CEOs to Workers: More for Me, Less for You
By Holly Sklar
July 25, 2011
Big company CEOs got a 23 percent raise last year and
corporate profits are at record highs. But the minimum wage
has less buying power now than in 1956 - the year Elvis
Presley first topped the charts, videotape was breakthrough
technology and the Dow closed above 500 for the very first
It’s no accident wages are down while corporate profits are
up. As JPMorgan’s July 11 "Eye on the Market" newsletter put
it, "Reductions in wages and benefits explain the majority of
the net improvement in [profit] margins - US labor
compensation is now at a 50-year low relative to both company
sales and US GDP."
The minimum wage sets the floor under wages, and that floor
is sinking. The 1956 minimum wage was $8.30, adjusted for
Today’s minimum wage is $7.25 - just $15,080 annually.
CEOs make more in a few hours than minimum wage workers who
care for children, the ill and the elderly make in a year.
Median CEO pay was $10.8 million last year among 200 big
companies measured by Equilar.
The $15,080 minimum wage workers have for rent, groceries,
transportation, medicine and everything else for the year
doesn’t even buy 2 pounds of the imported caviar featured in
the Forbes Cost of Living Extremely Well Index.
The last increase in the minimum wage to $7.25 on July 24,
2009 was so little so late it left workers 30 percent below
the minimum wage peak of $10.38 in 1968 - $21,590 annually -
in 2011 dollars.
Today’s retail clerks, health aides, child care workers,
restaurant workers, security guards and other minimum wage
workers have $6,500 less in annual buying power than their
That doesn’t help our corner stores, our communities or our
national economy. It hurts.
We didn’t have to go backwards. U.S. income grew $11,684 on
average between 1969 and 2008, the year Wall Street drove our
economy off a cliff. But there was nothing average about the
actual income distribution. Every dime of income growth went
to the top 10 percent. Income for the bottom 90 percent
Compare that to the period between 1917 (when the data began)
and 1968. Income growth averaged $26,574. The top 10 percent
got 31 percent of that growth. The bottom 90 percent got 69
You can’t have a strong middle class or a strong economy if
the bottom 90 percent gets none of the nation’s income
If the minimum wage had stayed above the $10.38 value it had
in 1968, it would have put upward pressure - rather than
downward pressure - on the average worker wage. Wal-Mart and
McDonald’s, our nation’s largest employers, couldn’t
routinely pay $7.25 or a little above.
McDonald’s wages would be more like In-N-Out Burger, which
has an entry wage of $10 plus good benefits and beats
McDonald’s and other fast food chains in the new Consumer
Reports ratings for food, service, value and speed. Wal-
Mart’s wages would be closer to Costco, which pays starting
wages of $11, has the lowest employee turnover in retail,
doesn’t need to spend money on advertising and outperforms
The 2010 American Values Survey found that 67 percent of
Americans supported increasing the minimum wage from $7.25 to
Critics routinely oppose minimum wage increases in good times
and bad, claiming wrongly they will increase unemployment.
The most rigorous studies of the impact of actual minimum
wage increases, including two studies published recently in
the journal Industrial Relations and the Review of Economics
and Statistics, show they do not cause job losses - whether
during periods of economic growth or recession.
In the words of John Shepley, co-owner of Emory Knoll Farms
in Maryland and a member of Business for a Fair Minimum Wage,
"The notion that raising the minimum wage will kill jobs is
just bunk. People at the lower end of earnings tend to spend
100 percent of their after-tax income. They put it right back
into local businesses buying food, clothing, car repairs and
other necessities. - When the minimum wage is too low it not
only impoverishes productive workers, it weakens the key
consumer demand at the heart of our local economy."
It’s time to stop stuffing the penthouse of the economy with
gold and rebuild the crumbling foundation.
[ Holly Sklar's books include "Raise the Floor: Wages and
Policies That Work for All of Us," "A Just Minimum Wage:
Good for Workers, Business and Our Future" and "Streets of
Hope: The Fall and Rise of an Urban Neighborhood." She can
be reached at [log in to unmask]]
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