Posts Tagged ‘CEOs’

CEO-worker-2013

According to the AFL-CIO’s latest “Executive Paywatch” report, the CEO-to-average-worker-pay ratio rose last year to 331:1. And the ratio of CEO pay to the minimum wage was much higher: 774:1.

That’s because, in both cases, workers’ wages remained more or less constant while the amount of surplus those workers created that ended up in the pockets of the CEOs of the nation’s largest corporations continued to rise.

As the AFL-CIO argues in their report:

America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families a middle-class standard of living. But in recent decades, corporate CEOs have been taking a greater share of the economic pie while wages have stagnated and unemployment remains high.

High-paid CEOs of low-wage employers are fueling this growing economic inequality. In 2013, CEOs of the Standard & Poor’s (S&P) 500 Index companies received, on average, $11.7 million in total compensation, according to the AFL-CIO’s analysis of available data from 350 companies.

Today’s ratio of CEO-to-worker pay is simply unconscionable.

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According to the American Association of University Professors, in Losing Focus, its latest annual report on the economic status of the profession,

Figure 2 compares thirty-five years of data on administrative salaries from the CUPA-HR Administrators in Higher Education Salary Survey cited above with faculty salary data collected by the AAUP. It would have been preferable to disaggregate the analysis into more specific institutional categories, but that level of data on administrative salaries was not available. In the data from public institutions, the increases in median salary paid to four senior administrative positions were at least 39 percent after controlling for inflation, with the increase in presidential (“chief executive officer” in the parlance of the report) salary much greater at 75 percent. By contrast, and probably not surprising to regular readers of this report, the cumulative increases in mean salary for full-time faculty members were mostly less than half as great. The same pattern held in the private-independent sector, although the rates of increase for all positions there were larger. Median presidential salary jumped 171 percent above the rate of inflation, and the other three administrative salaries increased at least 97 percent, while the uptick in mean salaries for full-time faculty members reached only 50 percent or less. . .

As the longer-term analysis in figure 2 also shows, salaries for presidents in recent years have generally increased more rapidly than those of other administrators, reflecting greater concentration of authority in a single “CEO.”. . .But across all institutional categories, the average increases in administrative salaries are greater—in most cases, much greater—than those for full-time faculty members. The contrast is especially sharp at the private master’s degree universities, with senior administrators receiving double-digit increases while average faculty salaries stagnate or decline. . .

Some commentators have argued that the outsized and rapidly rising salaries paid to many presidents, especially, have only a trivial impact on institutional budgets that may amount to hundreds of millions (or even billions) of dollars annually. While that may be true from an accounting standpoint, the salaries paid to senior administrators are highly symbolic. As we have argued previously, they serve as a concrete indication of the priorities accorded to the various components of the institution by its governing board and campus leadership. Disproportionate salary increases at the top also reflect the abandonment of centuries-old models of shared campus governance, which have increasingly been replaced by more corporate managerial approaches that emphasize the “bottom line.”

 

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I have to spend the rest of the day preparing Upton Sinclair’s The Jungle for class tomorrow (for the labor section of my course on Commodities: The Making of Market Society). But before I get to that. . .

The campaign against college players forming unions, as exemplified by Patrick T. Harker in his column today, continues to repeat the false impression that what the “student-athlete-employees” are demanding is to be paid for their efforts. (Even Joe Nocera, who has been very good on exposing the NCAA’s mistreatment of college athletes, makes the mistake.) No, what these employees are asking for is a voice in setting and enforcing the rules that govern their employment in NCAA-supervised athletic competitions—nontrivial things like how much time they are forced to spend in preparing for their sports, what majors and courses they can take, whether or not athletes who are injured will be given adequate medical care, and so on. No one—except the cavalcade of critics—is talking about making the athletes paid employees.

Sure, as Mark Thoma explains, rent-seeking behavior can explain at least some of the rise in inequality we’ve seen in recent decades. But why go through such tortured explanations, which require one or another deviation from perfect competition, when we can explain inequality in a much simpler manner, even when there’s perfect competition: surplus-seeking behavior. Because that’s what we need to focus on: the ability of a tiny minority in today’s economy to capture and keep the surplus being produced by the majority of workers. And how do they manage to get that surplus? Through high corporate profits that flow into CEO salaries, the growth of the financial sector, and capital gains, which in turn are taxed at low rates. And then, on top of those “normal” flows of surplus, we can consider various forms of market power that culminate in economic rents, which make the already-unequal distribution of income based on flows of the surplus even more unequal.

Speaking of inequality, how is it possible to write a paper on “Consumption Contagion: Does the Consumption of the Rich Drive the Consumption of the Less Rich?” in which Marianne Bertrand and Adair Morse [pdf] describe yet another departure from the Permanent Income Hypothesis, and never mention Thorstein Veblen and his Theory of the Leisure Class?

And, finally, under the heading of “let them eat flip-flops and cheap lingerie from Macy’s,” Thomas Edsall does a nice job summarizing the literature that explains why American workers might be wary about the claims that everyone gains from free trade and how the arguments of free-trade zealots like Jagdish Bhagwati ring so hollow these days.

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NnWDU.AuSt.79 Steve Bell on St George defending The dragon 16.01.2014