Analysis: CEO pay soars while workers face layoffs, stalled pay
CEOs are getting even richer while workers are hit with stagnate pay and even layoffs.
A recent USA Today analysis of data from GovernanceMetrics International showed that CEO pay jumped 27 percent last year, nearly reaching pre-recession levels.
Workers, however, saw their pay rise at a paltry 2.1 percent in 2010, according the Bureau of Labor Statistics. Data from the bureau also showed that the overall inflation rate was 1.64 percent during the same period.
That means working people in America barely kept on level with the rate of inflation, while their employers saw their pay soar.
The analysis of 158 Standard & Poor’s 500 index companies with the same CEO serving all of 2009 and 2010 found that median CEO pay in 2010 was $9.0 million, the most CEOs have made since a median of $9.2 million in 2007.
“We have the recipe for controversy over CEO pay: big increases in CEO pay that show up following run-ups in stock prices coupled with high unemployment rates,” Kevin Murphy, professor of finance at the University of Southern California, told USA Today.
William Lazonick, professor at the University of Massachusetts, explained to the paper that much of the 47 percent increase in profit S&P 500 companies saw last year was due to cost cutting and layoffs. Revenue, on the other hand, grew at only 7 percent in 2010.
“So in other words, a 7 percent pay hike for CEOs might have been fair; a 27 percent raise looks a lot more like profiting off the misery of the people who once worked for you,” Mother Jones Josh Harkinson noted.
The unemployment rate fell to a two-year low of 8.8 percent in March.