The income of the top 1 percent has grown by 275 percent between 1979 and 2007, whereas the income of the bottom 99 percent remained flat in the same period. Income inequality also has become greater within our country than in any other in the developed world.
This is reflected in our current CEO-to-average worker pay ratio of 475 to 1 and gross domestic product growth rate of only 3.2 percent in that same period. We followed Britain with a 22-to-1 pay ratio and a 36 percent increase in GDP; Canada with a 20-to-1 ratio and a 32.6 percent increase; Germany, 12-to-1 ratio and a 125 percent increase; and finally, Japan with an 11-to-1 CEO/worker ratio and an increase in GDP of 25 percent. Europe has more restraints on executive compensation, and yet taxes are even higher there, as well.
The correlation between our average CEO pay and performance is actually negative compared to other developed countries. If the “job creators” are unwilling to contribute more through taxes, perhaps their salaries need to be returned to their 1965 level of 20 to 1, when the economy was healthy and there was a strong middle class.
Paul H. Campbell