Published Monday, Sept. 3, 2001, in the San Jose Mercury News Executive pay enters the stratosphere BY GENEVA OVERHOLSER WHEN last I took a Labor Day occasion to compare the average American workers' paychecks to those of their bosses, the score was 1 to 419. That was two years ago. Executive pay has continued soaring since, and the ratio is now 1 to 531. With our daily nod so overwhelmingly going toward the tycoon, you have to wonder about the sincerity of an annual celebration of the common worker. The instructive comparison between boss and worker pay comes from Business Week, which takes a regular look at 365 of the nation's largest public companies. Since the magazine's 1980 survey, when the average CEO made 42 times what his workers earned, the chasm has opened swiftly. The average pay of working stiffs has gone up 66 percent in those two decades, while those at the top have seen a rise of 1,996 percent. In the most recent decade, executive pay rose 571 percent; worker pay scarcely bettered inflation. The executives profiting the most may have been those who were laying off their workers. United for a Fair Economy, a non-profit organization in Boston that highlights economic inequality, found that CEOs who laid off 1,000 or more earned an average 80 percent more than executives in the broader Business Week survey -- $23.7 million average total compensation last year for the layoff bosses, $13.1 million for the others. Experience says some of you readers are rock-solid in your conviction that executives earn every dime they get. But those inside see it differently. A Fortune article earlier this summer, examining the process that rewards CEOs, draws a picture of compensation committees largely controlled by the executives themselves -- and compensation consultants. ``A good name for every compensation consulting firm would be Ratchet Ratchet & Ratchet,'' said one financier. ``Any other kind of consultant you can think of is brought in to try to cut costs. The basic goal of compensation consultants is to justify whatever it is the CEO wants to make.'' There are voices of concern. A labor-sponsored Web site, Executive PayWatch (www.aflcio.org/paywatch <http://www.aflcio.org/paywatch>), enables you to figure what your paycheck would be, had it grown recently at CEO-like rates. (The above-noted United for a Fair Economy says last year's $24,668 average worker pay would have been $120,491 if it had grown over the past decade at CEO pace.) And you can see what some wealthy Americans concerned about the gap between haves and have-nots are trying to do about it at www.responsiblewealth.org <http://www.responsiblewealth.org>. Bill Gates Sr., a member of the Responsible Wealth group, wrote in the Washington Post that he ``celebrates individual achievement and the hard work of entrepreneurs and leaders in our free-enterprise system. But I also recognize that society has played an important role in the creation of wealth. Take any one of the Forbes 400 and drop them into rural Africa and see how much wealth they would amass.'' But some of our countrymen are sure that the talents of, say GE's Jack Welch, are such that, were he in New York or Ouagadougou, he'd have earned -- and deserved -- every penny of last year's $122.6 million pay package. This view is one reason the out-of-whack system goes on flourishing. As Fortune put it, ``The American culture celebrates wealth and fame above almost all else. . . . In many countries a nine-figure pay package, and the attention it attracts, would be just too far outside social bounds. Not here.'' No, not here. It's odd that we have this end-of-summer holiday dedicated to those who, in the words of one of its founders, ``from rude nature have delved and carved all the grandeur we behold.'' Yet we now live in a society that daily honors those who reap riches beyond all reason. And we -- even as we fall ever further behind the CEOs -- seem to behold them with admiration. Or perhaps it's mostly with apathy. One business professor told Business Week, in response to this year's CEO-worker salary comparisons, that ``we're back to serfs and royalty.'' But even the Middle Ages didn't last forever. Geneva Overholser is a columnist for the Washington Post.
