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CEO pay skyrockets while politicians bicker over the minimum wage
Inequality USA

By Elizabeth Schulte | January 19, 2007 | Page 16

ROBERT NARDELLI is out of a job. But unlike ordinary people, this was just another windfall for Nardelli.

The former chairman and chief executive of Home Depot left his post in January with more than just memories--he got a $210 million golden parachute.

According to figures on corporate executives' compensation compiled by the Center for Labor Market Studies (CLMS) at Northeastern University, Wall Street bonuses are out of control. Christmas for Morgan Stanley's John Mack included stock and options worth more than $40 million. Goldman Sachs' Lloyd Blankfein got more than $53.4 million.

Meanwhile, Congress is debating whether to increase the federal minimum wage--which has stagnated at $5.15 an hour for more than nine years. After adjusting for inflation, the value of the minimum wage is at its lowest level since 1955.

The Senate is set to vote on a bill that passed the House of Representatives, which would increase the minimum to $7.25 over the next two years.

This would be a step toward pulling minimum-wage workers out of poverty, but only a step. To reach the poverty level for a family of three in 2005--set by the federal government at $15,577 a year--a full-time, year-round worker would need to make $7.49 an hour.

"I mean, it's tough for me, and I'm already making $7.25 an hour," Robert Iles, who works at a dollar store in Atchison, Kan., told the Washington Post.

Iles supports his father, who lost part of his feet to diabetes, has leukemia and is legally blind--as well as his mother, who quit her $6.50-an-hour nursing-home job to care for her husband. Describing what it was like when his boss told him he was getting a pay raise to $7.25 last year, Iles said, "Inside, I was doing the cha-cha-cha. It was like going from lower class to lower middle class."

If workers' wages have stagnated, the prices of necessities sure haven't. According to the Bureau of Labor Statistics, between fall 1997 and summer 2006, the cost of food increased 23 percent, housing 29 percent and medical costs 43 percent.

Meanwhile, workers are more productive than ever. Between 2000 and 2006, total labor productivity (not including the farm sector) rose by 18 percent. During that same period, according to Andrew Sum at CLMS, the inflation-adjusted weekly wages of workers increased by just 1 percent.

"Productivity has been exceptional," Sum told the New York Times' Bob Herbert. "And for most of my life, the way to get wages up was to be more productive. That's how our economy was supposed to work."

But the opposite is true in the U.S. today. The more productive workers become, the more they struggle to make ends meet--even as CEOs go home with unprecedented earnings.

Workers' frustration with low wages was reflected in the overwhelming passage of referendums increasing the minimum wage in Arizona, Colorado, Missouri, Montana, Nevada and Ohio.

There are now 28 states where the minimum wage is higher than the federal government's pitiful minimum. In addition, more than 140 municipalities have passed some kind of living-wage law, requiring pay between $9 to $11 an hour.

In a January 2006 poll, 81 percent of respondents said that raising the minimum wage was an important priority, and 47 percent said it was a top priority.

The notion that the minimum wage is only a temporary entry-level wage is simply not true for many workers. After finishing school, 19.2 percent of workers spent at least half of the first eight years of their working lives in jobs that paid no more than $1.50 an hour above the minimum wage, according to a study by economists William Carrington and Bruce Fallick.

According to the Economic Policy Institute, 5.6 million people--4 percent of the workforce--make less than $7.25 an hour and will be directly affected by an increase.

It's safe to say that Home Depot's Nardelli never had the problems minimum wage workers endure. According to the AFL-CIO's Executive PayWatch, Nardelli took in $37,862,312 in total compensation in 2005, including stock option grants.

That adds up to the annual wages of 3,534 minimum-wage workers. Even after the increase to $7.25, what Nardelli made in 2005 could support 2,510 minimum-wage workers for a year.

No one should be forced to make do with such abysmally low pay when there's so much to go around.

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