755-to-1. And Johnson, in turn, thought nothing of firing 19,000 workers (according to March 1, 2013 edition of Business Insider) in a mercenary bid to increase share value … and justify his pay. As it happened, despite using his workers as sacrificial lambs to Wall-Street speculators, J.C. Penny lost half its share value, which is why Johnson lasted only 17 months as CEO.
Anthony L. Hall is a Bahamian native with an international law practice in Washington, D.C. Read his columns and daily weblog at www.theipinionsjournal.com.