Tuesday, July 24, 2012

The Gilded Age of Bankers

Mark Twain called the late nineteenth century the "Gilded Age” - meaning that the period was golden on the surface but underneath the thin veneer was a cesspool of banksterism, greed and graft, shady business practices, scandal plagued politics and overt displays of upper class consumerism and materialism.

If we stop looking in the rear view mirror right here and fast forward to the future we’re struck by the many similarities to today’s present conditions…………..

In 2010, the top 20% of Americans earned 49.4% of the nation’s income.

According to a AFL-CIO analysis of 299 companies in the S&P 500 Index CEOs of the largest companies received, on average, $11.4 million in total compensation for 2010, a 23 percent increase over the previous year. CEOs of the 299 companies in the AFL-CIO Executive PayWatch database received a combined total of $3.4 billion in pay in 2010, enough to support 102,325 jobs paying the median wages for all workers.

CEOs of S&P 500 Index companies received an average of $12.9 million in pay in 2011 – a 14 percent raise. The ratio of CEO to worker pay is now 380 to 1. The average wage for workers in 2011 was about $34,000 – a 2.8 percent increase that barely keeps up with the government massaged rate of inflation.

“Astronomical CEO pay is based on the false idea that the success of a corporation is due to one CEO genius. In reality, all employees create value, and CEO pay levels should be more in line with the rest of their company’s employee pay structure. CEOs should be paid as a member of a team, not as a superstar. The further widening gap between CEO-to-worker pay to an astonishing 380 times is simply bad for our economy.” - AFL-CIO President Richard Trumka.

In 2011, Brian Moynihan of Bank of America, Vikram Pandit of Citigroup and Jamie Dimon of JPMorgan, have seen annual pay raises averaging 11.9 percent. The top fifteen bank CEOs total compensation for 2011 averaged $12.8 million.

Jamie Dimon’s pay in 2011 was $23.1 million, that’s up $3.5 million from the $19.6 million he made in 2008.

"Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations. The more detailed the data we can use to observe this change, the more skewed the change appears to be ... the majority of large gains are indeed at the top of the distribution."  - Economist Timothy Smeeding, Social Science Quarterly.

Income disparity and the fact some things never change should be on every ones radar screen. Are these issues on your radar screen?

If not, maybe they should be.

Richard (Rick) Mills


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