Thursday, April 26, 2012

The Hypocrisy of the 1%

The AFL-CIO has launched its annual PayWatch data, revealing that the ratio of the average S&P 500 CEO pay package to that of the typical worker has once again risen; it's now an eye-popping 380-to-1. This ratio was just 42-to-1 in 1980.

The average annual CEO pay of companies in the index was $12.94 million in 2011, rising by 13.9% and following a 22.8% increase in CEO pay in 2010.

While chief executive pay has become more lucrative, regular Joes' and Josephines' incomes haven't seen similar results. Last year, average worker wages grew by a paltry 2.8% to an average $34,053.

The AFL-CIO was wise to point out that many American investors haven't necessarily experienced a great windfall either. The S&P index ended 2011 flat.

Living the dream is a fiscal nightmare
I know a lot of investors -- not to mention one-percenters -- likely dismiss the AFL-CIO's complaints out of hand or, let's face it, even become immediately apoplectic. I'll grant that many union demands don't always reflect a sustainable view of economics or fiscal responsibility for the organizations they target. Pensions and benefits into infinity, guaranteed pay levels regardless of performance, and making it difficult if not nearly impossible to fire employees for underperformance (or because a company or entity is in legitimate or even dire financial trouble) are all pretty untenable for long-haul financial health. Read more....

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