Economy ceo pay graph

Published on May 4th, 2012 | by Rhonda Winter

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Excessive CEO Pay Fuels Our Nation’s Expanding Income Inequality

 

The growing income inequality in the United States is making our economy very volatile and unstable. Executive compensation and CEO pay have helped to fuel that rapidly expanding wealth gap, as well as our country’s financial crisis. The Economic Policy Institute has just released a report detailing how the grotesque expansion of CEO pay has helped to create our nation’s huge chasm in income.

The EPI study, “CEO pay and the top 1% — How executive compensation and financial-sector pay have fueled income inequality“, by Lawrence Mishel and Natalie Sabadish, found:

• From 1978 to 2011, CEO compensation increased more than 725 percent, compared with an increase in compensation for workers of only 5.7 percent. 

• CEOs were paid, on average, 231 times more than workers in 2011. This CEO-to-worker compensation ratio includes the value of stock options exercised by executives. An alternative measure of CEO compensation that includes the value of stock options granted in a given year yields a CEO-to-worker compensation ratio of 209.4-to-1. By comparison, the CEO-to-worker compensation ratio was roughly 20-to-1 in 1965.

EPI CEO pay graph

The unequal growth in earnings enjoyed by the top 1% have come at the expense of the rest of us at the bottom of the financial food chain. How is it possible that over the last three decades the wages of the elite plutocracy rose 725%, while worker compensation grew just 5.7%? These kind of extreme inequities and wealth disparities bankrupt our democracy, rob investment in our vital infrastructure, and are turning our country into a severely stratified oligarchy.

 

graph image is via EPI

 





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About the Author

was raised by wolves, and subsequently has difficulty interacting with other humans; she can also be found on and Twitter.



  • Donald T Coughlin

    As a rank and file Democrat living in a capitalist society, prizing the Hollywood and oil, free agency, and now CEO compensation, I cannot see how a free society can literally cap any single social strata income level. The very nature of the free capitalist society values that which a product or rarity of labor will allow. Inclusively to strike in the streets for one social income strata seems time consuming and inefficient.
    However, also in a capitalist society is the free citizen’s redistribution of wealth as well as the funding of a fine government. Taxation has become one of the Milton Friedman Neoliberalism of give up all assets the labor class has earned over the last 53 years, including taxation-redistribution of wealth.
    A reemployment to reasonable tax rates will balance the wealth, if acted upon in a necessary manner. A logarithmic ever increasing percentage of tax rates will allow the free market to pay as a sector and earn what they may through competitive action.
    The concept of taking to the streets to beat back the wealthy sector of only the CEO compensation seems to forget many other 1% classes of exceedingly successful wealth gained each year.
    One healthy tax structure could assess a greater percentage of an earners income, as that earners wages improve; this seems to cover all considerations if investments successes are inclusive.
    There is nothing improper earning a billion dollars in a year, as when others make income, they make others income. However, as this is the greatest free country in the world, why not tax this billionaire for this year of success at a rate greater than all other less successful wage earners. Let that rate allow all earners to take more home with each wage earning increase. A rate of tax at 30-50 percent seems high yet even higher rates will allow the free system to continue and pay a wage commensurate to demand. The taxes would fund our great country.
    B 36 Ears

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