CEO pay soars as flat middle-class wages erode with rising cost of living

CEO pay in the United States was up 12 percent last year, averaging about $9.6 million. Fourth quarter profits for U.S. companies grew at a 30 percent rate, the most in several years of Sundays. While CEOs were giving themselves pay raises, wages for U.S. workers were stagnant as increasing gas and food prices eat into paychecks.

CEO increases at the expense of the workers

At a time when millions of Americans simply hope they keep their jobs, average CEO pay has risen to surpass pre-recession levels. The economy is beginning to rebound and executive pay is increasing, however employee pay is still constant with the recessions drop. As corporate profits soar, stock prices rise and productivity increases, CEOs can increase their own pay but don’t have to hire or award employees with rises because more than 13 million people are looking for work. CEO’s have no reason to hire employees when they are making do with who they have. Last year, an average of 12 percent raises was given to CEO’s by economic bail out sectors. Yet, private sector pay rose by about 2 percent. In March, unemployment was around 8.8 percent. It is forecasted to be years before the unemployment rate drops, according to most economists.

CEOs rake in huge stock opportunities

The highest paid CEO in the U.S. last year was Phillipe Dauman of Viacom who pocketed $84.5 million in just nine months. Ray Irani of Occidental Petroleum made $76.1 million past year, making him take the place of the second highest paid CEO. Forbes also states that Oracle’s Larry Ellison brought in $39.5 million making him the third highest paid. Fueled by Wall Street, CEOs are raking in the biggest paydays since 2007 with stock opportunities. Many CEOs accepted stock choices during the recession when they held little value, knowing that huge paydays lied ahead when the market recovered. Thanks to taxpayer bailouts and interest-free leverage offered by the Federal Reserve, the stock market has recovered spectacularly and the CEOs are cashing in. There was well over $20 million made by several CEOs cashing in their stock choices according to USA Today.

The rising commodity costs impact middle class

Middle-class America is having a difficult time with these payments to CEOs since they have had a hard time with pay increases. In the last five months, hourly income have not increased by as-much-as a single penny according to the Bureau of Labor Statistics. United States workers aren’t getting raises, yet the cost of products is ever increases. Since the start of the year, U.S. income and prices have been moving in opposite directions. Gas is the biggest thing hurting the American worker. An average of 12 gallons of gas a week is used by the average employee. Individuals have reported that filling a gas tank is costing $40 more per month than it did past year. In the mean time, the average weekly wage is up just $18 from past year.

Citations

New York Times

nytimes.com/2011/04/10/business/10comp.html?_r=2#38;ref=business

USA Today

usatoday.com/money/companies/management/2011-04-04-1Aoptions04_ST_N.htm

NPR

npr.org/2011/04/10/135272006/paychecks-cant-keep-up-with-rising-prices