Ridiculous CEO Pay Means Lower Worker Pay

Sam Pizzigati Editor, Too Much online magazine

America’s corporate execs and their cheerleaders regularly assure us that we need not worry about all those millions that top execs are collecting. The latest to make this case: JPMorgan Chase CEO Jamie Dimon.

“It is true that income inequality has kind of gotten worse,” Dimon told an audience of movers and shakers at the Detroit Economic Club last month. But “you can take the compensation of every CEO in America and make it zero,” he continued, and that “wouldn’t put a dent” into inequality.

Dimon happens to be totally wrong in his arithmetic — and his analysis.

The arithmetic first. The nation’s top 3,000 CEOs, a new ISS Corporate Solutions analysis shows, averaged $6.4 million last year. The typical American woman working full-time earned $39,621 last year.

If we zeroed out the $19.2 billion that went to those 3,000 CEOs, we would have enough cash to give nearly 6 million women a bonus that equals one month of their pay. That qualifies as a “dent” on inequality.

But the problem with over-the-top CEO pay goes far beyond the sheer immensity of the mega millions CEOs are collecting out of corporate coffers. The even bigger problem — for average workers — remains what CEOs are doing to claim those mega millions.

Most corporations tie CEO compensation to their share prices, earnings per share, or some other “performance” metric. The outrageously high rewards top execs collect when they hit their targets on these metrics give the execs an irresistible incentive to behave outrageously.

Average workers bear the brunt of that outrageous behavior. They see their jobs downsized, outsourced, or turned into part-time employment. They see their wages stagnate. Since 2000, median inflation-adjusted full-time wages for U.S. men have dropped from $51,227 to $50,383. Median wages for full-time women have dropped nearly $500 since 2007.

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This has been reposted from Too Much.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. He is an associate fellow at the Institute for Policy Studies in Washington, D.C. Last year, he played an active role on the team that generated The Nation magazine special issue on extreme inequality. That issue recently won the 2009 Hillman Prize for magazine journalism. Pizzigati’s latest book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives (Apex Press, 2004), won an “outstanding title” of the year ranking from the American Library Association’s Choice book review journal.

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