By Dian Vujovich
I’ve always thought that at the bottom of this current economic crisis was the wide spread in salaries between those at the top and the average worker. Data I’ve seen shows muckadeemucks earning something like 400 times more than the average Joe and Jill. That means, if the average salary is say $45,000 a year, 400 times that would be $18 million a year. In the 1950s, that wage spread was like 40 times. The opportunity for building a future was better for the average worker back then than it is today.
Now there’s nothing wrong with high salaries from where I sit, but when the average salaries aren’t enough for average folks to live life and build a sound financial future for themselves and their families, then you’ve got problems. And our country has big time problems on the wage and income side of things now and going forward.
Simply look at health care premiums, for instance. They’ve soared over the past 10 years while the salaries of most people haven’t. It doesn’t take a genius to realize when costs are rising and salaries aren’t rising in lockstep there’s trouble looming. When scenarios like that exist, it’s no wonder that people use their homes as banks and their credit cards to pay bills.
That brings me to the subject of bailouts. The only bailouts for individuals are home foreclosures and bankruptcy. Not only are both devastating and stressful to most, they remain on one’s credit report for, well, ever. On the other hand, those Captains of Industry whose companies are getting bazillions in government bailouts ride off to one of their many homes with millions in their pockets and most likely unblemished credit reports. There’s something stinky about that.
A New York Times online story today looked at seven financial firms that have lost over $100 billion while their execs received $464 million in performance pay since 1995. Mr. Mozilo from Country Wide Financial is one included. He was paid $246.7 million from 1998 to 2007 while the company he co-founded lost $3.9 billion in 2007 and 2008.
Over at Bank of America (B0A), Mr. Lewis’ compensation in 2007 was $12.5 million and from 2001 to 2007 was paid a total of $138 million. BOA has not posted an annual loss. And at A.I.G. Mr. Sullivan received $13.9 million in 2007 and a total of nearly $50 million from 1995 to 2007. Maurice R. Greenberg, his predecessor got $168 million from 1998 though 2005. A.I.G. lost $37.6 billion in 2008.
Read the rest of the story at
http://www.nytimes.com/interactive/2009/02/20/business/0222-pay-graphic.html?ref=business and weep.
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