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"CEOs at the Nation's Largest Companies Were Paid Better Last Year Than They Were In 2007, When ... Unemployment Was Roughly Half What It Is Today"

George Washington's picture




 

Washington’s Blog

CNN Money points out:

Just
22% believe the country is on the right track, Rasmussen tells us.
According to a new Gallup poll, more than half of us say the economy is
in recession or depression, despite the fact that output has been
expanding since the summer of 2009. In fact, more of us (29%) say the
country is in a depression than say the economy is growing (27%).

 

There's
a good reason for this: As inflation surges at the store and the gas
pump, the economy is stalling. And the heart of the problem could very
well be the Federal Reserve's $600 billion "QE2" money-printing
initiative, which was implemented last November to great fanfare on Wall
Street and is set to end in June.

 

***

 

Yes, the stock market has posted impressive gains since the idea of QE2 surfaced....

 

But
stock ownership is concentrated among the wealthy: On average, just
12% of households worth $100,000 or less own stocks and mutual fund
shares outside their retirement plans -- a group that comprises 74% of
the total population. While many more own shares through 401ks and
IRAs, they're not in a position to easily tap that wealth for current
spending.

 

At the same time, QE2 has pushed up borrowing costs [?],
pressing down the prices of homes -- a much more widely held asset. The
Case-Shiller Home Price Index started falling last summer as the idea
of QE2 was floated, and it hasn't stopped since. The broad 20-city
index now sits below 2009 levels.

 

This is a continuation of
trends that have been in place since the recession ended in 2009.
According to Credit Suisse equity strategist Douglas Cliggott, it
suggests the improvement in net worth during the past two and half
years "has been heavily skewed towards that relatively small part of
the U.S. population that has significant equity holdings."

 

While
the program has helped push up the cost of living for all of us --
sending inflation into the red zone and damaging consumer confidence --
evidence suggests its benefits have accrued only to the top tier of
the net-worth ladder.

 

In other words, the Fed's "stimulus" has
made the rich richer, with limited impact in terms of new spending.
It's made the vast majority of people poorer, and less able to spend.
It's this tradeoff that threatens to snuff out the feeble,
three-year-old economic recovery.

And salaries have only gone up for the very top. AP notes:

CEOs
at the nation's largest companies were paid better last year than
they were in 2007, when the economy was booming, the stock market set a
record high and unemployment was roughly half what it is today.

Indeed, the government's policies have been geared towards redistributing wealth upwards. See this, this, this, this, this and this.

 

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Sun, 05/08/2011 - 10:46 | 1252801 Zero Govt
Zero Govt's picture

what possible correlation is there between what CEO's get paid and the unemplyoment rate GW?

the only body that has made any promises whatsoever regards improving the unemployment rate is Obumma, Bernancubus and Jobs Czar Jeff '36,000 GE lay-offs' Immelt ...Obummas specific target was to keep unemployment "below 8%" if he could only spend $850bn (promises, promises, politicians)

..they've all failed miserably despite $Trillions thrown down the toilet to 'stimulate' the economy and employment (debt spending by Govt is a suicidal economic folly, anyone with a peanut for brains knows it)... all 3 should be sacked for their very obvious failure and very obvious waste of huge amounts of money without further ado   

Sun, 05/08/2011 - 10:53 | 1252819 IdioTsincracY
IdioTsincracY's picture

Nothing failed, actually everything worked as intended ...

$trillions spent, oligarchy saved, CEOs making more than ever ...

enough of a correlation for you?!?!

Sun, 05/08/2011 - 18:30 | 1253935 Zero Govt
Zero Govt's picture

there's only a correlation if you're a loony (ie. socialist)

CEO's role is to run their company profitably. Most have actually been turning in good profits although in the worst way, pure cost cutting (because of stagnant GDP).

No CEO has signed any contract to help the US unemployment. It's not in any of their job discriptions, they'd be loony (ie. a socialist) to do so. Their sole responsibility is for the survival and profit of their enterprise.

To my knowledge Jeff Immelt in the only US CEO, as Obummas Jobs Czar, to have signed up to any responsibility to reduce the unemployment cues. In fact he's only added to them to date with 36,000 laid off GE staff

Maybe you and GW should point your nonsense at him as nobody else, and nobody will, take on the 'collective' responsibility. Collectivism doesn't work don't you know, nor does any form of nonsense nationalism

Sun, 05/08/2011 - 10:08 | 1252779 Ralphie
Ralphie's picture

So, what do we do? Kidnapping them is out of the question. In fact, so is any other form of violence (until it is too late, anyway). Hoard silver and bullets, bone up on the Federalst Papers and rebuild after the printing presses melt down? Or do you risk being fired and harassed by going to every commissioners court and city council meeting in your community every week and submitting resolutions for things like ending these wars of empire and prosecuting the bankstas? I have fought in our Army in Iraq, and I know its capabilities. PRAY it never gets so bad that we're fighting against tanks in the streets. But dammit, how do we dispel the stupid before it comes to that?

Sun, 05/08/2011 - 04:56 | 1252562 Clowns on Acid
Clowns on Acid's picture

Rick - It is not the nominal amount of CEO pay that matters, it is that they broke / disregarded the law.

Oh really.."I really, really don't care about CEO pay.  If you took all the "excess" CEO pay and spread it amongst all the working people, I doubt it would be worth one latte at Starbucks each.  What I do care about is that business stay profitable, avoid too much margin compression, and expand to increase employment."

All the banks (well most of them..certainly GS, JPM, Citi, et al) should have had their equity price go to 0, their stock options priced at zero, and the bondholders given a high and tight haircut. Like the 2000 plus execs who were disgarced and jailed during the S&L crisis (notably nobody from the "money center" banks), they should have lawyered themseleves out of a jail sentence. hey their golf handicap would have improved anyway. 

This did not happen. What happened is that they got printed money (on the back of taxpayers) to continue their market inefficient pay packages. Pure and simple.

Wake up and smell the facsism.

Yes the CEO's $20MM packages and the petty bourgeoisie (economisseds, CDO/ CMO sales people, the failed traders, compliance morons, et al) retained their 1MM plus packages, are a drop in the ocean regarding the budget deficit. Your point is taken...but not respected.

Today one sees Unions taking the heat for the CEO's maladroit deeds. Not that the socialist led Unions are not 2nd derivative complicit, but they are the real small potatoes.

Bring the present day banksters down...maybe too late w/o pitchforks in the street, but they are sending Unions of police, firefighters, teachers (been socialist led for years) against the middle class to fight for the scraps.

Point your bejeweled finger at the root of the issue...the banksters  circumvented the Chap 7 law, and made it a free for all.

I would like to hear your opinion on this. Speak.   

Sun, 05/08/2011 - 07:58 | 1252641 IdioTsincracY
IdioTsincracY's picture

Of course you are correct!

However I can't understand why unions factor into these discussions every single time.

Unions are truly an expression of democracy ... it is people bonding together to ask for fair wages and work conditions ... (you know ... by the people, for the people ...)

Beacuse of the BS the oligarchy is selling, Unions are disappearing and coincidentally so is the middle class, that in the past benefitted by union representation ...

 ... well,  enough said

Sun, 05/08/2011 - 09:59 | 1252761 Kickaha
Kickaha's picture

Agreed that unions seem to be a lightening rod for criticism.  It is unfair that they are singled out.  That doesn't make the criticism unfair.

Spare me the platitudes.

Unions are just another special interest group that lobbies for government protection.  They do not represent "working people".  They represent their members, and nobody else.

Your argument about "democracy" proves that.  If you are not in the union, you don't get a vote in the future of your industry.

When the jobs started disapeariing overseas, the unions could have ripped up their contracts and taken large decreases in wages and benefits.  They were too shortsighted to do so.

Every interest group thinks they don't make a "fair" amount of money, and that the government needs to pass a law to blunt market forces so that they can make a "fair" amount of money.  So many such laws have been passed here that all markets are impaired and dysfunctional to the point where whatever benefit your lobbying group attains for you has been overwhelmed by the hidden costs created by the lobbying efforts of all the other groups.

Union democracy is a farce.  Those workers not in the union never got to vote while ever-increasing union wage and benefit demands sent entire industries overseas and killed the livlihoods of union and non-union workers alike.

But most of all, it has been having to listen to guys like you explain patronizingly to the rest of us how good the Unions have been to society that is the best explanation of the current wave of resentment. 

Payback is a bitch.

 

Sun, 05/08/2011 - 10:51 | 1252818 IdioTsincracY
IdioTsincracY's picture

Disinformed at best ...

First, taking for granted a standard of living that had improved since and thanks to unions, the middle class became complacent and decided that they did not need unions any longer,

then people drank the anti-union KoolAid of the Oligarchy, taking in stride the 'need-to-be-more-productive-with-less-pay-and-less-benefits' reasoning ...

and finally, as they move in the ranks of the poor the majority of the middle class, deprived of union representation, complains not about the oppressing Oligarchy that is destroying their way of life, but about the 'unbelievable super-power' of Unions and about the 'unsustainable' benefits of unionized workers.

So instead of asking for fair compensation and benefits for themselves, they ask to take that away from everybody, so that the whole middle class can enjoy the space at the bottom of the barrell.

... in the end it is this 'wonderful' wave of uninformed resentment towards the unions that has allowed the oligarchy to rape and pillage this Country.

Enjoy it!!

Sun, 05/08/2011 - 11:39 | 1252889 Kickaha
Kickaha's picture

From wikipedia:

"The UAW has seen a dramatic decline in membership since the 1970s. Membership topped 1.5 million in 1979, falling to 540,000 in 2006. Then the Great Recession hit, with GM and Chrysler going bankrupt. Membership fell to 390,000 active members in 2010."

The UAW is a massive fail.  Through its own idiocy, it has put 70% of its own members out of work since 1970.

That is actully no accident.  Unions are run by the high-seniority politicos.  They didn't care that they were cruising along in a sinking boat.  They just threw the low-seniority members overboard and raised their own compensation.

You probably also believe that fire trucks cause fires.

The AFL-CIO, and their favored status under the law, is part of the problem, and not part of the solution.

I hate the banksters and Wall St. more, so to some degree I can hold my nose and welcome the political activity of the unions.  They are an enemy of my enemies.

But the UAW supported every auto industry government bail-out.  They don't deserve the moral high ground you blindly ascribe to them.

 

 

Sat, 05/07/2011 - 16:53 | 1251468 RickC
RickC's picture

As usual, I disagree with this writer.  Home borrowing costs are not going up.  I just got the reset on my ARM and it came in at 3.75%.  I started out at 7.75% in 2000.  The price of homes has been falling for several years.  The only time it spiked up was when we had the first home buyers credit.  If anything, QE2 should have provided liquidity and, like the stock market, home prices would have risen, save for the overhang of foreclosures and shadow inventory.

I really, really don't care about CEO pay.  If you took all the "excess" CEO pay and spread it amongst all the working people, I doubt it would be worth one latte at Starbucks each.  What I do care about is that business stay profitable, avoid too much margin compression, and expand to increase employment.  The most telling statistic in the past week or so is not CEO pay or the employment situation.  It is Walmart noting their sales are declining at the end of the month indicating their customers are running out of money.  Follow that with the continuing, large increases in food stamp recipients and it is clear that the problem is employment, not CEO pay.  

 

I do not understand why the left is so enamored with CEO pay which, in the greater scheme of things, is visible, but really just a nit. 

 

Sun, 05/08/2011 - 00:53 | 1252384 Enkidu
Enkidu's picture

This is a bleak way to look at the gross inequity of pay in the US. If someone comes along and mugs you in the street, gives an excuse to a judge, and gets off - why would I care? He'll never mug me - no way - he'll never mug 300 million Americans either - so why lock that guy up? Well, because it forms the basis of justice and fairness in a so-called civilised society. The huge transfer of wealth in the US to the rich, the complete lack of representation for the people, the centrally planned economy by unelected bankers (Fed) will lead, and has already, to the ruination of America.

Sun, 05/08/2011 - 04:45 | 1252554 Weisbrot
Weisbrot's picture

1>about 150mm of us pay, about 150mm collect welfare.

2>about 24mm more are illegals receiving benefits in some form(s)

3>we are continuously being mugged as you put it

4>we the tax payer are also a shrinking base or society

5>the ruination that you refer to is well under way

Sun, 05/08/2011 - 07:54 | 1252633 IdioTsincracY
IdioTsincracY's picture

Oh well ... here comes the usual bullsh!t ...

This view assumes that income taxes are the only taxation in this Country .... Wrong!!!

Without going into details, people could get a quick idea of real taxation by reading this:

http://www.ctj.org/pdf/taxday2009.pdf

Income disparity is bad already, with more money moving to the top and more and more people falling to the bottom ... unfortunately wealth disparity is even worse ...

When you consider wealth, the people at the bottom, percentage-wise, get hit by everyday taxation in a truly horrible way...

Whatever!!

Sat, 05/07/2011 - 22:12 | 1252074 pitz
pitz's picture

Why would home prices have risen?  There is no good reason for houses to sell at anything above construction costs in practically everywhere in the United States.  An efficient economy would arbitrage out any areas of price inflation by redirecting economic growth elsewhere (ie: NYC finance firms would leave NYC in droves and relocate to Arkansas to take advantage of the low cost of labour and living).

 

As for CEO pay, its a huge morale killer to have one guy who barely contributes to an organization (ie: the CEO), paid hundreds of times more than the men and women who literally give their lives to organizations.   Why would anyone contribute 110% to an organization when the organization (and the economy) only wants to return 10% of the value that employee creates, to the employee?   

Sun, 05/08/2011 - 12:59 | 1253086 Future Jim
Future Jim's picture

If a CEO is just "one guy who barely contributes to an organization" then why would the owners (stockholders) pay the CEO so much? 

Why wouldn't they hire someone who would do it for less, and if no one will do it for less, then why have a CEO at all if he barely contributes?

Who are these "men and women who literally give their lives to organizations"? Are you talking about Starbucks? Are you talking about the military?

Sun, 05/08/2011 - 19:04 | 1254000 pitz
pitz's picture

Why do they get paid so much?  Its an incestuous club that just helps themselves.  CEO's are not selected on merit.  Most of them, without their connections, wouldn't even get a job at the fuck-up farm. 

Sun, 05/08/2011 - 21:07 | 1254266 Future Jim
Future Jim's picture

I sounds like by "club" you refer to the board members who choose the CEO, as well as the CEO himself, and thus the board would rather help their fellow club member (the CEO) even if that means they will lose money compared to choosing a more competent CEO. So, that would make them quite altrusitic then and not so greedy at all.

Sat, 05/07/2011 - 23:09 | 1252192 RexZeedog
RexZeedog's picture

Anyone working for a corporation who is not an elite ranking executive would be wise to live extremely frugally, saving every dime and being fully prepared to be fired at a moment's notice. If you an "employee" and you work without a solid employment contract, you are an employee-at-will and no more valuable to your mployer than shit on the bottom of a shoe. It's not a matter of if you will get scraped off, but when.

Sat, 05/07/2011 - 13:43 | 1251179 falak pema
falak pema's picture

well maybe, but in Zimbabwe usd!! If I understand your next post!

Sat, 05/07/2011 - 15:17 | 1251261 anynonmous
anynonmous's picture

George it is no secret that Ben's policies of ZIRP along with the various Fed/Treas bailouts were and continue to be devastating for savers and those in cash. There is no shortage of pundits or money managers who have made that point e.g. Pimpco's Gross.

To make matters worse costs of the things people use and need e.g. food and energy are rapidly increasing, the only exceptions being accommodation and flat panel TVees.  In most municipalities and jurisdictions services are being reduced and taxes flat or increasing.

The financial crisis resulted in a massive transfer of wealth to the banksters and their ilk.  Other than the Ken Feinberg shamorama and some "voluntary $1/year gestures"  there were no strings attached to the trillions in bailouts.  No strings and no perp walks. 

Your average American along with their counterparts in  the EU, Canada etc have been thoroughly and totally fcuked right up the ass by the policies of Bush, Obama and their bankster masters. Jamie Dimon and thousands like him in the banking class have made out like bandits and the money involved is difficult for most to comprehend. The hedgies have done all right as well but they are simply jackals able to sense which way the herd is heading and get out in front albeit sometimes with a little help from their friends.    The one group that does need to be exposed are the policy wonks who lurk in the back corridors of power, think WTO, Business Roundtable, Brookings, CFR etc.. Conspiracy theories aside, globalization has had devating consequences for millions in first, second and third world countries. To that end your garden variety CEO who runs ACME widgit company is complicit to the extent that he/she signs off on the decision to outsource the back office to India whilst collecting millions in bonuses.

The role the media has played is significant and with a few exceptions they have been complicit. I mean think aobut it CNBC is/was owned by GE who not only reaped billions from bailouts but now sit at the right hand of Obama, and yet even this excellent blog on a regular basis links to those CNBS bastards, they should be banished from ZH.  I posted a link in another thread to the current radio commentary by CBS's Dave Ross - it may as well be a clip from the book 1984. 

 

So yes there has been a gargantuan transfer of wealth from the pockets of the 99% to the  1%.

................................................

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