Friday, March 7, 2008

CEO Compensation Scam

Long overdue, the House Oversight and Government Reform Committee is looking into the ridiculously overblown CEO compensation. Executives are now averaging pay that is over 300 times as large as their average worker (in the late 1960s, CEOs earned about 25 times as much). CEOs have seen double digit pay increases, year-in and year-out. Average workers have been lucky to see their pay keep up with inflation. If the minimum wage had seen the same increase as CEO pay since 1990, the minimum wage would be $23.03.

Even when they drive their companies into the ground, or merely oversee their company's stock devalue by 80 percent or so, these Captains of Industry walk away with millions if not hundreds of millions of dollars in compensation. The executives' pay, alone, takes roughly 10 percent of aggregate net company earnings. And, the tax code also allows many nefarious ways to avoid or lower taxation on this overly generous compensation.

Additionally, as Dean Baker comments, "The typical CEO is not producing great returns for shareholders. The average return is weak, and in many cases shareholders are incurring loses due to CEO mismanagement."

Yet the mainstream media has to nerve to write stories complaining about workers whom make a living wage, or actually have health insurance and some sort of retirement plan, as if everyday laborers are the cause of companies budgetary problems. We keep getting fed this story that all workers need to be Wal-Mart-ized (low wages, no health insurance, etc.) if we want to compete in the global economy. It's always the unions fault. Those damn Joe and Jane Six-packs! How dare they ask for a wage that allows them to own a home, pay their utilities, afford medical care, and, god forbid, take an occasional vacation.

Hopefully this is just the beginning of the pulling back the curtain on this inverse Robin Hood scheme the elite have been practicing for the last three decades, whereby workers are the enemy and in need of downsizing, while the rich, no matter how horribly they fail, are allowed to extract larger and larger rewards year after year.

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