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CEO Compensation

[ 42 ] June 13, 2014 |

Lawrence Mishel and Alyssa Davis of the Economic Policy Institute released a report yesterday on CEO compensation. CEO’s are doing pretty well these days. The rest of us? Nope. The key findings:

Trends in CEO compensation last year:

Average CEO compensation was $15.2 million in 2013, using a comprehensive measure of CEO pay that covers CEOs of the top 350 U.S. firms and includes the value of stock options exercised in a given year, up 2.8 percent since 2012 and 21.7 percent since 2010.

Longer-term trends in CEO compensation:

From 1978 to 2013, CEO compensation, inflation-adjusted, increased 937 percent, a rise more than double stock market growth and substantially greater than the painfully slow 10.2 percent growth in a typical worker’s compensation over the same period.

The CEO-to-worker compensation ratio was 20-to-1 in 1965 and 29.9-to-1 in 1978, grew to 122.6-to-1 in 1995, peaked at 383.4-to-1 in 2000, and was 295.9-to-1 in 2013, far higher than it was in the 1960s, 1970s, 1980s, or 1990s.

If Facebook, which we exclude from our data due to its outlier high compensation numbers, were included in the sample, average CEO pay was $24.8 million in 2013, and the CEO-to-worker compensation ratio was 510.7-to-1.

Over the last three decades, CEO compensation grew far faster than that of other highly paid workers, those earning more than 99.9 percent of other wage earners. CEO compensation in 2012 was 4.75 times greater than that of the top 0.1 percent of wage earners, a ratio 1.5 higher than the 3.25 ratio that prevailed over the 1947–1979 period (this wage gain is equivalent to the wages of 1.5 high wage earners).

Also over the last three decades, CEO compensation increased further relative to other very high wage earners than the wages of college graduates grew relative to those of high school graduates.

That CEO pay grew far faster than pay of the top 0.1 percent of wage earners indicates that CEO compensation growth does not simply reflect the increased market value of highly paid professionals in a competitive market for skills (the “market for talent”) but reflects the presence of substantial rents embedded in executive pay (meaning CEO pay does not reflect greater productivity of executives). Consequently, if CEOs earned less or were taxed more, there would be no adverse impact on output or employment.

This will no doubt grow before next year’s report.

An Armed Civil Rights Movement

[ 15 ] June 13, 2014 |

This is a great exchange about self-defense and the civil rights movement. Despite all the talk about nonviolence, these were people who faced violence everyday and defended themselves from that violence with their own firearms. That doesn’t mean they didn’t believe in nonviolence, but when you are taking those risks against people who would kill you for fun, you have to do what you have to do. On this subject, if you’ve never read Timothy Tyson’s Radio Free Dixie, do so. I haven’t read Charles Cobb’s book, who is part of the linked exchange, but I should.

Iraq #slatepitch

[ 188 ] June 13, 2014 |

Reihan Salam argues that the U.S. should never have withdrawn its troops from Iraq.

The next few days (weeks?) are going to be insane. Can we make a running list of writers to never take seriously again after they claim the U.S. should send troops to Iraq or attack Obama for withdrawing those troops?

Small Victories

[ 13 ] June 12, 2014 |

This is sort of a big deal:

Target is introducing a potentially precedent-setting policy imposing new rules on companies it hires to clean its stores in the Twin Cities, the retail giant’s hometown. It’s a step forward for union-backed efforts to force major corporations to raise standards for workers they don’t directly employ.

According to a Target (TGT) memo that the labor group Centro de Trabajadores Unidos en la Lucha provided to Businessweek, Target’s Twin Cities janitorial vendors will be required not only to comply with federal and Minnesota labor laws but also to give workers the option of at least one day off each week; establish safety committees and let employees choose half the members; and invite unions to meet at least once a year with management.

Most significantly, the document instructs each vendor—unless released from the obligation at Target’s discretion—to reach deals with labor groups that want to represent their workers. According to the memo, such deals should dictate “terms and conditions of employment” (making life easier for workers) but they must prohibit “economic interference with Target’s operations” by labor groups (making life easier for management).

In other words, Target—whose U.S. store workforce is 100 percent union free—is telling companies that want to clean its Twin Cities buildings to make nice with unions.

We shouldn’t overplay this–Target is not becoming a union shop overnight and it’s a very limited agreement where Target still has most of the power. But the precedent matters. Target has been forced to retreat in an era when we rarely see corporations do anything but crush organized labor.

Postmortems That Make No Sense

[ 102 ] June 12, 2014 |

Eric Cantor, moderate.

Also here.

Long Hours and Unequal Wages

[ 25 ] June 12, 2014 |

Why do women get paid less for the same work? Many reasons, but among them for women in the professional class seems to be that with the pressure on salaried workers to labor for longer and longer hours, men are more willing to put in insane workweeks than women, leading to promotions and higher wages. Of course, these decisions are gendered as mothers usually face significant pressure to not do this while fathers often do regardless of the effect upon their families.

The proportion of Americans who work long hours has increased substantially over the past thirty years. In the early 1980s, fewer than 9 percent of workers (13 percent of men, 3 percent of women) worked fifty hours per week or more. By 2000, over 14 percent of workers (19 percent of men and 7 percent of women) worked fifty hours per week or more. Overwork began to decline in the mid-2000s, but it remains widespread today.

The slowdown in women’s wage gains was especially notable in professional and managerial careers, just the ones where women’s educational advantages should have paid off, but where the stall in pay equality was most evident.

Expansion in “overwork”—net of other changes since 1979—could have affected the gender gap in two ways: Men could be overworking increasingly more often than women, or the financial payoff to overworking could have increased, or both. In their statistical analysis, Cha and Weeden identify the second factor as critical. In 1979, workers who put in long hours tended to make less per each hour than those who worked full-time; by 2009, that had reversed. Putting in the extra hours now pays off more. Or phrased another way, working “only” full-time now pays off relatively less.

Women remain less likely than men to put in those long hours, even though the payoff for doing so grew, which means that men disproportionately brought in the rising wages paid to overworkers. This explains part of the reason why gender equalization in pay slowed down. The authors estimate that the higher payoff for overwork was large enough to cancel out the gains in wage equality women had made from their growing edge in college graduation and the growing importance of college. The consequences of overwork now paying so well were especially strong among professional and managerial employees (Sandberg’s “lean in” targets).

In sum, Cha and Weeden argue, the American workplace increasingly rewards—and probably expects—overwork; men overwork a lot more often than women; this development helped stall pay equality.

Of course, overwork is a terrible thing but with sexism still endemic in our society, women are forced into overwork without getting paid for it while men too often just stay at the office.

The Worst State Democratic Party in the Country

[ 92 ] June 12, 2014 |

The Rhode Island Democratic Party does not deserve the name. In this one-party state, where Democrats outnumber Republicans in the state legislature by a 10:1 margin, anyone who wants to become powerful is a Democrat. What does it mean to be a Democrat here? Nothing. Could mean you are a progressive of the Elizabeth Warren stripe. Could mean that you have the same politics as John Boehner. Some examples from our lovely state:

The amendment, which passed through the finance committee last Thursday, would prohibit municipalities in Rhode Island from establishing their own minimum wage laws. The Providence city council is currently considering an ordinance that would raise the minimum wage to $15 an hour for employees at large hotels. Other cities around the country like Seattle, San Francisco, and Santa Fe have passed or are considering minimum wage hikes.

Among those assembled to protest the measure was Carmen Castillo, a hotel worker, union leader and Providence city councilwoman, who has been organizing for months to pass the minimum wage ordinance. “This proposal attacks all Rhode Island cities and towns,” she said. “It would strip us of our power to represent our communities. What power will they try to take from us next?”

In Rhode Island, however, where Democratic legislators outnumber Republicans ten to one, the story is a little more complicated—involving a likely collusion between conservative Democratic leaders and the business interests most staunchly opposed to the wage ordinance. Though it was Democratic Representative Raymond Gallison, chair of the house Finance Committee, who slipped in the budget amendment, many suspect House Speaker Nicholas Mattiello—who took over the top spot in March after state and federal investigators derailed the career of his predecessor—played a heavy hand in pushing the measure.

Mattiello, a lawyer from Cranston, is also a Democrat. But like his senate counterpart, President Teresa Paiva-Weed, he enjoys a full endorsement from Rhode Island Right to Life and the National Rifle Association. In 2012, He voted for Rhode Island’s voter ID law—the only one to pass in a Democrat-controlled legislature. Tea Party Republican Rep. Michael Chippendale once declared that Nick Mattiello is “on our side.”

And the legislative budget:

Sam Bell (no relation), State Coordinator of the RI Progressive Democrats, has ceased to be surprised when top state Democrats betray the left flank of the party to side with big business conservatism. “This is not an aberration. It is part of a bigger picture,” he said. The $8.7-billion budget also cuts corporate taxes from 9 to 7 percent, and raises the estate tax exemption from $922,000 to $1.5 million.

“Progressives and Democrats around the country are talking about raising the minimum wage right now,” Bell said. “But in Rhode Island, we’re fighting our own party over gun control and abortion.”

In other words, the Rhode Island Democratic Party is Andrew Cuomo’s dream. It’s an embarrassment. And it shows the perils of the one-party state. A functioning Republican Party is needed to keep Democrats relatively honest.

Feminism’s Class Problem

[ 229 ] June 12, 2014 |

I am very excited about the new project at The Nation Kathleen Geier is heading up. The Curve will bring together experts twice a month to talk about the intersection of economics and feminism. That’s a concept long overdue in progressive media, where white men still dominate discussions of economic issues.

The series starts off great too, discussing the class divide within feminism, particularly in the aftermath of Sheryl Sandberg. Geier:

Whatever you think of Sheryl Sandberg, her chirpy self-help book Lean In achieved at least one very important objective: it exposed the deep class divide within American feminism. Sandberg, the centimillionaire Facebook executive, wrote a book arguing that individual empowerment was the way forward for the women’s movement and ignited a raging debate among feminists. Sandberg’s frank acknowledgement that her message was pitched to professional elites rather than the masses, her enthusiasm for capitalism and her advocacy of a depoliticized strategy that focused on self-improvement rather collective action troubled many feminists on the left. If feminism is defined down as the right of elite women to enjoy equality with men of their class, is that really feminism—which at least in theory advocates the liberation of all women—in any meaningful sense?

Of course, Sandberg’s rationale was that if more women advanced into leadership positions, all women would gain. But there is little reason to have faith that Sandberg-style “trickle-down” feminism will benefit the masses any more than its economic equivalent has.

Focusing on the rich is always easier than the poor because it allows one to isolate a single issue as a problem rather than deal with the endemic disease of poverty. Female executives of course should make the same money as male executives, but that doesn’t really help most women.

Did Cantor’s Loss Inspire Extra Crazy Time Today?

[ 179 ] June 11, 2014 |

Who is today’s worst person?

1. Oklahoma state House candidate Scott Esk, for being “OK” with stoning gay people to death.

2. Rep. Louie Gohmert for using a Congressional hearing to speculate about whether non-Christians go to Hell.

3. Pat Robertson for telling kids not to turn their father in to the police when he threatens their mother with a gun.

What the hell is wrong with this country?

Sexual Harassment in the Construction Industry

[ 50 ] June 11, 2014 |

Sexual harassment of female workers in construction is so endemic that most who enter the field quit. It is a problem that nobody takes even close to seriously enough, including the unions. Given that it is one of the best-paying types of work for workers without college degrees, the institutionalization of this sexism means that wage disparities between genders are reinforced as well. It’s a major problem.

Lessons

[ 301 ] June 11, 2014 |

Klein is fundamentally correct about the lessons from Cantor’s loss (side note: ha ha ha ha ha ha ha ha ha ha). This is especially important:

If Republicans hadn’t scared Senator Arlen Specter into the Democratic Party and if Democrats hadn’t kept Senator Joe Lieberman on their side Obamacare would never have passed. If the Tea Party didn’t keep knocking off viable Republicans Mitch McConnell would have been Senate Majority Leader since 2010. If Mitt Romney could have run as the Massachusetts moderate he once was Obama might well have lost in 2012. It’s possible Republicans will now lose in Virginia’s 7th District. The Tea Party is good at policing purity but they’re terrible at winning power.

Of course for the Teahaddis, anything short of a violent coup to institute Jim Crow, er, overthrow Obama, er, restore Constitutional rights is unacceptable. So a sellout compromiser like Cantor needs to be eliminated to save the nation for real Americans.

I hope Eric Cantor likes making millions of dollars as a lobbyist. Because that’s his sad future.

Cash for Votes

[ 6 ] June 11, 2014 |

In the New Gilded Age, politicians don’t have to pretend hiding that corporations are buying their votes.