It's time for some political straight talk. Our political, business and civic leaders have been kicking the can down the road for way too long. Solving this crisis is going to take a national conversation and some hard choices. Painful sacrifices will have to be made. So let's just come out and say it.
America can no longer afford the promises we once made to our hard-working CEOs, corporate board members and our wizards of Wall Street.
It's time for salary-and-perk reform. The money that we pay our top executives and Wall Street gurus has been rising steadily since 1981. In an era of prosperity, when the Pied Piper in the White House was promising buttercream candies served on the priciest china, what we were able to do to reward our toil-and-sweat-soaked bosses was a symbol of American audaciousness. From 1978 through 2011, we increased salary for our CEOs by 725 percent. which was 127 times -- 127 TIMES -- the rate of pay hikes for the average worklng stiff. These Masters of the Universe even increased their compensation during the Great Recession, when everybody else was making painful concessions.
Yes, we did that, America!
Indeed, it felt like a party that would never end. But it's time to face the hangover: In a few short years, if projections are right, the money to pay our CEOs at this fantastic rate of return simply won't be there. I know what you're probably saying right now: A promise is a promise -- especially when it's signed in ink. But we have to acknowledge that the money to keep our promise simply isn't there.
Why? As always, our politicians deserve some of the blame. Eager to keep their campaign contributors happy, they voted tax break after tax break after tax break for the guys in the big corner offices, and that encouraged CEO pay to soar beyond our ability to make the payments after this decade. But maybe our CEOs also did what was asked of them -- boost the bottom line by shipping jobs overseas, keeping paychecks flat for the bottom 99 Percent of their workforce, lobbying against sick leave or expanding health insurance -- a little too well. So much has been successfully squeezed from the economy that the only place left to cut is our annual contributions to the C-suite. It should never have come to us.
And it's not just private boardroom compensation. Look at our non-profit sector, and sweet pay deals that CEOs at hospitals, universities, even philanthropies have been able to negotiate for themselves. Many college presidents have million-dollar paychecks, or more. It's hard to imagine now, but the day could come when we have to saddle our young diploma seekers with tens of thousands of dollars in debt to foot the bill. (....Wait, what?).
Well, anyway, we've put off this problem long enough. If we don't get a handle on our looming CEO pay crisis, the money for pay for important things like new roads (so tomorrow's CEOs and their chauffeurs can get to work on time!) and other societal needs may not be there. Americans have always been able to do more than less. If they go back to making ONLY 26.5 times what an average worker makes, as was the case in 1978, if they have to muddle through with a three-car garage instead of a seven-car garage...well, everyone has to tighten his or her Ferragamo belt.
After all, CEOs can still start collecting Social Security checks when they turn 65. We do still have Social Security...right?
One final footnote: This may have been the easiest blog post I've ever written. All I had to do was read a handful of screeds about the need for pension reform -- the stock and trade of constipated editorial page writers and op-ed lackeys from coast to coast -- and simply substitute "CEO pay" wherever it said "pension." Now, I know what a few of you are saying, that it's totally unfair to compare the "pension crisis" (their term) with a "complicated" (also their term) issue like fair compensation for hedge-fund traders, corporate chieftains and other lords and nabobs of the 1 Percent.
Maybe it is unfair. After all, the American worker -- confronted with changes in the global economy -- has shown a beyond-stoic willingness to inflict pain upon herself or himself, and their families, to help preserve the bottom line. Those at the top of salary heap...not so much. The future of some pension funds is certainly perilous -- in many cases because politicians made sweetheart deals to steer investments to their cronies, and sold out their workers (and taxpayers) in the process -- but understand this:
You can't talk about pension reform -- a nice way to describe yanking away old-age income out of the pockets of a generation of workers who've already endured decades of zero wage growth and other indignities of modern capitalism -- without talking first about making an equitable society. That means sacrifices not just from the little people but from the guy (or gal, but it's still usually a guy) at the very top. It's been 46 years since John Fogerty warbled, "And when you ask 'em, "How much should we give?/Ooh, they only answer "More! More! More!", y'all."