A Post-Labor Day Look at Pay Gaps and Wage Wars
By David R. Francis, Staff writer of The Christian Science Monitor
It's not the usual Labor Day stuff. That material, at this time, shows that the wages of typical American workers rose slightly in the past year, despite the economic slowdown.
What researcher Chris Hartman and his colleagues at United for a Fair Economy (UFE) did is a bit different. They compared what has happened to the wages of workers and bosses during the 1990-2000 period.
"We are having some fun," says Mr. Hartman, who works for this Boston-based advocacy group.
In that period, top corporate executives' pay rose 571 percent (before adjusting for inflation).
Average worker pay climbed 37 percent. With inflation in that decade reaching 32 percent, real wage gains were modest.
If the pay of production workers had grown at the same rate since 1990 as it has for CEOs, their 2000 average annual earnings would have been $ 120,491 instead of $ 24,668.
As its name implies, UFE holds that the economic system could be fairer to those of moderate and lower income. It campaigns for change.
For instance, it would like Congress to boost the minimum wage when it reassembles after Labor Day. If the minimum, which stood at $ 3.80 an hour in 1990, had grown at the same rate as CEO pay, it would now stand at $ 25.50 an hour, UFE notes. The current rate is $ 5.15.
That wage is "well below the poverty line for a family of four," says Hartman.
Sen. Ted Kennedy (D) of Massachusetts proposes gradually raising the minimum to $ 6.65 an hour. Republicans hint they will attach fresh tax cuts onto the bill to offset its cost to employers of minimum wage workers. There is also talk of a cut in the tax on capital gains.
But a spokesman for Senator Kennedy says there is "no money" for more tax cuts. The federal government is already tapping $ 9 billion of Social Security revenues this fiscal year.
The years-old minimum-wage fight is building again.
The Employment Policies Institute, financed by firms hiring low-wage workers, has just issued a paper saying most minimum-wage workers live in families with incomes well above poverty levels.
Kennedy's bill was first introduced in 1999, but blocked by a Republican-led Congress. Now the Democrats have a majority in the Senate. Prospects of a minimum-wage hike have risen.
Another UFE campaign aims at taming executive pay.
CEOs of firms that announced layoffs of 1,000 or more workers this year earned an average of $ 23.7 million in compensation in 2000, notes a UFE study. That compares with $ 13.1 million for the average CEO of major firms.
Last year, these job-cutters got an increase in salary and bonus of nearly 20 percent. US wage workers got 3 percent, and salaried employees 4 percent.
Martin Sabo, a Democratic congressman from Minnesota, introduced a bill in July that would not allow a company to take a tax deduction on the salary and other compensation of an executive that is in excess of 25 times the pay of the firm's lowest-paid full-time employee.
CEO pay now stands at 531 times the pay of the average worker, Business Week estimates.
In 1993, Congress passed legislation removing tax deductibility for executive pay over $ 1 million. But it left a loophole for performance-based pay that companies easily drove through.
Chances of passage for the new loophole-closing measure are nil. But Mr. Sabo figures it makes a point on the issue of the huge income gaps in America.
Going back to "regular" Labor Day news, the AFL-CIO reports that 175,000 workers joined the union movement in the first six months of 2001. That's up from 160,000 in the same 2000 period.
Those numbers aren't enough to raise the proportion of the nation's total labor force that are unionized above its present 13.5 percent level. "We are breaking even," says an AFL-CIO official.
Labor's hope is that an increase in organizing efforts will eventually give the union movement more clout to balance corporate influence in Washington.
As for workers' wages, those at the median - with as many paid more as are paid less - saw an increase of 0.5 percent in their after-inflation wages in the 12 months ending last May, according to the Economic Policy Institute (EPI). But less-skilled men, those without college, saw real wages fall.
In coming months, unemployment could rise from its present 4.5 percent to above 5 percent
Wages of middle- and low-wage workers could be hurt, warns EPI economist Jared Bernstein.
Copyright 2001, The Christian Science Monitor