Here’s a demoralizing fact. Your paycheck has been shrinking for 5 years. We wish we were making this up…but we’re not…
According to MarketWatch, “Since the Great Recession ended five years ago, the amount of money Americans earn each hour after adjusting for inflation has actually fallen. And that largely explains why the U.S. economy is growing just 60 percent as fast as it normally does.
“Hourly wages have risen about 10 percent overall since June 2009, to $24.45 an hour. But over the same span they’ve slipped 0.3 percent in “real” or inflation-adjusted terms. That means most families are just treading water.”
This, in a nutshell, explains the frustrations the average American worker is faced with these days. They’re working harder than ever. But they are earning less.
It feels like running in ankle deep sand down a hot dry beach that never ends. Terrible amounts of time and energy are traded for a diminishing return. Yet the President says the economy is “booming.”
What’s more, American workers face the very real prospects of losing their job during the next downturn. There’s no such thing as job security these days. Years of dutiful service do not mean a thing if the bottom line’s in danger.
This is now the way the world works. Temp agency and contract hire jobs are the only options left for many hard working cubicle workers. In fact, contract workers will displace full time employees in less than a decade.
All the while, at the top of the organization, executives are transferring the hard work of their employees to their personal bank accounts. You’ve likely heard of the rash of corporate buy backs. But what you may not know is this amounts to a windfall for a company’s top dogs.
Here’s how it works…
Corporations borrow money at ultra-low interest rates artificially suppressed by the Fed. They take this borrowed money and plow it into shares of company stocks. This, of course, has the effect of boosting stock prices. Naturally, corporate executives receive a good part of their pay in stock based compensation.
Don’t believe us? Check this out these recent findings from the Roosevelt Institute…
Fire and Brimstone
“Over the past three decades, U.S. executive pay has exploded. In 2012, the 500 highest paid executives in Standard and Poor’s ExecuComp database (drawn from company proxy statements) averaged $30.3 million in total compensation, with 42 percent from stock options and 41 percent from stock awards. This amount of compensation is almost three times the level of inflation-adjusted compensation in the early 1990s, when executive pay was already excessive.
“Market forces did not bestow these riches on top executives; their boards of directors did. Dominated by CEOs of other companies who have a common interest in increasing executive pay, boards have stuffed senior executive pay packages with stock options and stock awards. These same boards have approved multibillion stock buyback programs that enable executives to benefit from the manipulation of their companies’ stock prices.”
Let’s see if we can reconcile some obvious incongruences here. The 500 highest paid executives averaged $30.3 million. The median income in the U.S. is $53,891.
That means top executives earn over 56,224 percent more than the median income earner. Do they work 56,224 percent harder than the median worker? Do they provide 56,224 percent more value?
Don’t be silly. The crafty fellows at the top are mere mortals like the rest of us. They don’t possess special powers. Nor do they produce anything that merits such lavish compensation.
They’ve just taken the opportunity they’ve been given to game the system to their benefit. No doubt, fire and brimstone will rain down on their heads.
for Economic Prism
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