---------- Forwarded message ---------- Date: Fri, 16 Apr 1999 14:32:42 -0400 From: Doug Hunt <[EMAIL PROTECTED]> To: [EMAIL PROTECTED] Subject: U.S. Wage Gap Widens - Ain't capitalism wunnerful One more in the unending series "Ain't capitalism wunnerful . . . " Njoki Njoroge Njehu wrote: > > Copyright 1999, Inter Press Service > ECONOMY: U.S. Wage Gap Widens > > By Abid Aslam > > WASHINGTON, Apr 13 (IPS) - U.S. corporate chiefs are amassing > ever-increasing pay raises, widening the gap between themselves and their > workers while irking some investors. > > Last year, chief executive officers (CEOs) of U.S. corporations pocketed > 419 times the average wage of a blue-collar worker, according to the U.S. > Bureau of Labour Statistics (BLS). > > Corporate inequality has multiplied apace, with CEO compensation > swelling from 85 times what workers earned in 1990, to 209 times in 1996 > and 326 times in 1997, before surging to last year's level. > > The latest survey of executive compensation from ' Business Week' > magazine and Standard and Poor's Compustat, a market research firm, finds > that CEOs now make 36 percent more than they did a year ago - and 442 > percent more than they did in 1990. > > Blue-collar workers, however, have received only a 2.7 percent raise > and white collar workers, 3.9 percent, according to the BLS Employment > Cost Index. > > That glaring disparity is moving a network of investors to sponsor > efforts to tie CEO pay to the wages of a company's lowest-paid labourer. > The group, called 'Responsible Wealth', is backing proposals to be voted on > in coming months by shareholders of seven major U.S. companies. > > If successful, the resolutions would set a maximum ratio between CEO > and worker earnings at each company. The firms include financial services > leader Citigroup, General Electric, and telecommunications giant AT&T. > > Many workers earn less today than they did in the early 1970s, > according to the non-governmental coalition 'United for a Fair Economy' > (UFE). > > The group says the average labourer's weekly pay in 1998 remained 12 > percent below the 1973 level, adjusting for inflation - despite a > 33-percent increase in productivity in the same period. > > Bosses' earnings also bear little relation to performance. According to > the latest survey of the 365 largest U.S. companies, CEO compensation has > ballooned despite often lacklustre corporate performance. > > Companies covered by the survey turned in a 1.4 percent fall in earnings > last year - even as the benchmark Standard and Poor's 500-stock index rose > 26.7 percent. Yet, CEOs did even better than the stock market, enjoying a > 36-percent pay hike. > > ''Despite the anecdotal connection, no academic has proven that higher > pay creates higher performance,'' the survey notes. > > Corporate leaders have not seen a large rise in salaries as such. > Rather, 80 percent of their earnings in 1998 came from gifts of stock, > known as 'options', awarded to them by their own companies. > > CEOs also continue to garner lavish enticements. These include bonuses > for taking their jobs in the first place, guaranteed retirement deals, and > ironclad severance packages to provide them with a 'golden parachute' in > case they are jettisoned. > > Stock options and other long-term compensation plans first came to > dominate executive pay in 1983. Ostensibly designed to motivate CEOs to > steer their companies toward higher earnings and provide higher returns for > shareholders, the stock schemes have become especially popular as a means > of avoiding taxes levied on salaries exceeding one million dollars. > > Thanks to these non-salary payments, ''the head honcho at a large > public company made an average 10.6 million dollars last year,'' according > to the 'Business Week' survey. > > Even that sum ''is chicken feed next to 1998's best pay cheque,'' the > survey notes. Walt Disney Co. CEO Michael Eisner pocketed 575.6 million > dollars and between them, the five top-paid executives raked in a whopping > 1.2 billion dollars. > > Yet, Eisner and Citigroup chief Sanford Weill - last year's third > best-paid CEO - top the charts of company bosses who ''gave shareholders > the least.'' They also rank fourth and fifth, respectively, in the > standing of ''executives whose companies did the worst relative to their > pay.'' > > This mismatch has strengthened support for 'indexed options', under > which a company's gift of stock to its CEO would go through only if a > firm's stock did better than its competitors or a market average. > > Federal Reserve Chairman Alan Greenspan - the U.S. equivalent of a > central bank chief - in February voiced his support for such 'indexing' > and publicly criticised the level of CEO pay before a Congressional > banking committee. Last year, the Council of Institutional Investors, > representing more than 100 large pension funds, also called for indexing. > > Such measures would fall short of fixing the imbalance between > executive and workforce pay, according to Betsy Leondar-Wright, > communications director at UFE. > > ''The important thing is to start linking the top and bottom of the pay > scale,'' says Leondar-Wright. ''If a company grows, the top and bottom > should grow together. If there's going to be pain - meaning layoffs at the > bottom - then there should at least be a freeze on raises at the top.'' > > UFE, which assembled the 'Responsible Wealth' investors' group, wants > Congress to pass a proposed 'Income Equity Act' capping the tax > deductibility of executive compensation at 25 times the amount paid the > lowest full-time worker in any given firm. (END/IPS/aa/mk/99) > > ** NOTICE: In accordance with Title 17 U.S.C. Section 107, this material is > distributed without profit to those who have expressed a prior interest in > receiving the included information for research and educational purposes. ** > > ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: > > Njoki Njoroge Njeh� > Director > 50 Years Is Enough Network > 1247 E Street, SE > Washington, DC 20003 > Phone: 202/IMF-BANK or 202/544-9355 > Fax: 202/544-9359 > Email: [EMAIL PROTECTED] > Webpage: http://www.50years.org > > It is better to protest than to accept injustice. > - Rosa Parks > Activist, Fighter for Freedom > > Class consciousness is knowing which side of the fence you're on; > class analysis is knowing who is there with you. > ----from a poster, source unknown > > The master's tools will never destroy the master's house. > - Audre Lorde > Sister Outsider
