There were two good news stories on America’s economic scene last week: the nation’s employers put an additional 268,000 people on the payroll in April. It was the third straight month that substantial job growth was reported.
The nation’s chief executives were also smiling. CEO pay now averages more than it did before the Great Recession got under way. In some cases a great deal more. The nation’s bosses now earn about 200 times more than the median wage of the corporation rank and file worker.
It is interesting to continue to compare the facts presented in these two reports.
— The nation’s corporations are swimming in cash. Fourth quarter profits of U.S. businesses were up 29.2 percent. It was the fastest growth rate in more than 60 years. Collectively, American corporations logged profits at an annual rate of $1.678 trillion, according to research done by Dania Costello of the New York Times.
— Even though job growth has been much greater than in 2009, the actual unemployment rate rose in April from 8.8 percent to 9 percent. What’s going on? Even as the private sector is growing, government workers are being laid off. The trend affects Kansas, too. While the Kansas House and Senate are still locked in combat over the 2012 budget, both houses intend to cut spending pretty much across the board. Further reductions in spending on the public schools seem inevitable and it is widely anticipated that layoffs of teachers and other school district personnel will be re-quired across Kansas. Other appropriation cuts will mean other layoffs.
— Median CEO pay at 200 major companies was $9.6 million last year, a 12 percent increase over 2009. (That’s in the neighborhood of $4,700 an hour for a 40-hour week. Worth every penny, the boards of directors guarantee.)
— Pay to the average worker has declined rather than risen as companies trimmed back on overtime, gave fewer raises and reduced fringe benefits. While manufacturing has shown strong growth, adding 250,000 jobs over recent months, the sector was one of the worst hit by the recession, shedding 2.3 million jobs during the slowdown. Many of those who lost jobs in 2008 and 2009 are still looking for work. The unemployed in the 55-and-older age group have an average duration of unemployment of over a year.
— Philippe P. Dauman of Viacom was paid $84.5 million for nine months of 2010 — the company changed its fiscal year in midstream — to qualify as the highest paid CEO in the survey. Occidental Petroleum paid its CEO $76.1 million, $33 million in cash, the balance in stock options. Lawrence J. Ellison of Oracle was given $70.1 million, a drop of 17 percent from the previous year. Ellison now has $26.3 billion in Oracle stock and other holdings.
— Amanda Fisher, a 21-year-old in New York City who was laid off as a hostess at a high-end restaurant, took eight months to find another job, was intermittently homeless at the start of the recession and has several friends who are still “in terrible situations.” Worker wages increased by 3 percent in 2010 while business profits were soaring at record rates. The average work week remains stuck at 34.3 hours. Those hurting most are the least educated, African-Americans and teenagers.
THE CONTRAST between the nation’s bosses and those who do the work and make the money for them has rarely been more stark. It is a trend that can be challenged by our society’s leaders in and out of government and slowed if not reversed. These preposterous compensations should be publically condemned by our opinion makers — and taxed heavily.
To move toward equity from the bottom up, our society should work as hard to prepare the greatest number of our youngsters to succeed in life as it did to put a man on the moon.
That will require putting more resources to work im-proving our schools, from preschool through grad school. To their discredit, Kansas and many other states are headed in the opposite direction. Kansas is very likely to end this legislative year slashing K-12 spending back to 2000 levels. The result of this race to the rear will be to make it more difficult for this generation of Kansas students to earn a decent living.
The dollars saved skimping on education today will turn into incalculable losses for tens of thousands of today’s children when they enter the job market and translate into even greater losses for the Kansas economy when its workforce can no longer attract employers. To call it a false economy is a screaming understatement.’
