teacherken's musings on everything

Anyone paying attention knows that our economy is becoming increasingly unfair. Rich people and corporations are paying an ever-decreasing proportion of our taxes. And this is happening at the same time as both are gaining an ever-increasing share our our national income and our national wealth. This bothers me, and probably bothers the reader as well.

It apparently does not bother our Secretary of the Treasury. In his column today, entitled Income gap mentality Derrick Jackson of the Boston Globe, inspired by a meeting John Snow had with the Globe's editorial board, analyzes the relevant issues for us. I urge you to read the column. I will offer you selections and a bit of commentary of my own.

The column begin with two paragraphs having the force of a sledgehammer:

AS TREASURY SECRETARY John Snow meandered through his thoughts about the pay gap between CEOs and workers, it brought back memories of 1992 when the first President Bush toured a mock-up of a grocery checkout counter, watched a carton of milk, a lightbulb, and some candy ring up via a scanner and said about the technology, ''This is for checking out?"

The scanner came to mind because, as the average American worker watches corporate America slash pensions and healthcare, as the average American has seen real wages decline in the last quarter century, and as the average American family has to work harder to maintain the standard of living it inherited, Snow talked about this as if it were not much of a problem.

Of course Snow came to his current position after serving as CEO of a major corporation (CSX) in which his own compensation soared while that of his workers at best stagnated. Yet despite this he calls the current approach an “aspirational” compensation system which can be illustrated by top baseball players getting exorbitant amounts. He still things, according to Jackson that there is plenty of trickle-down money to go around and that this is equivalent of sharing “the spoils of the game.”

When challenged by one member of the board with the fact that the NFL does better at drawing fans than does baseball, that football has a sharing of tv revenues, and that the Patriots have won 3 out of 5 titles without a star system, he basically ignored the local example and answered that the

”aspirational compensation system works pretty well. People will get paid on how valuable they are to the enterprise.”

Jackson then provides the factual description to what has happened in recent decades. He relies on data provided in part by two liberal think tanks, and tells us the following (which I summarize to stay within fair use):

Annual gap between CEOs and workers:
1980 42-1
1990 107- 1
now 431-1

in current dollars:
$11.8 million to 27,460.

And what if average worker compensation had kept up with CEO compensation? If we used only the 1990 figures as a base, that 27,460 would now be $110,136. Or if we looked at those on the bottom, the current $5,.15 minimum wage, which is unchanged since 1997, would be $23.01.

Jackson uses figures from the Congressional Budget Office which show the shift of national income. The share received by the top 205 has gone from 45.5& in 1979 to 52.2% in 2003. But that only partly shows the increasing discrepancy, and hides the real shift:

The higher you go in that top 20 percent, the more the rise in their share of the income. The top 1 percent of Americans saw their share of America's income zoom from 9.3 percent in the last quarter century to 14.3 percent. The top 10 percent saw their share go from 30.5 percent to 37.2 percent.

Before I go on with Jackson, I think Democratic candidates for federal office ought to be hammering on these figures. Yes, I know some of the disparity occurred on Clintons watch. But from Reagan to part way through Bush 41 saw a major increase, and much of the disparity we are now seeing occurred since the last time the minimum wage was raised. And perhaps we can focus on that last point as far as the current President’s comments of Americans not being willing to do some jobs. Employers want a guest worker program so they are not forced to raise the minimum wage,. Heaven forbid that it would cut into corporate profits.

Let me list several other statistics Jackson offers from the two progressive think tanks. Let’s look at corporate taxes.

In 2003 46 of the largest 275 corporations paid NO federal income taxes. During the years 2001-2003 at least 82 of those 275 had one year (or more) during which they paid no federal income taxes). Of course, at the same time CEO compensation was soaring, as the Bush tax cuts for the wealthy, which he now wants to make permanent, kicked in.

There is no way I can fairly summarize the final two paragraphs Jackson offers us. So I will offer them uncut:

Despite this, Snow went on and on about how corporate governance has actually gotten better. He said ''the marketplace" is the best place to leave the issues of pension and healthcare cuts to workers. ''The best place to leave compensation is set in a market system," Snow said. But as to that pesky pay gap, he said, ''A full explanation is still awaiting a full exposition."

Like the first President Bush, who did not know that checkout-counter scanners had been common in American supermarkets a decade before his discovery, Snow, in the guise of defending the fiscal policies of the second President Bush, talked about waiting for a full explanation of an American condition that for the average American is fully exposed as a betrayal of average aspirations.

Regular readers know that I am a fan of Jackson, diarying about one of his columns at least once or twice a month. I think the man is long overdue for a Pulitzer, an award for which he has in the past been a finalist. Such honors aside, this column is an example of the clarity with which he can present an issue to us. It is also an illustration of why I do not think Snow will retain his current position for any significant future period. If the new Chief of Staff does have the authority to replace cabinet members, I would have considered Snow near the top of that list of endangered incumbents. If he reads this column, Snow might be promoted to number 1.

But changing the faces will not represent a change to the policy. The issue of economic fairness will not be fixed because the position of SecTreas has a new occupant. We should remember that, remind our candidates, and hammer constantly on the economic injustice perpetuated by Republican administrations in general. Most of all, we need to remind people that this administration, and the Republican Congress that has been in power since the election of 1994, are the ones responsible for destroying the aspirations and dreams of most Americans. This inequity can be laid at their feet, and for it the voters should hold them accountable.



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