When I was growing up in a small Midwestern farm community, I was vaguely aware of rich folks. There were prosperous lawyers, business owners, Dad’s cousin who owned the grain mill.
Our family struggled on a small dryland farm, made more challenging by my dad’s ill health. But as a kid, I never remember feeling poor or disadvantaged. There was a communal sense of equality, and even if you were the company CEO, you showed up at the church potluck.
There were no television shows promoting the lifestyles of the wealthy, and history class taught us disapprovingly about the “robber baros” of the late 19th and early 20th centuries, company owners who grew obscenely wealthy as their poor workers labored like peons.
Fast forward to 2019, and the new robber baron age. Now the pay received by CEOs figures heavily into this new income disparity.
Here’s a statistic that should bother us all: According to the Economic Policy Institute, compensation for CEOs has risen over 800% from 1978 to 2016. That far outpaces the growth of the stock market during that period. And worse, during that same time, the typical worker’s annual compensation rose a paltry 11.2%.
A CEO in the 1950s made 20 times the salary of his or her average worker, according to a May 2018, article by Diana Hembree in the business magazine Forbes. In 2017, “CEO pay at an S&P 500 index firm soared to an average of 361 times more than the average rank-and-file worker,” Hembree reported.
Having such an enormous gap between what an employee makes and what a CEO makes is demoralizing, to say the least. The fast-food worker won’t be at the same church potluck with the company executive. That worker is more likely to be at the food bank, depending on charity to sustain a livelihood that can’t be sustained by her stagnating wage.
In another Forbes article, Shellie Karabell talks about this incredible imbalance.
What will it take to bring executive pay under control?
Karabell talks about ideas like transparency and letting shareholders vote on compensation.
Tax structure plays a role. Corporate tax rates could be set higher for firms that have higher ratios of CEO-to-worker pay. The tax break for executive-performance pay could be removed. We could establish higher marginal income tax rates for the very rich.
But will we?
Recent federal tax legislation favored the rich. And maybe it’s not surprising that Congress caters to the wealthy when they write tax law. After all, who contributes enormous sums, often in today’s dark money, to keep incumbents in office? Politics runs on money. My measly donation to a political candidate can’t compete with the enormous donations of the very rich.
Those who give are usually the ones who influence.
We need to call our legislators to account for better campaign-financing laws and ask for tax structures that don’t euphemistically promise “trickle-down” advantages to the poor and middle class while favoring the richest among us.
There’s a larger issue here as well, one that resonates with those who espouse Gospel values. That concerns greed.
The Gospel of Jesus instructed us to think in terms of love and service, being the Samaritan on a road teeming with bandits. We’re not called to be the bandits. Each of us, regardless of income, needs to examine our own lifestyles and desires.
As we try to lessen income disparity, we need to support a culture that doesn’t idolize the life of the rich but invites everyone to come to the table together.