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Exploring the Pay Gap between CEOs and Average Workers

This discussion explores the increasing wage gap between top 100 CEOs and the average worker. It also examines the reasons behind stagnant wages and productivity, the impact of financial strip-mining, and the influence of corporate and financial elites in politics. Additionally, it analyzes the consequences of runaway inequality on education, unemployment, and the prison system.

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Exploring the Pay Gap between CEOs and Average Workers

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  1. How big is the pay gap between a top 100 CEO and the average worker? Discussion Question 1:

  2. CEO-to-Worker Pay Gap Soars Sources: CEO pay from “CEO Compensation Survey,” Forbes, April or May issues, 1971-2012; earnings for workers from Bureau of Labor Statistics.

  3. $30,750,000 Wage Gap: Top 100 CEOs vs. Average Worker(2014) Source: Labor Institute

  4. Discussion Question 2: Why Have Wages & Productivity Stopped Rising Together?

  5. Financialization: Primary Cause of Wage Stagnation Source: International Labor Organization, Global Wage Report 2012-13

  6. Wall Street Wages Have Soared In 2010 dollars. Sources: Data compiled by the author from Bureau of Economic Analysis, "National Income and Product Accounts Tables, Section 6--Income and Employment by Industry,” at www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1, accessed March 28, 2012; Average compensation of employees adjusted for inflation using the Bureau of Labor Statistics CPI Inflation Calculator at www.bls.gov/data/inflation_calculator.htm

  7. Financialization and the Productivity Gap Real Wages vs. Productivity Increases Financial vs. Non-Financial Compensation

  8. How does so much wealth end up on Wall Street and with top CEOs? Discussion Question 3:

  9. The Better Business Climate Taxes All Boats Rise Profits & Investments Regulations Gov’t Social Spending & Attack Unions

  10. Buy Companies Using Borrowed Money Step 1: • After finance was deregulated around 1980, corporate raiders bought up company after company using borrowed money

  11. Make the Target Co. Pay Back the Loan Step 2: • The corporate raiders take some of the loan as fees and special dividends • They give some to the CEOs and bankers • Then they make the company pay it all back

  12. Pay CEOs with Stock Incentives Step 3: Yearly average in 2012 dollars

  13. How the Top 500 Executives Are Paid(2013) Source: Standard & Poor’s ExecuComp database, calculations by Matt Hopkins

  14. If you are the CEO and you are paid with stock incentives, what would you do?

  15. Step 4: Use Profits to Buy Back Stock to Raise Its Price and Your Salary! Source: Data made available by William Lazonick, The Academic-Industry Research Network

  16. Step 5: Squeeze the Co. to Pay Back the Loans and to Buy Back Stock • Downsize through layoffs • Ship production abroad • Sell off product lines and divisions • Speed-up production • Raid pension funds or discontinue them • Cut wages and benefits • From “Retain and Reinvest” to “Downsize and Distribute”

  17. Four Methods of Financial Strip Mining • Interest payments on massive debt • Fees to banks • Special dividends to corporate raiders • Stock buybacks

  18. Outcomes of Financial Strip-mining • Average real wages stagnate • Financial and CEO incomes skyrocket • Good jobs and benefits decline

  19. How does financial strip-mining impact our communities and the public sector? Discussion Question 4:

  20. Corporate Debt Explodes, But Debt Is Not Taxable Source: Federal Reserve Economic Data, FRB of St. Louis, research.stlouisfed.org/fred2; quarterly, end of period.

  21. Corporate Taxes as Percent of State and Local Revenues Declines Source: Bureau of Economic Affairs

  22. $150 billion per year lost in off-shore tax shelters, aided and abetted by Wall Street Off-Shore Tax Shelters Cost Us $150 B

  23. Rich Pay Taxes at a Lower Rate Top 1% of taxpayers Next 4% Next 15% Fourth 20% Middle 20% Second 20% Lowest 20% Source: Institute on Taxation and Economic Policy, whopays.org

  24. Percent of NYC Kindergarten Classes with 25 or More Students

  25. Where U.S. Education Ranks Among Developed Nations • Educational Mobility: Getting to college if your parents did not go to college – ranked 25th out of 28 OECD countries. • Hours Teaching per year: Ranked 36th highest out of 38 countries. • Support for 5 to 14 year olds: Ranked 29th out of 39 Countries

  26. Corporate and Financial Elites Pour Money Into Politics Corporations / Finance Single Issues Labor Source: Center for Responsive Politics

  27. Wall Street Revolving Door Makes TPP Work for Financial Elites • Michael Froman leads charge in Clinton Administration to repeal Glass-Steagall • Leaves for Citigroup • Citigroup presses for trade provisions making it harder to regulate Wall Street • Leaves Citigroup with $4.5 million bonus to Obama Administration to be chief trade negotiator • TPP contains provisions advocated by Citigroup making it harder to regulate Wall Street

  28. Runaway Inequality Promotes a New Social Philosophy • If you want education, go into debt • If you are poor, fend for yourself • If you want a job, go find it • If you want a poverty program, go to jail

  29. What’s Runaway Inequality’s Solution to Higher Education? Runaway Student Loans

  30. What’s Runaway Inequality’s Solution to Youth Unemployment? Young High School Grads (17-20)

  31. We Have the Most Prisoners in the World Source: Bureau of Justice Statistics

  32. Financialization and Prisons State and Federal Prisoners Financial vs. Non-Financial Compensation Source: Bureau of Justice Statistics

  33. Prison Population Rises, Violent Crime Doesn’t Sources: Bureau of Justice Statistics; www.disastercenter.com/crime/uscrime.htm

  34. Why Black Communities Are Concerned About Arrests and Incarceration Source: Data from National Corrections Reporting Program, Bureau of Justice Statistics, cited in Evans, Garthwaite, and Moore, “The White/Black Educational Gap, Stalled Progress, and the Long-Term Consequences of the Emergence of Crack Cocaine Markets”

  35. Runaway Inequality Punishes Black & Poor Communities to Raise Revenue Michael Brown Source: City of Ferguson, MO, “Comprehensive Annual Financial Report for the Year Ended June 30, 2013,” www.fergusoncity.com/470/Comprehensive-Annual-Financial-Report

  36. Who Is Most Eager to Find Work? Eric Garner

  37. What do we do about Wall Street and runaway inequality?

  38. How Do We Build It?

  39. An example of a powerful national anti-Wall Street movement: The Populists 1880-96

  40. Populists’ Agenda • Consumer and producer co-operatives • Public banks • Public ownership of railroads, telegraph and telephone industries • Progressive income tax

  41. What’s our agenda?

  42. Our Agenda • Financial speculation tax, pay for free higher education • Public banks • $15 minimum wage indexed to inflation • End “Carried Interest” loophole

  43. Top Salaries at Bank of North Dakota

  44. Populist Organizing Strategy • Educate and organize • Organize and educate • Army of 6,000 educators

  45. Key Fact #1: Runaway inequality will not cure itself

  46. Key Fact #2: It will take a massive popular movement to counter runaway inequality

  47. What do we need to do? • Common Agenda, Common Analysis • Educational infrastructure • New national movement organization • New activist identity – silo busters -- movement builders

  48. We need our army of educators Are You Interested?

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