Corporations Need to Step Up
Recently, the American people have been debating front-line economic issues such as the minimum wage, unemployment, job creation, CEO compensation, and income inequality. A then-and-now comparison sheds some light on these issues and leads to harsh conclusions.
The World Bank tracks the minimum wage in countries around the globe. Here’s a snippet from its 2013 report; Canada - $9.95, United States - $7.25, China - $1.19, Mexico and Philippines – 61 cents, India – 28 cents and Bangladesh – 9 cents.
According to CNN.com, in 1980, a CEO of a large corporation made 42 times more than the typical worker. In 2013, that CEO earned 354 times more than the average worker. According to the Bureau of Labor Statistics, the average worker’s yearly salary was $34,053 for all occupations last year. CNN Money says the average CEO compensation in large corporations is now over $12 million a year.
In 1980, with a minimum wage of $3.10 and an average wage of $6.82 for production workers, the cost of a men’s shirt was $15.00. Today, with a minimum wage of $7.25 and an average wage of $20.12 ($6.82 factored for inflation would now be $19.43) that shirt actually costs $39.74. Factored for inflation the shirts would cost $42.50, if they were made in the US, but they are not. The above narrative reveals that in 1980 the labor cost of a shirt, in wages only, was 46% of a shirt’s price, today – 50%. Now, as opposed to 1980, there are hardly any defined-benefit retirement or fully-paid health insurance plans offered by employers so the overall cost of manufacturing in the United States has actually dropped, despite inflationary pressures.
Historically, increased productivity has resulted in increased wages. From 1950 to 1980, the productivity of American workers increased 92% and hourly wages rose 87%; however, since 1980, productivity has doubled while hourly wages have risen only 40%. In the former time period the socioeconomic stratification structure of the US resembled a diamond shape with a large middle class, while in the latter, it would resemble a truncated triangle that continues to flatten.