docangel's
diary here on Thursday praised Barney Frank for besting Secretary of the Treasury John Snow in a contest of wits in a Financial Services Committee hearing a couple of weeks ago. Snow bragged that wages last year had gone up by 3.8 percent, the best increase in almost five years. Barney asked Snow whether that increase was adjusted for inflation.
Snow actually said he didn't know.
The answer is no, the increase was not adjusted for inflation. Inflation last year was 5.1 percent, which makes a wage increase of 3.8 percent not so much to brag about.
The contest of wits between Barney Frank and John Snow reminded me of the Harlem Globetrotters' games against the Washington Generals, a team that existed to travel around the country losing to the Globetrotters. The contest was entertaining, but the outcome was never really in doubt.
We probably can't get John Snow to travel around the country with Barney. Too bad.
The stagnation of wages for American workers is nothing new to anyone who reads DailyKos. I've
pointed it out, and bonddad makes the point regularly, including a
diary here on Friday.
But a few Americans are doing just fine, thank you very much.
According to a recent CEO compensation survey in Corporate Library, the median total compensation for CEO's increased by 30 percent in fiscal 2004. The average increase was 91 percent, but that number was skewed because 27 CEOs received compensation increases of more that 1000 percent.
A special report in USA Today disagreed that the median CEO compensation increased 30 percent. USA Today examined the Securities and Exchange Commission filings of the largest public corporations, and concluded that the median compensation only increased 25 percent, to $14 million.
Still, that's pretty good work if you can get it.
The increases in CEO compensation dipped a little after the Enron and WorldCom scandals. The median CEO compensation only increased 9.5 percent in fiscal 2002, and 15 percent in 2003. But the longer term trend is clear, even without going back to the New Deal for a baseline. In 1991, the average CEO of a large company received approximately 140 times the pay of the average worker. In 2003, the average CEO made 500 times what the average worker made.
Executive compensation adds up to real money. In 2003, the aggregate compensation for the top five executives at U.S. public companies was 10.3 percent of company profits, ten times what it was a decade earlier. The total amount paid to those executives was $295 billion, or ten times the 2005 discretionary budget of the Department of Homeland Security.
Defenders of CEO compensation say that we live in a celebrity culture now, and CEOs are the rock stars of the economy. If we didn't pay CEOs what we pay them, they wouldn't work as CEOs, they'd...do what?
The Democrats on Financial Services have devoted a page at our web site to executive compensation, upon which I have largely relied in writing this diary. For those of us now accustomed to links, the page is a little frustrating. It appears that many of the authorities are obscure publications that are only available through an antiquated technology that uses dead trees.
And the House Financial Services Committee will hold a hearing on executive compensation on Thursday. The Republicans were not entirely cheerful about agreeing to the hearing, but Barney got all 33 Democrats on the Committee to join in the request.
We've had a little trouble getting witnesses for the hearing on Thursday. We've got plenty of witnesses who want to testify that CEO compensation is obscene, but we've had a little trouble finding anyone to make the CEOs are rock stars argument. We invited Lee Raymond to testify. Raymond just stepped down as CEO of Exxon Mobile after 13 years. His total compensation was $686 million, or about $144,573 a day. Raymond was apparently busy on Thursday.
I'm not sure how much press coverage the hearing will get. But maybe someone could blog about it.