Philly Inquirer "Rich Man Poor Man" Labor Day Editorial:Telling it like it is!
Posted on Mon, Sep. 6, 2010
Editorial: Rich man, poor man
As the nation marks Labor Day, the plight of middle-class families demands greater attention.
The recession that began in December 2007 has not eased its grip on the average worker. Unemployment in Pennsylvania in July was 9.3 percent; it was 9.7 percent in New Jersey.
And too many of the fortunate workers who still have jobs are falling behind because of stagnant wages, lost home values, and dwindling savings.
The Keystone Research Council, a nonprofit group in Harrisburg, found that median household income in Pennsylvania fell $2,400 in the first seven years of this decade, even before the worst of the recession took hold.
Meanwhile, fat cats grow fatter. The CEOs of the 50 companies that laid off the most workers during the recession enjoyed salaries 42 percent higher than the pay of other corporate chiefs, one study found.
Former Schering Plough chief Fred Hassan led the list of shame, receiving $49.65 million in compensation in 2009. After his company's merger with Merck, 16,000 employees were laid off.
Johnson & Johnson's William Weldon was paid $25.57 million while the firm laid off 8,900 workers. Verizon CEO Ivan Seidenberg took home nearly $17.5 million while laying off 21,300 employees.
Nice work if you can get it.
Compare those shocking salaries with the median wage for workers of $44,770 - for men, that is. Female workers still earn less, a median wage of about $36,600. Over her lifetime, a female college graduate will earn an average of $1.2 million less than her male peers.
Aside from the perennial gender gap, it's clear overall income inequality is growing. Corporate leaders know it, too, which is one reason so many are resisting a new law that requires companies to disclose the ratio between CEO compensation and the average worker's pay.
The KRC study found that, if a typical worker's pay had risen equally with the rate of top wage earners since 1979, middle-class families would be earning between $5,600 and $7,500 more per year in today's market.
While middle-class wages have stayed flat, families are paying more out of pocket for their health care, too. The Kaiser Family Foundation said family health premiums have risen 3 percent this year, but workers are paying 14 percent more on average as employers shift more of the cost to employees. That means the average family is paying $482 more this year for health care.
These factors and others, including higher taxes, are causing more families to raid their retirement savings early. Fidelity Investments, for example, has reported a sharp increase this year in the number of people tapping their 401(k) accounts for "hardship" withdrawals. They're doing it to prevent their homes from being foreclosed, or to pay for their children's' college education.
The Great Recession is almost three years old, but it could take many years before many workers get back on their feet.