By Cliff Montgomery – July 6th, 2011
Several corporations are fighting to keep you from knowing precisely how much their CEOs are being paid–specifically, they’re working to keep you from discovering how much more money the CEO makes than theaverage worker.
It at least may matter to the workers, as a top reason given for reducing worker pay and benefits is that thecorporation ‘just can’t afford those high expenses’. Such claims will ring hollow to workers when they discoverthe boss collects an ever-increasing fortune from their work as they starve.
A lobbying group serving as the political front for 81 large corporations, including McDonald’s and GE, is buyinglawmakers to keep ordinary people from discovering how they’re being fleeced.
“The lobbying effort began more than a year ago,” The Washington Post recently reported.
“It involved some of the biggest names in corporate America,” continued the Post, “and [also involved]meetings with members of both parties on the House Financial Services Committee and Senate bankingcommittee.”
“The companies and their Republican allies in Congress call comparisons between the chief and everyone elsein the company ‘useless.’ “
The Post further quoted one Republican–Rep. Nan A.S. Hayworth (R-NY)–who declared that such adisclosure “creates heat but sheds no light,” adding that she said “the calculation of [such a…] ratio would be aburden for companies, especially those with global operations.”
To put that into perspective, Republicans also proclaim any new laws to oversee the speculative CasinoCapitalism of Wall Street to be ‘useless’ and a ‘burden’, even after the U.S. economic meltdown brought on bysuch irrational speculations. They also proclaimed ‘useless’ any serious attempt to look deeply into the flawedevidence leading us into the current Iraq War–a war which later was proved to be based on self-delusion andoutright fraud.
We at The American Spark wonder if ordinary Americans, who have suffered through a host of layoffs, forcedpay cuts and forced benefit reductions in recent years, would agree about the so-called ‘uselessness’ ofinformation on CEO pay.
Another recent article from the Post proclaimed the matter in more broad terms:
“Recent research…indicates that executive compensation at the nation’s largest firms has roughly quadrupledin real terms since the 1970s,” declared the Post,” even as pay for 90 percent of America has stalled.”
“Inequality, economists have noted, is an essential part of capitalism,” the Post pointed out.
“Defenders of executive pay argue, among other things, that the rising compensation is deserved becausefirms are larger today,” stated the article. “Moreover, this group says, more packages today are based on stockand options, which pay more when the chief executive is successful.”
“Critics, on other hand, argue that executive salaries have jumped…because greed became more sociallyacceptable,” the Post continued.
“In settling these arguments, economists were hampered by a lack of data, particularly any that might givesome historical perspective,” the article tellingly declared.
“It wasn’t until economists Carola Frydman from MIT’s Sloan School of Management and Raven E. Molloy ofthe Federal Reserve collected and analyzed data going back to 1936,” stated the Post, “[…] that the longer-term trends became clear.”
“What the research showed is that while executive pay at the largest U.S. companies was relatively flat in the’50s and ’60s,” the article continued, “it began a rapid ascent sometime in the ’70s.”
“As it happens, this was about the same time that income inequality began to widen in the United States,”declared the Post, which quoted information garnered by University of California economist Emmanuel Saez.
Most important, “the finding that executive pay was flat in the ’50s and ’60s, when firms were growing,” statesthe article, “appears to contradict the idea that executive pay should naturally rise when companies grow.”
“This is a ‘challenge for the market story,’ ” MIT’s Carola Frydman told the Post.
