Thursday, May 16, 2013

Inequality in Renaissance Italy was nothing compared to today in America

The Medici family home. Today's CEOs are doing even better. 
Inequality in 15th century Italy was nothing like it is today.

Today, it's worse.

Visit the Renaissance palaces of Florence, Italy, and you'll be struck by the fairy tale extravagance of the leading family, the Medicis. You may ponder the unfairness of a system that allowed a lucky few to live in splendor while everyone else struggled to survive.

But consider this: At the turn of the 15th century, Giovanni di Bicci de Medici, the founder of the Medici family fortune, had an annual income of 1,900 florins. The average worker then earned less than 100 florins a year. So the richest guy in town earned 19 times what the average worker earned.

Standard and Poor's 500 CEOs today "earn" an average of 204 times as much as their workers.

A new report unveiled by Bloomberg states the now-former CEO at J.C. Penney Co. made 1,795 times more than the average worker at his stores (43,000 of whom were laid off last year). Meanwhile the CEO at Abercrombie and Fitch Co. made 1,640 times more than rank-and-file employees there.

It's getting worse: A survey of Standard and Poor’s 500 Index companies placed the average multiple of CEO compensation to that of their workers at 20 percent higher between 2011-12 and 2009.

The Bloomberg piece is the latest to show a growing gulf between those in corporate leadership and the employees who work for them. The AFL-CIO’s Executive Paywatch also details the soaring divide between executives and their workers.

While Bloomberg’s study on the topic is insightful, however, it is not a definitive measurement of the CEO-to-worker pay gap. The revamped financial service rules require reporting of CEO-to-worker pay gap numbers. That hasn't happened yet.
Almost three years after Congress ordered public companies to reveal actual CEO-to-worker pay ratios under the Dodd-Frank law, the numbers remain unknown. As the Occupy Wall Street movement and 2012 election made income inequality a social flashpoint, mandatory disclosure of the ratios remained bottled up at the Securities and Exchange Commission, which hasn't yet drawn up the rules to implement it. Some of America's biggest companies are lobbying against the requirement.
"It's a simple piece of information shareholders ought to have," said Phil Angelides, who led the Financial Crisis Inquiry Commission, which investigated the economic collapse of 2008. "The fact that corporate executives wouldn't want to display the number speaks volumes." The lobbying is part of "a street-by-street, block-by-block fight waged by large corporations and their Wall Street colleagues" to obstruct the Dodd-Frank law, he said.
The leading opponent of mandatory pay-ratio disclosure is a Washington-based non-profit called the HR Policy Association, which represents top human resources executives at about 335 large corporations.
Of course, we owe much to the corporate fat cats: the 40-hour work week, vacation, sick time, the middle class.

Oh wait, no we don't...