This article was originally published in Partisan issue no. 21, printed September 2005.
CEO pay is now 431 times that of workers. The ratio of average CEO pay (now $11.8 million) to worker pay (now $27,460) spiked up from 301-to-1 in 2003 to 431-to-1 in 2004.
While still well below the 525:1 ratio the CEOs were getting the last year of the Clinton administration, it's still way ahead of the 107:1 ratio they were getting just 15 years ago in 1990.
If the minimum wage had risen as fast as CEO pay since 1990, the lowest paid workers in the United States would be earning $23.03 an hour today, not $5.15 an hour.
Since 1990, corporate profits are up 86.7%, while average worker pay is up by only 4.5% and the minimum wage has actually lost 6.2% of its value.
These facts come in a new report from the Institute for Policy Studies and United for a Fair Economy, "Executive Excess 2005: Defense Contractors Get More Bucks for the Bang."
Some people would argue that CEOs are just being paid in proportion to the "value" they produce. But the Executive Excess study shows that people investing in the stock of the companies with the highest paid executives over the past 15 years would have lost money. Greed does not necessarily indicate efficiency.
Corporations pay only 7% of federal taxes. In fact, while corporate profits soared, 46 of the nation's 275 largest corporations paid no federal income tax in 2003.
Ten of those companies reported more than $1 billion each in profits that year. Those ten paid their CEOs an average of $12.5 million each.
Of course, the people who own the corporations aren't paying much in taxes either. Between 1979 and 2001, the reported after-tax income of the top 1% of "earners" rose by an average of $409,000 each. Adjusting for inflation, that's a 139% increase. Then they got the Bush tax cuts. That gave them an extra few hundred billion to play with.
As The Partisan goes to press, senators are proposing to make Bill Clinton's repeal of the federal estate tax permanent. This would shift roughly $1.5 billion per week from the federal treasury into the pockets of the heirs to the nation's biggest fortunes at a time when thousands of Americans -- many of whom are among the nation's poorest -- have lost everything to Hurricane Katrina and are looking to the government for help.
Fewer than one estate out of 100 currently pays the estate tax. Repeal of the tax would give an average $3 million tax break to the 7,000 estates that would have otherwise paid the tax.
War profiteers are making out like bandits. Half the CEOs of top military contractors are making over $3,880,200 a year.
For example, David H. Brooks, CEO of bulletproof vest maker DHB Industries, earned $70 million in 2004, 13,349 percent more than his 2001 compensation of $525,000. Brooks also sold company stock worth about $186 million last year.
In May 2005, the US Marines recalled more than 5,000 DHB armored vests after questions were raised about their effectiveness. By that time, Brooks had pocketed over $250 million in war windfalls.
Since September 11, the ratio between median pay for defense CEOs and pay for military generals has nearly doubled to 23-to-1, up from 12-to-1 just three years earlier. The pay ratio between defense CEOs and army privates with combat pay soared to 160-to-1, up from just 89-to-1 in 2001.
Halliburton CEO David Lesar got $11.4 million in pay. The government is questioning $1.4 billion Halliburton has billed them in Iraq, but they're still getting contracts to "rebuild" the Gulf Coast after Katrina.
The big money maker for military contractors is the fact more than half the contracts are awarded as insider deals. See Partisan No. 20 for how "cost plus" billing works.