The Working Stiff Continues to Get Screwed

The NY Times published its annual survey of executive pay today. Guess what? Things got worse in 2005. The average CEO of the 200 large public companies surveyed got a 27% raise. The average worker is lucky if he got enough to beat inflation.

The Times listed the details about the companies surveyed. Two columns are of interest: the percentage change in compensation over the year and the percentage change in the total return to stockholders over the year. Here are a few of the more egregious examples.

• Aramark - 98% increase in compensation, 12% increase in total return
• Cisco Systems - 475% increase in compensation, 8.5% decrease in total return
• Cooper Industries - 127% increase in compensation, 10% increase in total return
• CSX - 958% increase in compensation, 28% increase in total return
• Eastman Chemical - 151% increase in compensation, 8% decrease in total return

I could go on, but you get my point. Many executives are being paid exorbitant compensation for lackluster performance.

Another indication of the screwing of the working man is in the calculation of GDP. The GDP divides our national income (which is generated from the production of goods and services) into that which goes into profits and that which goes into wages.

Currently, R&D is treated as a cost, not a capital investment. This tends to overstate the proportion of GDP going to wages. However, the Bureau of Economic Analysis, which issues the GDP data, is considering treating R&D as an investment and thus assigning it to the profit column of the GDP. Using this method, the share of GDP assigned to wages drops by 1%. What's 1%, you say? Do the math for a $12.5 trillion economy. 1% is a helluva big number.