Posts from Sam Pizzigati

The Key to Distributing Wealth More Equitably

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

CEO compensation in the United States may have finally crossed the line — from outrageously unfair to intolerably obscene. In 2018, a new Institute for Policy Studies report details, 50 major U.S. corporations paid their top execs over 1,000 times the pay that went to their most typical workers.

What can we do about obscenity this raw? Plenty. We can start by placing consequences on the CEO-worker pay ratios that publicly traded U.S. corporations must now annually disclose.

In Oregon, the city of Portland already has. Since 2017, major companies that do business in Portland have had to pay the city’s business tax at a higher rate if they compensate their top execs at over 100 times what they pay their median — most typical — workers.

State lawmakers have introduced similar legislation in seven states, and, earlier this week, White House hopeful Bernie Sanders announced a plan to hike the U.S. corporate income tax rate on all large firms that pay their top execs over 50 times their worker pay. Some context: A half-century ago, few U.S. corporations paid their chief execs over 25 times what their workers earned.

The new Sanders plan has drawn predictable scorn from the usual suspects. One analyst from the right-wing Manhattan Institute, for instance, told the Washington Post that a pay-ratio tax “could dramatically affect industries such as fast food and retail that naturally pay lower wages.”

Corporations pay “what the market demands,” added Adam Michel from the equally conservative Heritage Foundation, “and levying new taxes on high pay will just make U.S. businesses less able to compete globally, expand their workforces, or raise wages of rank and file workers.”

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America’s Wealthy: Ever Eager to Pay Their Taxes!

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Why do many of the wealthiest people in America oppose a “wealth tax,” an annual levy on grand fortune? Could their distaste reflect a simple reluctance to pay their fair tax share? Oh no, JPMorganChase CEO Jamie Dimon recently told the Business Roundtable: “I know a lot of wealthy people who would be happy to pay more in taxes; they just think it’ll be wasted and be given to interest groups and stuff like that.” Could Dimon have in mind the interest group he knows best, Wall Street? In the 2008 financial crisis, federal bailouts kept the banking industry from imploding. JPMorgan alone, notes the ProPublica Bailout Tracker, collected $25 billion worth of federal largesse, an act of generosity that’s helped Dimon lock down a $1.5-billion personal fortune. Under the Elizabeth Warren wealth tax plan, Dimon would pay an annual 3 percent tax on that much net worth. Fortunes between $1 billion and $2.5 billion would face a 5 percent annual tax under the Bernie Sanders plan.

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Executive Excess 2019: Making corporations pay for big pay gaps

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

INTRODUCTION:

For two full years now, publicly held corporations in the United States have had to comply with a federal mandate to report the gap between their CEO and median worker compensation. The resulting disclosures, this report makes clear, have produced truly staggering statistical results.

Americans across the political spectrum have been decrying the yawning gaps between CEO and worker compensation for several decades now. Yet Americans still, the research shows, vastly underestimate how wide these gaps have become. Today, with corporations required to disclose their pay ratios, the public can finally see the actual size of pay gaps at individual firms. These excessively wide compensation gaps hurt us on three major fronts:

  • Corporate pay gaps help drive extreme inequality in the U.S.
  • Wide pay gaps undermine business efficiency and effectiveness
  • Runaway CEO pay endangers our democracy and the broader economy
 

KEY FINDINGS:

  • At the 50 publicly traded U.S. corporations with the widest pay gaps in 2018, the typical employee would have to work at least 1,000 years to earn what their CEO made in just one..
  • Among S&P 500 firms, nearly 80 percent paid their CEO more than 100 times their median worker pay in 2018, and nearly 10 percent had median pay below the poverty line for a family of four.
  • S&P 500 corporations as a whole would have owed as much as $17.2 billion more in 2018 federal taxes if they were subject to tax penalties ranging from 0.5 percentage points on pay ratios over 100:1 to 5 percentage points on ratios above 500:1.
  • Walmart, with a pay gap of 1,076 to 1, would have owed as much as $794 million in extra federal taxes in 2018 with this penalty in place, enough to extend food stamp benefits to 520,997 people for an entire year..
  • Marathon Petroleum, with a 714-to-1 gap, would have owed an extra $228 million, more than enough to provide annual heating assistance for 126,000 low-income people.
  • CVS, with a 618-to-1 ratio, would have added a revenue stream that could have provided annual Medicare prescription benefits for 33,977 seniors.
  • The report also includes the most comprehensive available catalog of CEO pay reform proposals.

Download the full report here.

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From the Institute for Policy Studies

A Superstar CEO Takes One Greedy Step Too Far

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Gigs! Disruption! Cubicle killers! Adam Neumann figured he could parlay trendy buzzwords into an office rental goliath that could make him rich. WeWork, the company he co-founded nine years ago, took out long-term office building leases and subleased space to start-ups and freelancers, a business model that soon flopped. In 2018, WeWork collected $1.8 billion in revenue and still ended the year $1.6 billion in the red. But Neumann himself has done quite well, in part by buying up buildings and renting the space back to WeWork. Neumann also tried trademarking — in his own name — the “We” in WeWork. Amid the resulting furor, he later returned the $5.9 million he charged WeWork for rights to the “We.” That furor only intensified this summer when Neumann sold off $700 million of his WeWork shares before a planned IPO, a clear case of trying to get out while the getting seemed good. That maneuver chopped two-thirds off WeWork’s $47 billion market value and had WeWork investors demanding Neumann’s head. They got it. Neumann last week stepped down as WeWork CEO. The good news for Neumann? He still has plenty of pillows to rest his head on. He owns five homes worth a combined $80 million.

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Reposted from Inequality.org

The GM Strike: A Century of Context

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Wars end with treaties. In the middle of the 20th century, the “class war” that finished off America’s original plutocracy ended with the “Treaty of Detroit.”

Fortune, the business magazine, came up with that catchy turn of phrase back in 1950 to describe the landmark collective bargaining agreement that the United Auto Workers union had just reached with General Motors. What made the pact so historic? America’s most powerful corporation was essentially agreeing to “share the wealth.”

In exchange for labor peace, notes historian Nelson Lichtenstein, GM guaranteed auto workers what amounted to “a 20 percent increase in their standard of living” over five years, along with a new health care benefit and a standard $125 monthly pension, the equivalent of about $16,000 annually in today’s dollars.

This “Treaty of Detroit” would help energize a huge postwar shift in the distribution of U.S. income and wealth. In the quarter-century after 1945, the real incomes of average Americans would double, in the process manufacturing the first mass middle class the world ever seen.

Now UAW workers are once again making headlines, demanding just as they did decades ago that General Motors share the wealth with the workers who toil to create it. And GM is sitting on plenty of wealth. Since 2015, the company has posted $35 billion in North American profits alone. But GM workers today find themselves struggling in a far different — and more difficult — political and economic environment than their UAW forbears.

In 1950, the U.S. labor movement was beginning a third decade of sustained and significant growth. By the mid 1950s, over one out of every three workers in the nation carried a union card. Last year, by contrast, only 6.4 percent of American private-sector workers belonged to a union.

The executives who run General Motors are operating in a different environment, too. In the 1950s, the U.S. tax code subjected the nation’s rich to consistently steep tax rates. Individual income over $200,000 faced a 91 percent federal income tax throughout the decade. In 1950, GM’s top executive, Charlie Wilson, paid 73 percent of his $586,100 total income in taxes.

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An Invitation to Sunny Miami. What Could Be Bad?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

If a billionaire “invites” you somewhere, you’d better go. Or be prepared to suffer the consequences. This past May, hedge fund kingpin Carl Icahn announced in a letter to his New York-based staff of about 50 that he would be moving his business operations to Florida. But the 83-year-old Icahn assured his staffers they had no reason to worry: “My employees have always been very important to the company, so I’d like to invite you all to join me in Miami.” Those who go south, his letter added, would get a $50,000 relocation benefit “once you have established your permanent residence in Florida.” Those who stay put, the letter continued, can file for state unemployment benefits, a $450 weekly maximum that “you can receive for a total of 26 weeks.” What about severance from Icahn Enterprises? The New York Post reported last week that the two dozen employees who have chosen not to uproot their families and follow Icahn to Florida “will be let go without any severance” when the billionaire shutters his New York offices this coming March. Bloomberg currently puts Carl Icahn’s net worth at $20.5 billion.

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Wealth That Concentrates Kills

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

The weight of the wealth that sits at the top of America’s economic order isn’t just squeezing dollars out of the wallets of average Americans. That concentrated wealth is shearing years off of American lives.

The latest evidence for that squeeze on American wallets comes from the Census Bureau. Researchers there have just released results from their latest annual sampling of U.S. incomes. In 2018, the new Census stats show, incomes for typical American households saw a “marked slowdown.”

In effect, average Americans have spent this entire century on a treadmill getting nowhere fast. The nation’s median — most typical — households pocketed 2.3 percent fewer real dollars in 2018 than they earned in 2000.

The “vast majority” of American households, note Economic Policy Institute analysts Elise Gould and Julia Wolfe, “have still not fully recovered from the deep losses suffered in the Great Recession.”

America’s most affluent households have been having no such problem. Average top 5 percent incomes have increased 13 percent overall since 2000, to $416,520. The new Census Bureau figures, based on a sampling of U.S. households, tell us that top 5 percenters are now collecting 23.1 percent of the nation’s household income.

But these Census Bureau figures significantly understate just how much income America’s richest are annually grabbing, mainly because Census researchers “top code” high incomes to keep the identity of sampled deep pockets confidential. All incomes above fixed top-code levels get recorded at the top code. These levels have changed over the years, but the Census Bureau’s continuing reliance on top coding leaves us with figures that fudge the real extent of our inequality.

Analyses based on other data sources — like IRS tax return records — show that top 1 percenters alone are pulling down over 20 percent of America’s household income, essentially triple the top 1 percent income share of a half-century ago.

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Opioid CEOs Are Our Nation’s Real Druglords

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Last week didn’t go so well for the Mexican druglord Joaquín Guzmán Loera. A federal district court sentenced the notorious “El Chapo” to life in prison. The 62-year-old will almost certainly, notes the New York Times, be “spending the rest of his life behind bars.”

El Chapo certainly deserves his fate. The drug cartel he ruled, a jury determined this past February, dumped “hundreds of tons of drugs to the United States” and “caused the deaths of dozens of people to protect himself and his smuggling routes.”

John Hammergren dumped far more deathly damage. Over the years from 2006 through 2012 alone, we learned last week from the release of a previously secret federal drug database, the corporation that Hammergren ran as CEO inundated local communities in the United States with over 14.1 billion highly addictive opioid pills, nearly a fifth of the opioids distributed in those years.

No other corporation distributed more opioids in those years than Hammergren’s McKesson, the Washington Post reports. Overall, America’s corporate health care giants dropped 76 billion opioid pills on American localities in the time period the new stats cover, enough to supply 36 pills to every man, woman, and child in the United States.

Some 2,000 American cities, towns, and counties are now suing McKesson and the rest of the corporate drug distribution complex. They’re charging that these corporations “conspired to flood the nation with opioids.” The companies, the charge continues, didn’t just fail to report suspicious orders. They “filled those orders to maximize profits.”

The new stats the Washington Post has highlighted will undoubtedly heighten the pressure on McKesson and its fellow partners in crime to settle. But John Hammergren personally has little reason to worry. Unlike El Chapo, Hammergren knew when to fade way. He retired this past April, ending a CEO career that began in 2001. Over his first 16 years as CEO, notes Bloomberg, Hammergren pocketed $781 million. His final months in the McKesson chief executive suite brought that total near $800 million. Upon his retirement, he walked away with a pension package worth $138.6 million.

Opioids helped fuel all these rewards — and Hammergren had to know it. In 2007, the federal Drug Enforcement Administration accused McKesson of shipping “millions of doses” of the opioid hydrocodone to shady operators.

“By failing to report suspicious orders for controlled substances that it received from rogue Internet pharmacies,” the DEA charged at the time, “the McKesson Corporation fueled the explosive prescription drug abuse problem we have in this country.”

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He Gets the Bucks, We Get All the Deadly Bangs

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

National Rifle Association chief Wayne LaPierre has had better weeks. First came the horrific early August slaughters in California, Texas, and Ohio that left dozens dead, murders that elevated public pressure on the NRA’s hardline against even the mildest of moves against gun violence. Then came revelations that LaPierre — whose labors on behalf of the nonprofit NRA have made him a millionaire many times over — last year planned to have his gun lobby group bankroll a 10,000-square-foot luxury manse near Dallas for his personal use. In response, LaPierre had his flacks charge that the NRA’s former ad agency had done the scheming to buy the mansion. The ad agency called that assertion “patently false” and related that LaPierre had sought the agency’s involvement in the scheme, a request the agency rejected. The mansion scandal, notes the Washington Post, comes as the NRA is already “contending with the fallout from allegations of lavish spending by top executives.”

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Out of Ottawa, Some Deflating New Stats on Life in the World’s Richest Nation

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

South of the border, here in the United States, we Americans tend not to pay much attention to our northern neighbors. Entire election cycles can come and go without anyone running for national office saying anything significant about Canada.

But that all has changed of late. Canada now looms large in our politics, mainly because many more of us have realized that Canadians enjoy a health care system far superior to our own, by every meaningful yardstick of fairness and efficiency. Canada’s single-payer approach to health care has become — for progressives in the United States — a guiding inspiration. We want what the Canadians have. We need what the Canadians have.

And we need what Canadians have, an innovative new study suggests, on more than just health care. Average Canadians, this research relates, now enjoy higher incomes than their counterparts in the United States.

The new report — Household Incomes in Canada and the United States: Who is Better Off? — comes out of the Ottawa-based Canadian Centre for the Study of Living Standards and essentially challenges the conventional wisdom on economic well-being. That wisdom, report author Simon Lapointe notes, typically defines well-being as GDP per capita.

To calculate this GDP yardstick, economists take the sum total of the goods and services a nation produces, divide that total by the nation’s population, and tell us that the resulting number measures how well a nation’s people are doing economically.

By this standard measure, Americans are doing much better than Canadians. In 2016, the latest year with comparable stats available, GDP per capita in the United States ran over 20 percent higher than GDP in Canada, $57,798 to $47,294, in U.S. dollars adjusted for what economists call “purchasing power parity.”

But GDP per capita can obscure reality as most households live it, especially in a deeply unequal society like the United States. Lapointe acknowledges in his new Canadian Centre for the Study of Living Standards report that American households certainly do rate as richer than Canadian on average. But “much greater incomes at the top of the income distribution” in the United States, he points out, are driving the difference in the Canadian and U.S. averages.

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Union Matters

America’s Wealthy: Ever Eager to Pay Their Taxes!

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Why do many of the wealthiest people in America oppose a “wealth tax,” an annual levy on grand fortune? Could their distaste reflect a simple reluctance to pay their fair tax share? Oh no, JPMorganChase CEO Jamie Dimon recently told the Business Roundtable: “I know a lot of wealthy people who would be happy to pay more in taxes; they just think it’ll be wasted and be given to interest groups and stuff like that.” Could Dimon have in mind the interest group he knows best, Wall Street? In the 2008 financial crisis, federal bailouts kept the banking industry from imploding. JPMorgan alone, notes the ProPublica Bailout Tracker, collected $25 billion worth of federal largesse, an act of generosity that’s helped Dimon lock down a $1.5-billion personal fortune. Under the Elizabeth Warren wealth tax plan, Dimon would pay an annual 3 percent tax on that much net worth. Fortunes between $1 billion and $2.5 billion would face a 5 percent annual tax under the Bernie Sanders plan.

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No Such Thing as Good Greed

No Such Thing as Good Greed