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4-15-05, 9:35 am
In times of continuing layoffs and stagnant job growth, when real wages have slipped year after year and corporations tell workers they have to give back more and more of their health benefits, take a little cut in the pay, and work a few extra hours, we find one group of people who seem to be doing just fine – CEOs.
According to a recent story in the New York Times, in 2004, the average CEO of a major company received $9.84 million in total compensation, a 12 percent increase over 2003.
Workers’ pay didn’t keep up with inflation, meaning that in real terms, workers’ pay fell. The buying strength of a worker’s paycheck is less than in 2003.
One report that details some facts about the bloated salaries of CEOs and what those pay a packages cost workers is the AFL-CIO Executive PayWatch report.
Two of the biggest offenders are Coca-Cola and Wal-Mart. According to the PayWatch website, the pay packages of company’s CEO Douglas Daft totaled over $36 million when he retired in 2004.
At Wal-Mart, CEO H. Lee Scott received nearly $23 million in total compensation last year. Full-time Wal-Mart workers, who comprise only about two-thirds of Wal-Mart’s workforce, are paid an average $9.64 an hour—but may be scheduled for as few as 34 hours weekly. Even at an hourly wage of $9.64, working 34 hours a week, a Wal-Mart employee earns only $17,043 annually, well under the $18,850 federal poverty guideline for a family of four in 2004.
2004 Top 10 Most Highly Paid CEOs on Executive PayWatch
Yahoo Inc.: Terry S. Semel, $109,301,385
Apple Computer: Steven P. Jobs, $86,315,789
Coach Inc.: Lew Frankfort, $64,918,520
TXU Corp.: John C. Wilder, $54,960,893
Occidental Petroleum: Ray R. Irani, $52,648,142
NVR Inc.: Dwight C. Schar, $51,058,500
KB Home: Bruce Karatz, $47,288,228
Toll Brothers: Robert I. Toll, $44,240,611
Allegheny Energy: Paul J. Evanson, $40,543,354
Motorola Inc.: Edward J. Zander, $38,851,374
(Source: AFL-CIO Executive PayWatch)
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According to the Bureau of Labor Statistics, median weekly earnings for full-time workers stood at $638 in 2004, growing by a mere $18 since 2003. That’s two movie tickets or half a family dinner at a medium-priced restaurant.
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For the 20 million part time workers in the economy, wages grew by 3 bucks a week – a one-way ride on the bus.
What little wage growth workers saw was wiped out by skyrocketing health care costs. In fact private insurance premiums had three main negative effects on wages and buying power:
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More workers could not afford any insurance, pushing the total number of people without it to 45 million.
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Higher costs forced more workers to divert earnings and savings to higher premiums and out of pocket expenses.
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Employers who do pay part or all of the cost of premiums for insurance were forced to shell out an average of 7 percent more over last year, cutting into the resources that may have been available for raises, investment, or profits.
Many companies, from huge multinationals like General Motors and Ford to small business owners, understand the significance of the health care problem and are looking for other solutions.
This is an important development, though the auto companies' main efforts seem to be oriented towards continued mismanagement and forcing workers to accept cuts rather than putting strong pressure on the Bush amdinistration to find health care solutions. (For more information, click here.)
A single-payer national health insurance program is an option that would reduce costs for employers and would guarantee affordable insurance for working people, leading many corporations, small business owners, unions, and working people and retirees to endorse it. (One current single-payer proposal can be found here.)
Excessive CEO pay takes earnings away from workers in other ways besides the relatively lower pay of the workforce. Money is diverted from the union-sponsored pension funds that many companies pay into, according to the report, into CEO pay. This means that CEO pay packages put the financial picture of many current and future retirees at risk.
CEOs can, and have, become tempted to develop corporate agendas that increase their pay package, but threaten the stability of pension plans. Enron is only the most notorious example, where a CEO, whose compensation was fueled by stock options, diverted the company’s main work into market speculation. While Enron’s executives saw their pay packets grow, the health of the company, and ultimately its workers, collapsed.
This dramatically unfair income disparity calls for direct involvement and oversight by workers in the leadership of companies and management of their agendas, as well as government regulation of how companies do business.
A single-payer national health care coverage plan would also be in everyone’s best interest.
--Joel Wendland is managing editor of Political Affairs and can be reached at jwendland@politicalaffairs.net.
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