Editorial: The new Gilded Age bodes badly for middle class
06/01/2014 12:00 AM
05/30/2014 8:08 PM
The median pay package for a CEO in this country has now climbed past $10 million. What this means, among other things, is that a retired corporate executive can now cheerfully drop $2 billion on an NBA team.
How rich are the super-rich now?
So rich just in California that Oracle CEO Larry Ellison – one of the billionaires who was outbid for the Los Angeles Clippers last week by former Microsoft CEO Steve Ballmer – could have bought that team and still had enough cash to buy, oh, Yolo and El Dorado counties.
So rich that record executive David Geffen, who was also outbid, could have bought that team and still paid off the student loans of every kid enrolled in the UC system.
Of course, it’s another story for the 38 million-plus Californians who aren’t among the 111 billionaires on Forbes’ list occupying the courtside seats of the state’s economy.
For everyone else, this is a state where a median-priced house is now nearly eight times the state’s median income, and where, according to Redfin Research, more than 80 percent of the homes are unaffordable on a teacher’s salary.
Where the income gap between the top 1 percent and the middle 20 percent has doubled in a generation. Where the long-ago promise of a free education for every Californian has given way to soaring student debt and steep hikes in tuition and fees.
Not that basketball isn’t fun, and not that successful executives aren’t to be applauded, but at what point do we do more than gape at our economic disparity?
A chief executive of a typical large publicly traded company – Nabors Industries, CBS, BlackRock, American Express, the corporate owner of retailer TJ Maxx, Chipotle Mexican Grill and others – now makes about 257 times the average worker’s salary, according to a recent Associated Press/Equilar pay study. Five years ago, that multiple was a “mere” 181 times, the study found, but it has since been catapulted even further by the soaring stock market.
Yes, this is a global problem, and yes, shareholders have pushed back some. But clearly it hasn’t been sufficient. California’s economy relies on its middle classes. When only millionaires can afford homes, as in, say, San Francisco, everyone suffers.
Nonetheless, a bill that would have addressed the income gap by tying corporate tax rates to executive compensation was killed last week in the state Senate. Authored by Democratic Sens. Mark DeSaulnier and Loni Hancock, SB 1372 would have encouraged corporations to keep CEO pay below, say, 100 times the pay of the median worker.
Evidently, that was too radical; the bill was put down with the efficiency of a LeBron James jump shot. No wonder that, here as elsewhere, the people’s best-seller lists are heralding a different sort of most valuable player – the French economist with the new book on our new Gilded Age and its perils, Thomas Piketty.
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