The fixation on the pay of CEO's continues. Does this level of
pay indicate a very competitive market or a transitory tendency to
overcompensate the head dog? The answer, it can be argued, is yes,
that both are at play here.
Also is the current status a static solution or a dynamic aberration?
It can also be argued that it might be more the latter than the former.
This paper is focused on the thought process that inequality is
growing in all areas, and makes no sense. However one should make
sense of it, and understand the drivers as we are here.
However according to Saez, the wealth distribution is not changing as a
percent share as much as the income share. There is truth to the
notion that the top 0.1% own about 10% of the wealth and that share is
constant. Therefore the actual people owning this wealth is changing,
as mobility of wealth is quite high.
...top CEOs in 2005 was $6 million, while the median earnings of
full-time male and female workers were, respectively, $41,368 and
$31,858.1 These numbers imply that the average “boss” in a top
corporation earned 145 times more than the average male worker and 188
times more than the average female worker.
The compensation packages of
today’s top CEOs are far out of line with the maxim put forward two
decades ago by the late management guru Peter Drucker—that the CEO
should not earn more than 20 times the salary of the lowest paid
employee in the corporation.2 Perhaps his prediction of an “outbreak of
bitterness and contempt for the super-corporate chieftains who pay
themselves millions” will come true.
Both income inequality and wealth inequality are quite high in the
United States, but the degree of income inequality is lower than that of
wealth inequality.
Note: however according to Saez, the wealth distribution is
not changing as a percent share as much as the income share.
However there is truth to the notion that the top 0.1% own about 10% of
the wealth and that share is constant. Therefore the actual people
owning this wealth is changing, as mobility of wealth is quite high.
Figures on inheritance tell much the same story. According to a
study published by the Federal Reserve Bank of Cleveland, only 1.6% of
Americans receive $100,000 or more in inheritance. Another 1.1% receive
$50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff
& Gokhale, 2000).
Here are some dramatic facts that sum up how the wealth distribution
became even more concentrated between 1983 and 2004, in good part due to
the tax cuts for the wealthy and the defeat of labor unions: Of all the
new financial wealth created by the American economy in that
21-year-period, fully 42% of it went to the top 1%.
A whopping 94% went
to the top 20%, which of course means that the bottom 80% received only
6% of all the new financial wealth generated in the United States during
the '80s, '90s, and early 2000s (Wolff, 2007).