In 2005, Executives' Pay +21.9%, everybody else 0%
by Bonddad, Mon Apr 10, 2006 at 05:12:59 AM EDT
Compensated only by stock options since 1997, Fairbank claimed one of the biggest windfalls among CEOs, exercising 3.6 million options for gains of nearly $250 million. His personal haul exceeded the annual profits of more than 550 Fortune 1000 companies, including Goodyear Tire & Rubber, Reebok and Pier 1
Fairbank, 55, pulled in $56 million from options in 2004. Capital One says Fairbank had to exercise options last year because they were set to expire. The company also noted its 24.6% annual shareholder returns the past decade.
Median 2005 pay among chief executives running most of the nation's 100 largest companies soared 25% to $17.9 million, dwarfing the 3.1% average gain by typical American workers, USA TODAY found in its annual analysis of CEO pay.
Now...onto the show. According to the Bureau of Labor Statistics, non-supervisory wages (which represent about 80% of the population) increased from $15.88 in January 2005 to $16.35 in December of 2005 for an increase of 2.95%. Over the same period, the inflation figure increase from 190.7 to 196.8 for an increase of 3.1%. So using the BLS numbers gives non-supervisory employees a net decrease of .15 in wages and using the UA Today figure gives the average American an increase o 0. Wow, that's really impressive.
It's not as though corporations don't have the money to spare:
U.S. corporate profits have increased 21.3% in the past year and now account for the largest share of national income in 40 years, the Commerce Department said Thursday.
Strong productivity gains and subdued wage growth boosted before-tax profits to 11.6% of national income in the fourth quarter of 2005, the biggest share since the summer of 1966.
For all of 2005, before-tax profits totaled $1.35 trillion, up from $1.16 trillion in 2004 and just $767 billion in 2001.
Meanwhile, the share of national income going to wage and salary workers has fallen to 56.9%. Except for a brief period in 1997, that's the lowest share for labor income since 1966.
And it's not as though corporations balance sheets are hurting. According to the Federal Reserve's Flow of Funds report, corporations are the only economic sector to actually increase their savings during this expansion. Undistributed Corporate have increased from 192 billion in 2001 to 418 billion in the third quarter of 2005. Clearly, they have the money.
The unemployment rate fell to 5% in June of 2005. According to standard economic analysis, this is the level of full employment. This implies that pay increases will soon follow because employers have to bid for labor. Yet, there aren't any wage gains yet.
Basically, this is an executive's economy. They are getting the pay increases, benefits and tax cuts. Everybody else is just getting in....somewhere else.