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CEOs Now Make 300 Times More Than Their Employees (Again)
One narrative we’ve sought to drive home particularly hard since March (when we first solved the mystery of America’s missing wage growth), is the disparity between wage growth for the 83% of American workers classified by the BLS as “non-supervisory” and wage growth for the other 17% who are classified as “supervisory”.
In short, the “supervisors” are America’s bosses and for them, wage growth hasn’t looked so bad of late. However, the “non-supervisors” haven’t been so lucky, which is one more reason why no one should expect a robust, consumption-led recovery and also helps to explain why the post-crisis world suffers from a global demand dearth.
In this environment it’s always amusing to take a look at just how wide the disparity is between average workers and the “supervisors” par excellence — i.e. America’s CEOs. As you can see from the chart shown below, the CEO-to-worker comp ratio is now back near its all-time high helped, no doubt, by a soaring stock market which the CEOs themselves have helped to inflate via buybacks:
More from The Economic Policy Institute:
CEO compensation grew strongly throughout the 1980s but exploded in the 1990s and peaked in 2000 at around $20 million, an increase of more than 200 percent just from 1995 and 1,271 percent from 1978. This latter increase even exceeded the growth of the booming stock market—513 percent for the S&P 500 and 439 percent for the Dow. In stark contrast to both the stock market and CEO compensation, private-sector worker compensation increased just 1.4 percent over the same period.
The fall in the stock market in the early 2000s led to a substantial paring back of CEO compensation, but by 2007 (when the stock market had mostly recovered) CEO compensation returned close to its 2000 level. CEO pay fluctuates in tandem with the stock market as measured by the S&P 500 index, confirming that CEOs tend to cash in their options when stock prices are high. The financial crisis in 2008 and the accompanying stock market tumble knocked CEO compensation down 44 percent by 2009. By 2014, the stock market had recouped all of the ground lost in the downturn and, not surprisingly, CEO compensation had also made a strong recovery. In 2014, average CEO compensation was $16.3 million, up 3.9 percent since 2013 and 54.3 percent since 2009. CEO compensation in 2014 remained below the peak earning years of 2000 and 2007 but far above the pay levels of the mid-1990s and much further above CEO compensation in preceding decades.
The alignment of CEO compensation to the ups and downs of the stock market casts doubt on any explanation of high and rising CEO pay that relies on the rising individual productivity of executives, either because they head larger firms, have adopted new technology, or other reasons. CEO compensation often grows strongly simply when the overall stock market rises and individual firms’ stock values rise along with it (Figure A). This is a marketwide phenomenon and not one of improved performance of individual firms: most CEO pay packages allow pay to rise whenever the firm’s stock value rises and permit CEOs to cash out stock options regardless of whether or not the rise in the firm’s stock value was exceptional relative to comparable firms. Over the entire period from 1978 to 2014, CEO compensation increased about 997 percent, a rise almost double stock market growth and substantially greater than the painfully slow 10.9 percent growth in a typical worker’s compensation over the same period.
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It's funny to me that any of this ever surprises people. The whole "freedom" thing has been a scam for a long time. It is amazing the bs people believe about our country. http://www.thetruthaboutthelaw.com/they-tell-big-lies-about-our-supposed...
It's been this way ever since we started forming into civilisations. Freedom has always been an illusion throughout history except for a few very brief periods.
Wealth lies in words and thoughts, memories and knowledge, lessons and wisdom. Never let anyone tell you that you or some other person is worth # dollars or whatever other currency units. Your worth is defined by the content of your character.
"I don't care what your name is - I care who you are," as an old friend of mine told me once.
#WorthyLivesMatter
Awesome!!!! Something to strive for without sacrificing personal relationships. Way to go CEO's. Sad - all of the hateful, jealous, losers who hate people who make money.
A totalitarian state is NOT the answer...
What this means is that we have an overpopulation of 300X, which is a solvable problem for the Elite.
"If success was guaranteed, failure would not be possible, and it is in failure that people either harden up and try harder, or give up, but when everyone gives up, then everyone loses."
The end will come when a fuck the people do not give....
You do know that CEO's can control how fast time moves. They can jam 1 weeks worth of work in an hour.
...because their employees snort coke on London Subways?
Sweet potatoes will be the answer to large scale starvation, Tom.
There will be no Coke-a-Cola or Subway sandwich in London or anywhere else for that matter. The Collapse will be a tsunami of devastation.
Peak capitalism. Period.
When did we start trying capitalism? I don't recall that ever being how things were run around these parts. We have been an oligarchy for as long as I've been around.
In contrast to what a small bunch of praxeologist Misesian morons, who think they are right because they think they are right, claim, we've had capitalism for over 200 years, and it has finally evolved to its best just before its collapse. And no amount of crying and denying will change this fact.
Go on, start voting me down. Then this disgusting crony capitalism will be called socialism.
Well, first off, I didn't down vote you, nor am I going to now. I either down-vote or I respond, not both.
"And no amount of crying and denying will change this fact."
Nonetheless, I deny that. If we had anything close to Capitalism the banks would have been allowed to fail in '08. Failure of institutions is the primary defining characteristic of Capitalism, not that spoon-fed crap about efficient allocation of resources through free markets. Nobody knows what that would look like until somebody goes tits-up. Then everyone gets a good look at what not to do. Take away failure, you don't have Capitalism. Maybe at one point we did, but not during my adult lifetime.
All modern Countries are Socialist.
All of Latin America is Socialist as far as I can tell.
As you say the Old Boy Network is making Insiders Rich, while they Lie their asses off, keep as much secret as the can, punish those that go against them, and try to make us forget Racketeering, Anti-Trust, and Bribery doesn't exist.
But soon they will have to put in Auditing, Strong Financial Ratings Agencies, and Price Controls to keep good financial ratings.
What we need are new Financial Ratings Agencies, nonprofit or private or public. AND Price Control through publishing the Administrative costs, overhead Costs, Executive Compensation Costs.
Moody's is actually moving in this direction it seems.
Late Add:
Where is TallTom? He is gonna rip me a new one. But at least he tries to stick to the Dialectic, Socratic Method, or uses Logic. TallTom will at least appreciate the truth even if he hates anyone to say that the USA is Socialist.
Truth: Schemers have taken the US Congress and have Raped you since the Vietnam War (openly and in modern history).
Please ZH: Respond with the Date of US Coup. I say at least 1980 when the CIA Director took the US Vice Presidency. But they got Jimmy Carter to sign off on the Intelligence Finding that funded and directed US Efforts to the Mujaheddin.
Time to Say it Tom. You live in a Socialist Country. Now it may be proper, it may be Right to fight against this fact. True, I think I know the Fixes in the Federal Govt. I think I could fix the Health Care System & Social Security System. But no one will ever listen to me. I don't Expect people to listen with an open mind. After all this is the USA. USA is a strong mix of Openness & Cloisters & Clans. A population that listens and is interested in the Ideas of the Far-rest Reaches of the world. But also a violent people, closed minded, illogical, easily manipulated, unable to actually engage in State Craft, unable to actually listen within the Government to other nations & cultures while the pulse of power, corporations, Fear, and Greed are so loud.
Why can I image a fix to the Federal Govt? Mostly since the money flows are so large. We have a core of small businesses. There is a prolonged attack on small business and the bankers don't want to invest in the USA (not for like 25 years or back to 1980 era. The Corporations knew after OSHA passed in 1970 that US Wages were above what they considered feasible. What followed was a generation of weak private Executives that negotiated with our Unions and gave away the shop.
By 1990 it was clear that US Corporations were weak in negotiating with Unions & Workers.
I had no part in Construction Federal Law, Regulations, Hiring Practices, or over Private Business Negotiations with Unions.
Looks like shit to me.
Multiple Bankruptcies in the Big Three Automotive Companies.
Lee Iococca pimping, preening, posing, like courtier.
Screw him.
Screw the Corporate Bail outs of Whining Corporations. I don't care what ZH says about that. You whine for Bailouts, you become a Target for ZH. Boom.
I don't know where to post this, so just will here.
Apparently some guys love their conservative Politicians not realizing that their "Guy" is supporting Status Quo. Both Parties are the same party.
- They both support unjustified wars
- They both Support Dirty Wars
- They both Support Exponential Growth of the Federal Budget
- They both support huge Corporate Socialism, Transfers of Taxpayer wealth to Expensive Contracts & Domestic Assistance Packages
--------------------------
-- Socialism Legislated -
--------------------------
- Clayton Antitrust Act 1914
- Railway Labor Act 1926
- Social Security 1935
- Labor Management Relations Act of 1947
- Contract Work Hours Standards Act 1962
- Equal Pay Act of 1963
- Civil Rights Act of 1964
- Economic Opportunity Act of 1964
- Food Stamp Act of 1964
- Medicare passed 1965
- Medicaid passed 1965
- Voting Rights Act of 1965
- Higher Education Act of 1965
- Immigration and Nationality Act of 1965
- Motor Vehicle Safety Act of 1966
- Child Safety Act of 1966
- Age Discrimination in Employment Act (ADEA) of 1967
- Truth-in-Lending Act of 1968
- Land Sales Disclosure Act of 1968
- Bilingual Education Act of 1968
- Think Medicaid expanded in 1968?
- Occupational Safety and Health Act of 1970
- Migrant and Seasonal Agricultural Worker Protection Act (MSPA), passed in 1983,
- FLSA amendment increased the minimum wage to $5.15 an hour 1996
- Fair Minimum Wage Act of 2007
--------------------------
-- Socialism Legislated -
--------------------------
Continuing on this line of how the USA is Socialist.
Someone respond here with info on how the US markets are Free.
Bahahahahahahaha
Well that is progress. Now explain to me the Safeguards at US Federal Government to keep Lobbyist, Interest Groups, Chamber of Commerce, Big Pharma, Big Ag, Big Oil & Gas, Big Tech, Big Engineering-Construction-Water-Electric-Infrastructure from Raping you in the Ass with no Lube?
Hey, If you got to face a Lawsuit against a Wealthy Corporation or really a Wealthy Executive... what do you suppose are your chances of winning with a Lawyer that works for $250 an Hour?
Bahahahahahahaha
Hey, you find out you got Cancer. Now explain to me why the doctor or medical center would follow logic instead of fake medical studies and Marketing Reps sent to their office? And sorry I might be one of the Patients soon, so I'm not joking. Where does salesmanship come into Medicine and Marketing to Doctors? I'm thinking no fucking where!
Very Bearish on Medical, Banking, Insurance, Financial & Banking System, Credit & Swaps Links, Security of Universities, US Education, US Families, US Culture, US Traditions, US Parenting, US Metal health, US Race Relations, US Policing, US Prison Systems & the Criminal Justice System that convicts consensual crimes.
Sorry. Looks like I have the Blues.
Peak humanism.
Fear and greed know no specific ideology, they simply use whichever one is in vogue.
There has never been a better time to get a CEO gig. Or buy a house. Or something.
MOAR!!
It's good to be da King! But now I want Moar. Why can't I own an Island or a whole Country!!
When Executives started getting paid in stock -- the game was on.
During the 80's many red flags were raised by experts who were dismissed as fools.
Greed and stocks have always been partners in crime.
Happy Fools Day.
Glad to see someone is winning! I really don't give a fuck how much they make as I think even if their wages were reduced to zero, it still wouldn't have much effect on what most people earn. The part that is most damaging is the perception, and what we are increasingly seeing is a growing number of people who would willing suffer loss in order to see those higher up fail. If there were ever a more sure path to self destruction, I don't know what it would be.
Show that second chart , which shows that the inflated stock market fueled by cheap money correlates with the increase in CEO pay to your typical "how much per month" crowd and they will look at you and say "ya, so what, we still deserve $15 per hour". 'Merica.
How many people here are playing the markets while complaining about how much CEOs make?
What CEO's don't realize is it doesn't matter how many McMansions you build, have, or live at. We the people will find you, hurt you and then kill you. Was that quote from the movie Taken? I think so.
CEOs don't live in McMansions on postage stamp lots. Cookie cutter homes are for the serfs who are pretending to have a high standard of living. CEOs live in mansions, fly in private jets and probably never have been in a McMansion housing development. At least, this is true in Cali.
Miffed
Bigger target! Easy peissy! A .308 should do it. Ever see the movie scar face? 12 gauge shotgun, it don't matter. Heck, a .22lr to the neck will ruin your day! Just saying. No one can hide if someone is looking for you.
You also have to have a middle name.
Not really, just shop at/look for really big lots. LOL! 2-5 friends = massive bonfire. Ever see the movie Shooter?
Who's talking start up companies? I'm talking about every CEO that moved manufacturing out of the USA. To me, that's every reason for them to be a target. A very easy target. Pay backs are a bitch!
Stop buying their foreign made crap and the factories will come back.
We have always had a choice but it so much easier to choose poorly and then blame those who made it easy to do so. It is the same as it always has been. We either figure it out or suffer the consequences. Isn't anyone curious how this can just keep repeating. To believe you can solve the problem by simply eliminating those who take advantage of our own greed and ignorance is to ignore who we are, who we always have been. There is only one way, and that is by doing the smart thing, forgoing instant gratification for the long term play. Grasshoppers always looking to seek revenge on the ants. Its not like we haven't been warned. Everyone has known the evils of debt, of the good deal, of something for nothing, the easy path. But we just can't help it and the only thing that will salve our souls is to seek revenge upon those who understood, who learned from history and understood the frailties of the human existence. We always have the greatest hostility for those who we perceive have fucked us, I think because we understand that what they are telling us is that we are stupid. Its not just the money, it's the insult of it. And their massive wealth is rubbing salt into the wound. We should learn from it, smarten up, but instead we just want to take revenge, punish the liars so we can go back to living our idyllic dream of stumbling through life, believing everything we are told and somehow it will all turn out all right...but it won't.
"CEOs don't live in McMansions on postage stamp lots."
Have you ever met a CEO of a startup company not funded by outside money? Your fantasy CEO, pushed by leftists and the media (but I repeat myself), is not the standard CEO. Many don't earn salaries, or take home less than minimum wage, so that they can pay their employees, getting the business going.
Yes, I've been in those companies. The CEO deserved everything that he got after the company took hold. Some lose everything and go to work as "regular" employees under other CEOs.
We just hate the winners. We just kind of gather around community activists who can use our collective muscle to hurt those who are doing significantly better than us.
If we celebrated success and punished those who truly cheat, the world would be a much more prosperous place. Instead, we justify our lives by using the worst of us as an example to emulate or hate, either choice is a destructive one.
Actually I hate the bums/homeless sleeping in the park stinking up the place and breaking in and damaging personal property.
I say take a shower instead of buying a fifth of vodka. Don't steal/sleep on private property. The park closes at 10 pm. Get out and stay out.
I'm up at 5:30 everyday and all I see is homeless people waking up pushing their carts, baby strollers whatever, to wherever homeless people go.
Makes me want to puke because they are not disabled at all. Just losers.
Yes I have but that was a very long time ago. In 1996 a book was written about this called a Millionaire Next Door. Basically how small business owners had far more wealth than wealthy appearing professionals who had higher incomes but lived a very expensive lifestyle.
The small business owner class is struggling far more today. I know many and what they say makes me glad I am not trying to run a business in this hostile climate. CEOs who I do know from larger companies are living a completely different lifestyle than those of yore. This is not a fantasy but a reality today.
Miffed
...but, they're GENIUSES at fudging the numbers!
Well, it's just worthless fiat currency anyhow. Hope they choke on it.
JP Morgan insisted a salary 10x of an avg floor worker's wage was the right pay for a CEO. "The CEO is just a hired hand." -- JPM
And the politicians that the CEO's put into office often make just as much as the CEO's do in the long run.
There are now more Democratic millionaires in Congress than Republican ones.
http://www.opensecrets.org/news/2014/01/millionaires-club-for-first-time...
Warren Buffett is so sure that Hillary Clinton will win the presidency in 2016, he is willing to wager some of his $58.2 billion net worth.
"Hillary is going to win, yeah," Buffett, a outspoken Clinton supporter, said at Fortune's Most Powerful Women Summit. "I will bet money on it. And I don't do that easily."
http://fortune.com/2014/12/04/warren-buffett-hillary-clinton/
Lol, is ZH going commie with a title like that?
No, ZH is finally waking up to the truth that everything they have been told about Capitalism is a total lie.
But but but I thought USA was "free market" economy and Capitalism is "the best and most efficient system to provide goods and services". Have I been lied to?
And what multiple is the amount owned by the Clinton Crime Family compared to the average American family? Gorelione Crime Family has more that $100M+. How much does the average Obama vacation cost compared to the cost of the average American vacation? These people never wrote a line of code, sewed a dress, served a meal, changed a bedpan, paid an employee from their own pocket, etc. THEY STEAL FROM THE MAKERS AND GIVE TO THE TAKERS. THEY'RE STRIPMINING THE COUNTRY. STEAL AND LIE BY DIVIDING AND CO-OPTING is all they do.