The top 20 private equity and hedge fund managers in the U.S. – all White men – made on average $675.5 million (Rs 2,700 crore) in 2006, or 22,255 times the pay of an average U.S. worker, according to a Forbes study cited in a new report called Executive Excess 2007: The Staggering Social Cost of U.S. Business Leadership.
The top four actually made more than a billion dollars each last year, according to the report.
And how are the others doing in the U.S.?
For the most part, American workers are doing badly. They are losing their jobs. They are losing their healthcare benefits. They are losing their pensions.
Remember, workers at the bottom rung of the American economy only recently received the first federal minimum wage increase in a decade from $5.15 per hour to $5.85 per hour.
But the new minimum wage of $5.85 an hour still stands 7% below where the minimum wage stood a decade ago in real terms.
The Executive Excess report suggests eliminating tax subsidy for excessive CEO pay, making investment fund executives pay their fair share of taxes, capping deferred executive pay, eliminating the tax reporting loophole on CEO stock options, linking government procurement to executive pay and increasing the top marginal tax rate on high incomes.
Since Indians have a tendency to blindly imitate the U.S., surely it won’t be too long before we see such pay excesses in India too.
Wage gaps are already increasing in India. The pay gap multiple between managers and clerks in India rose to 7.4 in 2007.