CEO pay in 2010 rose by 27%, while worker pay rose by just 2 percent. The median corporate CEO made $9 million in 2010. But even CEO pay pales in comparison to that of hedge fund managers.
The compensation for the top 25 hedge fund managers in 2010 totaled $25 billion. Their total pay was enough to fund the starting salaries ($35,000) of 712,935 firefighters, teachers, and police officers. On a one-year basis, these financial experts are worth 712,935 times more than the person racing to the scene of an emergency or a break in.
To make matters worse the carried interest loophole allows the income of hedge fund managers to be treated as long term capital gains, taxable at 15%- rather than ordinary income taxable at 35%. This results in hedge fund managers paying a lower tax rate on income than middle-class workers, who are subject to a 25%-28% top marginal rate.
The richest 1% of Americans, on average, have tripled their share of the American Income pie in just 30 years (after taxes). They didn't work 3 times harder than the other 100 million plus American households paying taxes. They benefited from the social and capitalist structures which their taxes support. Taxpayer funded infrastructure provided educated workers, roads, rails, airports, electrical and communication grids. Tax funded research resulted in thousands of scientific, medical, and technical related products which disproportionately benefited the well-to-do, who have the money to invest in the productions and marketing of these products. The richest 10%, with 80% of the stock market and a 15% capital gains tax, have settled back to watch their assets grow. According to a study by the University of California, in 2008 only 19% of the income reported by the 13,460 individuals making over $10 million came from wages and salaries. Think Mitt Romney.
The successes of the newest computer-based technology companies is only possible due to the input of thousands of physicists, chemists, chip designers, software engineers and market analysts over many years to lay the groundwork for the infrastructure and protocols needed for success.
American revolutionary Thomas Paine wrote "everything beyond what a man's own hands produce came to him from society, and therefore he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."
But instead we face warfare on the middle class from a small percentage of people and corporations, who with their hired think tanks, lobbyists, and CPAs, craft creative ways and laws to allow almost all of the new income to remain in their pockets. Based on IRS figures, if the average middle-income family had just maintained its share of America's productivity held in 1980, it would be making $10.000 more per year ($45,000 instead of $35,000). An astounding 90% of American workers have seen their inflation-adjusted incomes go down since 1999.
From 1968 to 2008, the productivity of workers in the United States grew by 112%, translating into an average increase in the amount produced per hour of 1.9% yearly for the last 40 years. Yet workers' paychecks have not kept pace with their capacity to produce: the real average wage of production workers grew by only 0.2% per year on average over this period.
The situation has been even worse for minimum wage workers, whose real wages declined by 0.9% per year on average over this period, even as they have become more productive and educated over this time period.
One common misconception about minimum-wage workers is that they are mostly teenagers, working part time. In fact, of the roughly 1.4 million workers who benefited from a Jan. 1 minimum wage increase in 8 states, roughly 80% are at least 20 years old and 78% work at least 20 hours per week. The percentage of affected workers who are teenage, part-time workers is a mere 12% in these states.
Looking at the past history of minimum wage increases, a 10% increase in the minimum wage is estimated by academic experts to lead anywhere from a 3% decrease in employment to a 1% increase in employment. Using the worst scenario with reduced hours worked but at the increased wage, the minimum wage workers would still see an increase of 8.3% in total wages. The increase would definitely have a stimulant effect on the economy, because a minimum wage worker is highly likely to spend the extra earnings.
Everyone who contributed to American productivity deserves to benefit from it. Extreme disparities in the system need to be fixed. That means indexing the minimum wage to 50% of average wages and taxing those more who have benefited hugely from the countries labor and infrastructure.
Some of the above material is from Paul Buchheit, a college teacher and founder of a social justice website called UsAgainstGreed.org.