Payment for chief executive officers at United States corporations increased 12 percentage points in 2010 to reach a median figure of $9.6 million. In the final quarter of 2010 corporate profits grew faster than they have in over 60 years-30 percent. As CEOs get richer, the workers making them rich get poorer because the rising cost of food and gas is taking a bigger chunk out of stagnant wages. Source of article – CEO pay soars as flat middle class wages erode with inflation by MoneyBlogNewz.
The harder the work the more for the CEO
At a time when millions of Americans simply hope they keep their jobs, average CEO pay has risen to surpass pre-recession levels. Even as employment is increasing, employee pay isn’t, however CEO pay is. Over 13 million people are currently looking for work, yet CEO’s are getting by on what they already have and increasing their own wallets. CEO’s have no reason to hire employees when they’re making do with who they have. Economic bailout sectors were given to CEO’s in 2010 at an average of 12 percent. In the mean time, average pay for private sector workers grew about 2 percent. 8.8 percent was the average joblessness rate in March. Most economists predict the jobless rate will continue to remain high for years.
The CEO stock portfolio increases
The highest paid CEO in the U.S. this past year was Phillipe Dauman of Viacom who pocketed $84.5 million in just nine months. Ray Irani of Occidental Petroleum made $76.1 million last year, making him take the place of the second highest paid CEO. Forbes also states that Oracle’s Larry Ellison brought in $39.5 million making him the 3rd highest paid. CEOs are gaining the largest raises since 2007, with stock choice thanks to Wall Street. Several CEOs accepted stock options during the recession when they held little value, knowing that huge paydays lied ahead when the market recovered. The stock market has recovered and now the CEOs are cashing in and making the large bucks. USA Today reports that many of the CEOs cashing in their stock opportunities were making well over $20 million.
The increase in commodity costs hurts the middle-class
Middle-class has not gotten any pay increase, yet prices have risen. This combination makes it hard for middle class to enjoy the CEOs pay raises. The Bureau of Labor Statistics says that the average hourly wage for workers hasn’t increased by a penny in so-much-as five months. While U.S. workers who nevertheless have jobs aren’t getting raises, employers in developing nations are hiring new consumers who are pushing up demand and prices for food, oil, cotton and other commodities. The direction of costs of goods and wages are going in different direction. Gas costs alone eat up more than half the average worker’s wage increase. The average middle-class employee buys about 12 gallons of gas a week alone. Individuals have reported that filling a gas tank is costing $40 more per month than it did last year. Yet the average weekly raise only increased by about $18.
Articles cited
New York Times
nytimes.com/2011/04/10/business/10comp.html?_r=2#38;ref=business
USA Today
usatoday.com/money/companies/management/2011-04-04-1Aoptions04_ST_N.htm
NPR
npr.org/2011/04/10/135272006/paychecks-cant-keep-up-with-rising-prices
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