Ouch: Since 1979, annual pay increases for top earners grew 138 percent, while the bottom 90 percent of earners saw only a 15 percent increase.
It’s rare to find a person who doesn’t long for a bigger paycheck.
Most of us want to earn enough to be comfortable. Then we want to earn enough to be more than comfortable. Then we want enough to be supercomfortable and maybe have a second house by the ocean in which to explore new boundaries of comfort.
That’s what drives many in their careers. And even those who chase passion over pay wouldn’t mind a bit more cash at the end of the week.
But I think it’s time for some in this country to acknowledge that perhaps they’re earning enough. And, more importantly, that in exchange for the big bucks they make, they need to help find ways to lift up others.
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There’s a pay disparity in America’s workforce that is jaw-dropping. That’s not news. It’s been growing for several decades, with the wages of working stiffs stagnating, productivity remaining high, and the folks at the tippy top — CEOs and the like — making more and more and more.
The exact size of this disparity is tough to nail down.
Data collected by the AFL-CIO show the average pay for an S&P 500 CEO last year was $13.1 million. That is, according to the labor union federation’s study, 347 times what the average American worker earns.
People who don’t think perversely high CEO pay is a problem denounce the AFL-CIO’s numbers as inflated via crafty math. The denouncers seem to have a solid argument, as the labor group is ignoring CEOs of smaller companies and possibly underestimating how much the average worker earns.
Online jobs review site Glassdoor released a report in 2015 that found CEOs of S&P 500 companies made 205 times more than the average workers at those companies. And the top four CEOs made more than 1,000 times the average worker’s pay.
We can quibble over its size, but the bottom line is the disparity exists and is significant. The AFL-CIO’s figure could decrease by a factor of eight and many CEOs would still be making more than 40 times what many workers are paid.
I don’t necessarily begrudge a CEO his or her money. And simply lowering the wages of top executives will never come close to covering the cost of boosting other workers’ pay.
But isn’t it reasonable to expect a CEO earning an obscene amount of money to include “finding ways to lower the wage disparity” in her or his job description?
And that’s where I don’t see action.
The Economic Policy Institute, a liberal economic think tank, has studied wage stagnation in depth and reached conclusions that are widely accepted.
A 2015 report from the institute explains: “In the three decades following World War II, hourly compensation of the vast majority of workers rose 91 percent, roughly in line with productivity growth of 97 percent. But for most of the past generation (except for a brief period in the late 1990s), pay for the vast majority lagged further and further behind overall productivity. From 1973 to 2013, hourly compensation of a typical (production/nonsupervisory) worker rose just 9 percent while productivity increased 74 percent.”
Since 1979, annual pay increases for top earners grew 138 percent, while the bottom 90 percent of earners saw only a 15 percent increase.
At the risk of sounding too technical, that sucks. And it’s not sustainable.
Company leaders are free to haul in as much cash as they want and look only at the immediate future of their businesses. But if people down the food chain don’t start seeing a more equitable alignment between their pay and the pay of the folks at top, a reckoning will come. It’s inevitable.
Ignoring this disparity is as short-sighted as it is counterproductive for the future health of an organization.
So what are the answers? Nothing simple, that’s for sure.
Globalization has made it hard for American workers to compete against cheaper foreign labor. But taking an anti-globalization approach and trying to force manufacturing back into America could hurt regular workers by increasing the prices of the things they buy.
People far more intelligent than I have presented sensible options: raise the minimum wage, cap executive salaries, increase the number of workers eligible for overtime pay, provide paid family leave, and invest more in worker training and development.
There’s no magic bullet. Fixing this — if leaders actually want it fixed — will require tweaks and changes on many fronts. It will take work — and a recognition that our pay disparity is clearly unfair.
I’m not advocating socialism, just making a simple call for reasonableness.
The ones who can help most are the ones at the top, the ones making $30 million, $50 million, $90 million a year.
They’ll hear a lot less complaining about their giant paychecks if they find a way to grow everyone else’s as well.
Rex Huppke writes for the Chicago Tribune. Send him questions by email at email@example.com.