Friday, August 3, 2012

It's All About the Benjamins

What’s wrong with our economy?  Check this out…

So part of the non-IT, business side of my job is to conduct wage/salary surveys.  I’m not going to get into a lot of detail on that, but let me say that I’m as close as you’d find to an expert on how much people in certain industries make in the Mid-Atlantic region of the United States.  And so as I was compiling a report today using some of the data from the latest survey (conducted between April and July of 2012), I ran across a stunning fact:

CEO’s and upper management are more likely to be given a bonus than the non-management workers—the difference is three-quarters vs. less than two-thirds—and the average value of the CEO’s bonus, AS A PERCENT OF SALARY, is four to five times that of the average worker.

Maybe it’s not so stunning, because we all know that CEOs and executives make a ton of money, but let’s just think about this for a minute and do a little math.  We have Bob, a CEO, who is making $200,000/year as a base salary.  We have Fred, a production line worker, who is making $25,000/year as a base salary.  When it comes bonus time, Bob is more likely to be given (or to grant himself) a bonus over Fred.  And, if Bob and Fred do both receive bonuses, Bob is getting a much larger one AS A PERCENT OF HIS SALARY than Fred is.  So, for example, say Fred is given a 4% bonus.  That means that Fred will get $1000.  Not bad, considering that Fred only makes $25,000/year.  Maybe he’ll be able to take his kids to the beach for a weekend.  Or maybe put a little dent in his credit card debt or mortgage, which hopefully is not underwater.  Bob, on the other hand, is getting four point five times that AS A PERCENT OF HIS SALARY.  Why do I keep capitalizing that?  Because Bob is not getting 4.5 times $1000.  Bob is getting 4.5 times 4%, or 18%, times his salary of $200,000/year.  In other words, Bob is getting $36,000 AS A BONUS.  That’s more than Fred makes in a whole year—almost a year and a half even!

Corporate taxes are at the lowest point since the 70's, and certain political folks in Washington (namely the GOP) think they should be lower to spur on the economy.  After all, trickle-down economics is the way to create more jobs, right?  Put more money into the pockets of the wealthy, and they will, in turn, give more money to the lower classes.  Right?

Not when the executives are taking it in huge bonuses...and then stashing it away in off-shore accounts and paying only 13.9% of their $20 million income in taxes, when all the rest of us are paying 15% or 25%.

What's wrong with our economy?  There's your answer.

No comments:

Post a Comment