It’s time to ask tough questions about the income gap

Categories: Editorial

Before we need another War on Poverty to save the middle-class in the United States, we need a War on Greed

Jan. 17, 2014, edition
By Bob Zyskowski

Discussions about raising the mininum wage once again are heating up both in Minnesota and at the federal level.

The proposals appear every few years and sometimes even gain traction and a few cents more in the pockets of the lowest wage earners.

It was somewhat inevitable that they would come up again — ironically — as the country reaches the 50th anniversary of President Lyndon Baines Johnson announcing a “War on Poverty.”

Black-hearted pundits — and those with agendas of their own — will smirk that the United States fought a war on poverty and poverty won.

Despite what you may be hearing from politicians bent on dismantling social safety nets, the poverty rate in this country had fallen from 26 percent in 1967 to 16 percent by 2012.

Today, in 2014, we face a different enemy.

Rather than waging combat on what keeps people poor, we might consider fighting the force that is draining the United States of its middle-class and putting the hard-working foundation of this country on the road toward poverty.

Before that growing income gap between the wealthy and the rest of the nation requires another War on Poverty, a different initiative is called for.

What we need is a War on Greed.

Issue is clear

A cartoon expresses well what we are seeing as we emerge from the recent recession. Its tagline?

“A rising tide lifts all yachts.”

Sen. Susan Collins, a Republican from Maine, was quoted recently saying that members of both major political parties see income inequality and the lack of jobs as a real issue, but she added, “The question is, what do we do about it?”

What indeed?

In neighboring Wisconsin, the governor chose to level some playing fields by working from the bottom up — devising laws that force public employees to bear more of the burden of their health insurance, spreading the pain, if you will, among folks like teachers, people not necessarily prone to high incomes.

He pitted lower-paid workers against one another.

Perhaps an alternative is to address the problem from the top down.

Before labels of “socialism” or “communism” are bandied about, it needs to be acknowledged that Communism has proven ineffective.

But the market economy is proving effective today for far too small a percentage of the population, and unnecessarily so.

Some gain, so some suffer

Unnecessarily because incomes and benefits at the top level are unnecessarily high — even obscene — and disproportionately rising. The consequences are that those lower on the totem pole lose jobs, suffer pay cuts, lose benefits, get meager raises, etc.

For example, take the fact that the average pay increase for American workers was about 2 percent in recent times, and juxtapose that with the exit package of a Minnesota chief executive officer whose company was bought out: He received more than $5 million in severance and another $15 million in stock and retirement plans. His package included added money to help him pay for the taxes he would have to pay on all this excessive payout.

That’s just one example, of course.

CEOs of the nation’s largest companies took home $12.3 million on average in 2012; the average American worker, on the other hand, made $34,645.

Do the math here: Given a 40-hour work week, the average CEO was paid $5,913 per hour; the average worker was paid $16.65 per hour.

The average CEO was paid 354 times what the average employee was paid.

It’s not that those at the top of the organizational chart are not job creators and wealth creators for others, because many surely are.

For most, their compensation is based on performance in the form of stock and stock options, which increase in value when the company does well.

The questions are about proportion.

And justice.

And especially about need.

How much do you need?

Is anyone really 354 times more valuable than someone else?

If that average CEO made only half of his or her compensation — “just” $6.15 million — that company could hire 123 new employees and pay them $50,000 a year, or it could give a $15,000 raise to 410 current employees.

And, finally, what may be the best question to ask: How much would the average CEO’s lifestyle be dimminished if he or she made “only” half of that $12.3 million salary?

Think they could scrape by?

How much money does a person need?

Senator Collins asked what can be done.

Other countries have ceilings on executive pay, but that isn’t likely to fly in the United States.

Instead, corporations and stockholders will need to come to the realization that they are the ones who must halt the bleeding of the middle-class and the continuing impoverishment of minimum-wage workers.

We can call it the first salvo in the War on Greed.

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