The Rich Can Already Call It a Year
January 7, 2011 By Mark Engler
Well, 2011, it’s been nice. But I think we’ve worked enough already. In any case, we’ve already made enough money. Time to call it a year.
This is a ridiculous idea, right? Yet, as the Canadian Financial Post reported at the beginning of the week, “Top CEOs will have earned average workers’ full annual pay by 2:30 p.m. today.” The “today” in question was Monday, January 3, the first business day of the year. Here’s their explanation:
Canada’s best-paid chief executives earned 155 times the average income earner during the darkest days of the recession, the Canadian Centre for Policy Alternatives said in a report Monday.
Declaring that those 100 chief executives were “recession proof,” the think tank said they earned an average of $6.6 million in 2009 compared with $42,988 for the average Canadian.
That means by 2:30 p.m. Monday, the first working day of the year, those CEOs will have earned the full year’s wage of the average Canadian, said Hugh Mackenzie, the author’s study and research associate for the centre.
The discrepancy is almost 50 per cent higher than just over a decade ago, in 1998, when CEOs took home an average pay 104 times higher than the average wage earner, the centre said.
“Even that extraordinary number understates the real story,” Mackenzie wrote. “Thanks to a change in corporate reporting introduced in 2008, we only have a conservative statistical estimate of the stock options that make up about one third of CEOs’ 2009 pay. The public will never know how much these CEOs actually got paid in 2009.
I’m not sure how the Canadian Centre for Policy Alternatives, when producing this brilliant bit of PR, crunched the numbers to come up with the exact time of 2:30 p.m. on January 3. However, their general point stands. And, in fact, the situation is even worse in the United States. Here, as the AFL-CIO has tracked, the average compensation for a Fortune 500 CEO is $9.25 million per year. Even if we grant that these businesspeople are workaholics putting in seventy-hour workweeks and taking no vacation, that comes to $2,541 for every hour they labor.
Calling it quits after the first week of January, these American CEOs would each be able to take home an annual income of over $177,000.
Whether the world would be worse off if they did check out for the rest of the year is a debatable point. As CNN Money has noted, not all of the companies run by the top-twenty-earning CEOs were even profitable. For example, in 2009 Johnson & Johnson experienced its first annual sales decline in seventy-six years, yet its CEO, William Weldon, was nevertheless paid $22.8 million, in large part for making “difficult personnel decisions.” (Translation: firing as many as 8,000 workers.)
Of course, even these Fortune 500 CEOs are not making money very quickly by the standards of the financial sector. The New York Times reported that the top twenty-five hedge fund managers made $25.3 billion between them in 2009, with George Soros personally raking in $3.3 billion. That’s $8.2 million per day.
It goes without saying that, while the incomes of the rich may be “recession proof,” that is not the case for the wages of the rest of us. But a lot of people don’t realize that this is not just a result of the recession of the past couple years. Over the last several decades, as earnings at the very top have skyrocketed, incomes for those outside of the top 20 percent have been basically stagnant, with productivity gains not translating into wage increases. And we are working ever more hours just to stay afloat.
I have written a couple times before about Take Back Your Time Day, which takes place on October 24 each year. The notion behind this holiday is that if working hours in the United States were on par with those in Germany, the Netherlands, or Norway, then, come October 24, we’d be able to take the rest of the year off.
If you don’t want to use those other countries as points of comparison, that date could be adjusted. Economist Juliet Schor explains that “the average worker [in the U.S. was] putting in 204 more hours in 2006 than in 1973.” That’s a full five weeks of extra work per year. If Americans just worked the same amount they did in the early 1970s, we’d be able to finish up our working year on about November 25. This would mean turning the entire month of December into a glorious annual sabbatical. Or we could spread the free time out over the entire year. (Three Fridays off per month, anyone?) The result: a far more reasonable balance between work, family, and leisure–a standard of life that used to be widely enjoyed in this country.
Certainly, that’s not as sweet as being able to take your hard-earned week’s pay of $177,000 and clocking out from now until 2012. But it’s something the rest of us can dream of–and demand.