Executives Get 33% of ALL Pay in the U.S. - WSJ

The Wall Street Journal ran a report which says:

the percentage of total wages and salaries paid to top executives rose from roughly 28 percent of the national total in 2002 to 33 percent in 2007, just five years later.

Even worse, due to a cap on social security contributions:

Executives and other highly compensated employees now receive more than one-third of all pay in the U.S., according to a Wall Street Journal analysis of Social Security Administration data -- without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries.

The pay of employees who receive more than the Social Security wage base -- now $106,800 -- increased by 78%, or nearly $1 trillion, over the past decade, exceeding the 61% increase for other workers, according to the analysis. In the five years ending in 2007, earnings for American workers rose 24%, half the 48% gain for the top-paid. The result: The top-paid represent 33% of the total, up from 28% in 2002.(...)

Social Security Administration actuaries estimate removing the earnings ceiling could eliminate the trust fund's deficit altogether for the next 75 years, or nearly eliminate it if credit toward benefits was provided for the additional taxable earnings.

So, in other words, not only are executives robbing the rest of the country blind of their income, that very income no longer contributes it's share into the social security fund, thus further starving out one of the last remaining social safety nets.

From Think Progress is this alarming graph on income inequality:

income inequality


While U.S. worker productivity has skyrocketed over the past 30 years, wages have not kept pace.

America’s working middle class made it clear last November that they wanted change—and reshaping the nation’s economic framework to strengthen the middle class and close the wage disparity between the very top and the rest of us, is fundamental to that change.

Further quotes from Daily Finance:

the percentage of wages subject to the payroll tax declined to 83 percent in 2007 from 90 percent in 1982.

Now beyond the obvious, removing the cap (ceiling) on income which is taxed for social security, do we have any meaningful legislation on regulation of executive compensation?

1/3. How many Americans could be employed if this rob fest stopped?

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New equation.

Income inequality + Financialization + Globalization = Destruction of the Middle Class

Income inequality - your graph show this.

Financialization - the increase size and position of financial assets and financial sector in the economy.

Globalization - free flow of trade, capital and jobs from one country to another.

This equation is based on these view points: Here and Here

This quote from one of the above viewpoints summarizes the destruction of the Middle Class very well:

The increased wealth at the top was combined with an absence of real economic growth in the middle. Real median wage in the United States has been stagnant for twenty five years, despite an almost doubling of GDP per capita. About one-half of all real income gains between 1976 and 2006 accrued to the richest 5 percent of households. The new “gilded age” was understandably not very popular among the middle classes that saw their purchasing power not budge for years. Middle class income stagnation became a recurrent theme in the American political life, and an insoluble political problem for both Democrats and Republicans. Politicians obviously had an interest to make their constituents happy for otherwise they may not vote for them. Yet they could not just raise their wages. A way to make it seem that the middle class was earning more than it did was to increase its purchasing power through broader and more accessible credit. People began to live by accumulating ever rising debts on their credit cards, taking on more car debts or higher mortgages. President George W. Bush famously promised that every American family, implicitly regardless of its income, will be able to own a home. Thus was born the great American consumption binge which saw the household debt increase from 48 percent of GDP in the early 1980s to 100 percent of GDP before the crisis.

Maybe, I should submit this equation to the National Bureau of Economic Research. Na. I'll just keep repeating it and maybe soon it will sink in.

you don't need a new equation

Those results are in the current ones. I believe we have some posts on executive compensation reform and esp. how it rewards poor behavior, bad corporate decisions and I think we need to keep it up. 33% of all income! I went looking for the actual worker population percentage this is, i.e. 5000 executives vs. 66M workers or whatever it is but couldn't quickly find that data.

But...one of the reasons I am such a Gomory fan is he (so does Paul Samuelson, many) show, with good old fashioned equations from economics....precisely why your conclusion is correct.

I have not added any sort of equation display code on EP. I started to look into it and I will add if others, besides myself want to utilize it. I have a tendency to translate anything heavy into some wild outrage opinion, layman's persons, "bloggerspeak" but we certainly could start just posting some of the more Academic research and point out what it really says.

One of the traits of a 3rd world nation

is income disparity. It's also not healthy for democracy.
But as long as people are not class conscious then they can continue to get away with this.

this is a story which needs more research amplification

It sure as hell is but the WSJ even sees this is a major problem now. I mean 33% of all income in the hands of a few? That's incredible and we can't get any traction whatsoever in corporate reforms or executive compensation restructuring.

But who cares right? the DOW went about 9,000.

That's what I see happening, the massive cliff diving is over (I think all green shoots and brown weeds can agree on this one, we're no longer in a cliff diving economy?) so it's like all of these major deep structural problems in the economy are going to get ignored again because they are not right in the face of people with that "crisis/panic" feeling.

workforce break down

US Bureau of Labor Statics says "Top executives held about 2.1 million jobs in 2006" and highest total employed persons in 2006 as 146 million. So roughly 1.5% of the total workforce. Basically the the 1 percenters.


Thank you anonymous drive-by

That is absolutely astounding. So, about 1.5% of the entire workforce is getting 33% of the income.

If this doesn't prove a feudal corporate class, or financial oligarchy, I just don't know what does.

Perhaps anonymous drive by would consider creating an account and joining in to help us dig deeply into the stats!

Thanks again.

No news for EP but...

the U.S. Gini Index is 46.4. That is about the same as Mexico, Malaysia, China and Uruguay

Oh, BTW the "socialist" country of Sweden has one of the lowest Gini Index at 25.

The lower the Gini Index the more equal income distribution.

I'll bet that is a delayed calculation

not incorporating this new data. I'll bet we just blew past Mexico at least in income inequality.


It is the most recent calculation performed by the Census Bureau in 2007.