Calling off class war
EXECUTIVE EXCESS makes good copy. Two Enron bosses are waiting to learn their fate from Houston jurors who heard Ken Lay testify to garish luxuries, including that he had made $233 million over three years and owned six vacation homes when Enron declared bankruptcy in 2001.
Most CEOs have better ethics and taste than Lay, but don't shun material benefits. Exxon chairman Lee Raymond is retiring with a package worth nearly $400 million. Leaders of the top 500 US companies each made $11.7 million on average last year. And the gap with regular workers has widened enormously. Chief executives who made 42 times an average worker's pay in 1980 -- plenty, one might think -- now collect more than 10 times that, according to Business Week.
Big bucks make big headlines, but the more important story is what is happening at the lower end of the income gap. The answer: little or nothing. In fact, real average wages have risen only about 1 percent per year for more than two decades. This is the real problem: the shrinkage of the American dream. A study of US trends last year by the National Academies in Washington concluded: ''For the first time in generations, the nation's children could face poorer prospects than their parents and grandparents did."
Government policies play an important role. Increases in the earned income tax credit and in standard tax deductions and exemptions have helped at the low end. But inaction on the minimum wage has hurt, and President Bush's prodigal tax giveaways to the very rich have, of course, widened the income gap into a chasm.
In addition to better policies, what is needed more fundamentally is a change in attitude. Treasury Secretary John Snow, in a recent visit to the Globe, defended high CEO salaries, claiming ''they are aspirational" -- meaning they motivate workers at all levels to seek advancement toward big pots of gold. What a charade. If the average worker should suddenly find his or her hard efforts rewarded with a doubling of pay, he or she would still have to work 216 years to make what the CEO collects in one. Some aspiration.
Robert Rubin, a former Treasury secretary, is seeking with others to change attitudes through a campaign called the Hamilton Project that stresses broad-based growth. Only if the masses of workers have a reasonable expectation of improving themselves will the national economy strengthen reliably, say Rubin and his colleagues. They also propose major government investments in education, infrastructure, and basic research.
This is not the policy of Bush and his plutocrats, but they should consider it. If average workers were thriving, few would care how much the CEOs make.
