Pay CEOs Less, Minimum Wage Workers More

Minimum wage workers made $5.15 an hour when Harry Potter became a sensation a decade ago, and nothing more until July 24, three days after the final Harry Potter book release.

The same year Harry Potter and the $5.15 minimum wage made their debuts, in 1997, Business Week declared CEO pay was “Out of Control.” Since then, CEO pay has gotten more out of control.

Average CEO pay at the top 500 companies jumped 38 percent to $15.2 million in 2006 — the year we broke the record for the longest period ever without a raise in the federal minimum wage.

The July 24 minimum wage increase from $5.15 to $5.85 is so little, so late, that the minimum wage is still worth less than it was back in 1997, when it was $6.67 in today’s dollars.

Minimum wage workers had more buying power when Wal-Mart founder Sam Walton opened his first Walton’s 5 & 10 in 1951.

CEOs make more in 90 minutes than minimum wage workers make in a year.

The two longest periods in history without a minimum wage increase have occurred since 1980. Those long draughts without a raise have left minimum wage workers in the dust.

In 1980, the average CEO at a big corporation made as much as 97 minimum wage workers. In 1997, the average CEO made as much as 728 minimum wage workers.

Last year, CEOs made as much as 1,419 minimum wage workers.

“As the productivity of workers increases, one would expect worker compensation to experience similar gains,” a 2001 U.S. Department of Labor report observed.

Instead, the gains have gone to record-breaking profits, CEOs and other have-mores.

Between 1980 and 2006, worker productivity went up 70 percent, average worker wages went nowhere, the minimum wage fell 32 percent, and domestic corporate profits rose 256 percent, adjusting for inflation.

A red light for minimum wage was a green light for accelerating greed.

Adjusting for inflation, men in their thirties make less today than their fathers’ generation made in the 1970s.

It’s time to stop overpaying CEOs enough to keep their families rich for many generations to come at the expense of workers paid poverty wages today.

Even the state with the highest minimum wage, Washington at $7.93, doesn’t match the buying power of the federal minimum wage at its peak in 1968. Worth $9.56 in today’s dollars, the 1968 minimum wage was more than $2 higher than the scheduled raise in the federal minimum wage to $7.25 on July 24, 2009.

Too bad we can’t use Hermione’s magical Time-Turner to send the minimum wage and CEO pay both back to 1968.

The minimum wage sets the wage floor. If the minimum wage had stayed above $9, Wal-Mart and McDonald’s, our nation’s largest employers, couldn’t routinely pay wages much lower.

Wal-Mart’s wages would be closer to Costco, which pays starting wages over $10 an hour. Costco CEO Jim Sinegal has long asserted, “Paying your employees well is not only the right thing to do, but it makes for good business.”

McDonald’s starting wages would be more like In-N-Out Burger, which has a minimum wage of $9.50 an hour and has long ranked first or tied for first nationwide among fast food chains in overall excellence.

Our nation’s minimum wage would be closer to Harry Potter’s U.K., where the minimum wage already tops $10, child poverty rates have fallen sharply, and the economy is stronger than ours.

Overpaying CEOs and underpaying workers is bad for business. Studies show that showering stock options on chief executives lowers shareholder returns, and increases the likelihood companies will cook their books, default on debt and go bankrupt.

Higher worker wages benefit business by increasing consumer spending, reducing costly employee turnover, raising worker morale and productivity, and improving product quality and company reputation.

In the words of Gary Theilen, owner of Theilen Farm and Cattle in Enid, Okla., “As a small-business owner who has always paid well above the minimum wage, it has been my experience that paying living wages makes good business sense. It is good for business, workers and the community.”

Theilen has joined business owners from across the nation in endorsing higher minimum wage at Business for a Fair Minimum Wage.

Paying workers enough to live on is the minimum employers should do.

Distributed by McClatchy-Tribune News Service

Holly Sklar is co-author of A Just Minimum Wage: Good for Workers, Business and Our Future and Raise the Floor: Wages and Policies That Work for All of Us. She can be reached at: Read other articles by Holly, or visit Holly's website.

2 comments on this article so far ...

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  1. ajohnstone said on July 26th, 2007 at 7:15pm #

    Not one to be associated with supporting the capitalist class , so when Karl Marx says :
    ” An enforced increase in wages ( disregarding the other difficulties and especially that such an anomaly could only be maintained by force ) would be nothing more than a better remuneration of slaves , and would not restore , either to the worker or to the work , their human significance and worth .Even the equality of incomes which Proudhon demands would only change the relation of the present-day worker to his work into a relation of all men to work . Society would then be conceived as an abstract capitalist ”
    we should really heed what he as to say and note also his other stricture :
    ” Instead of the conservative motto, “A fair day’s wage for a fair day’s work!” they ought to inscribe on their banner the revolutionary watchword, “Abolition of the wages system!”…
    …Trades Unions work well as centers of resistance against the encroachments of capital. They fail partially from an injudicious use of their power. They fail generally from limiting themselves to a guerilla war against the effects of the existing system, instead of simultaneously trying to change it, instead of using their organized forces as a lever for the final emancipation of the working class that is to say the ultimate abolition of the wages system.”

  2. sharon said on July 28th, 2007 at 12:09am #


    Whoa! You’ve got it!

    How many people understand that the most basic premises of our system need to be called into question.