The average CEO made $9.6 million in 2011, even as workers’ wages remained stagnant and unemployment hovered nationally around 8 percent. Chief Executive Officers are being paid at the highest-ever rate since the AP started tracking the figure in 2006, according to a new report from the news organization.
But while CEOs may be reaping the rewards of higher profits and a growing stock market, very little of that achievement spreads as far as the average worker — or even the company’s stockholders:
Profit at companies in the Standard & Poor’s 500 stock index rose 16 percent last year, remarkable in an economy that grew more slowly than expected.
CEOs managed to sell more, and squeeze more profit from each sale, despite problems ranging from a downgrade of the U.S. credit rating to an economic slowdown in China and Europe’s neverending debt crisis.
Still, there wasn’t much immediate benefit for the shareholders. The S&P 500 ended the year unchanged from where it started. Including dividends, the index returned a slender 2 percent.
As the AP noted, “the typical American worker would have to labor for 244 years to make what the typical boss of a big public company makes in one.”
Growing CEO pay is contributing to the larger trend of increasing income inequality — CEO pay increased 127 times faster than the average worker pay over the last 30 years, and the average Fortune 500 CEO made 380 times what the average worker did last year. Fortune 500 companies made a record $824 billion in 2011.
By: Annie-Rose Strasser, Think Progress, May 25, 2012
“Corporations Are Very Rich People”: Record $824 Billion Last Year As Conservatives Claim Obama Anti-Business
A favorite conservative attack on President Obama is that his policies — and even his personality — amount to an assault on American businesses. “President Obama himself is the most anti-business presidentin my lifetime. With rhetoric not befitting a president he has attacked oil companies, banks, airplane users, Wall Street and anyone who makes money,” wrote Gary Shapiro, president and CEO of the Consumer Electronics Association.
However, according to the latest data, President Obama has been very good for America’s biggest businesses. Last year, in fact, the Fortune 500 made a record $824 billion, topping the previous record set before the Great Recession:
The Fortune 500 generated a total of $824.5 billion in earnings last year, up 16.4% over 2010. That beats the previous record of $785 billion, set in 2006 during a roaring economy. The 2011 profits are outsized based on two key historical metrics. They represent 7% of total sales, vs. an average of 5.14% over the 58-year history of the Fortune 500. Companies are also garnering exceptional returns on their capital. The 500 achieved a return-on-equity of 14.3%, far above the historical norm of 12%.
Of course, that return to pre-recession level earnings hasn’t translated into job or wage growth for America’s workers. In fact, inflation-adjusted wages fell last year. Big companies are also squeezing more productivity out of their workers, with annual revenue generated per worker increasing by more than $40,000 over the last five years. CEO pay, meanwhile, increased 15 percent last year.
This data also puts the lie to the Republican claim that corporate tax cuts will spur businesses to hire. If all it took were extra cash, businesses would be hiring like crazy. However, they are clearly not doing so — and the effective corporate tax rate is already at a forty year low.
By: Pat Garofalo, Think Progress, May 7, 2012
CANTOR: We also know that over 45 percent of the people in this country don’t pay income taxes at all, and we have to question whether that’s fair. And should we broaden the base in a way that we can lower the rates for everybody that pays taxes. [...]
KARL: Just wondering, what do you do about that? Are you saying we need to have a tax increase on the 45 percent who right now pay no federal income tax?
CANTOR: I’m saying that, just in a macro way of looking at it, you’ve got to discuss that issue. [...] I’ve never believed that you go raise taxes on those that have been successful that are paying in, taking away from them, so that you just hand out and give to someone else.
Let’s just do this again, debunk that zombie lie. The more than 45 percent of people who “don’t pay income taxes” don’t pay federal income tax because they’re too poor!They pay federal payroll taxes. They pay sales taxes in most states. They pay a larger share of their income in taxes than rich people do. And they are students, and disabled people, and the elderly who don’t have income.
And you know who doesn’t pay income tax? Two dozen Fortune 500 companies that avoided corporate income taxes altogether in 2011.
And Eric Cantor says that we need to take even more money away from poor Americans and give it directly to “those that have been successful.” That’s the Republican version of redistribution of wealth.
10:57 AM PT: The Cantor NASCAR/NFL owners tax break just passed, 235-173. Ten Republicans voted no, one voted present, and 10 Democrats voted for it.
By: Joan McCarter, Daily Kos, April 19, 2012