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American CEO Compensation Plummets 29% in Fifteen Years: Did YOUR wage fall 2% per year?

May 15, 2015

Deep inside the San Francisco Chronicle’s pages (May 15, 2015), this shocking truth is hidden, as they often are, beneath a misleading headline. The hope appears to be that no one will notice, but sharp-eyed readers of the Business Section can’t help but see the truth hidden between the lines. It appears that in 2000 CEOs were making a comfortable “525 times more than the average worker.” By 2013 this had fallen to a paltry “331 times what the average worker was paid,” but this was largely due to the 2008 recession and the Dodd-Frank Act of 2010 that affected all CEO compensation.

This represented, in those dark years, a decline of 37%, with shockwaves circulating through all the dependent industries of real estate—second and third homes, view estates, and so on—as well as the subsidiary labor markets of yacht-polishers, gardeners and housecleaners, Sub-Zero refrigerator repairmen,Rolex and diamond salesmen, and so on. Not to mention sleeper-seats on transoceanic airplanes, high-rolling bets at the Vegas tables. The repercussions of this dramatic decline in CEO compensation were endless, and devastating.

Fortunately for all concerned, the 29% figure actually represents a modest improvement over the bleakest days of the recession. “Last year, the average CEO was paid $13.5 million.” Many of the headlines you will have seen call attention to the decline of workers’ buying power over the past fifteen years, but their loss is by comparison almost minimal.

Of course the overall figures of CEO compensation being 373 (for 2014) or 525 (for 2000) times the average worker do seem to be pretty positive when compared with 42 times (for 1980, the last year of the Carter administration.) But that was a long time ago, before Reagan’s “trickle-down” theory of economics.

But, take heart. 2015 is on a good start toward making up for CEO pay losses brought about by the Great Recession of 2008. The “average workers” can feel proud of the contribution they have made toward a remedy.

Other headlines from the San Francisco Chronicle for May 15, 2015:
Malaysia turns away 800 abandoned at sea
Israeli court paves way for demolition of Bedouin village (“Israel says the hundred of villagers are sitting on state-owned land slated for development. . . expected to feature a hotel and a country club.”)
Death toll rises to 72 in footwear factory fire
Obama pledges US will stand by [oil-rich] allies in gulf

To quote Lily Tomlin, “”No matter how cynical you become, it’s never enough to keep up.”

I never intended for this column to be a place to air my social-political views, but sometimes there is a point to be made, and I’m compelled to make it.

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