Last year, chief executives at the major bailed-out banks averaged $13.8 million in pay thanks to taxpayers saving them from a crisis they had largely created.
At the same time, the government failed to enforce fundamental wage protection laws for about two-thirds of low-wage workers in the nation’s major cities, costing the average worker about $2,634, or 15 percent of her pay, as a result of employer wage theft.
This stark lesson in why inequality has grown so extreme in the United States comes from two disturbing studies released today.
The first report, titled “America’s Bailout Barons,” was produced by the Institute for Policy Studies, a progressive think tank that has long reported on CEO pay. It tracks pay over the past three years for the top five executives at the 20 financial firms receiving the biggest bailouts.
Even as the beginning of an estimated $23.7 trillion in bailout money began flowing last year, they “earned” 37 percent more than CEOs in other industries, part of the $3.2 billion pay over three years.
It could hardly be justified as pay for performance. Indeed it rewarded risk-taking that tanked the world economy. And as IPS explains, they’re already set to capture windfall profits as the bailout boosts bank stock value. But there’s no windfall waiting for the 160,000 workers those CEOs have laid off.
But the comparatively underpaid regulators may be tempted to leave their crucial jobs for one of the fatter Wall Street paychecks, raising the issue of how the revolving door may be compromising regulation.
It’s obvious that government regulation has been horribly compromised at the other end of the pay divide.
A group of researchers from five institutions, led by Annette Bernhardt (National Employment Law Project), Ruth Milkman (UCLA) and Nik Theodore (University of Illinois at Chicago), interviewed a large sample of workers in low-wage (roughly $12-13 an hour) industries in New York, Chicago, and Los Angeles.
In “Broken Laws, Unprotected Workers,” they report that employers of a quarter of workers pay less – often far less – than the minimum wage. A quarter of workers get no overtime pay, even though they put in an average of 11 hours overtime. Nearly the same number are forced to work “off the clock” for no pay. Most of them were denied the breaks required by law.
Employers typically retaliated against the fifth of those surveyed who complained or tried to form a union as well as against those who reported an injury, depriving them of workers’ compensation.
Although some groups of workers (such as women and immigrants) suffered more abuse, the researchers found that the type of job or employer gave the best indication of likely violations. For example, some of the highest rates of minimum-wage violation occurred in apparel manufacturing, personal services and private household work.
So far Congress has passed a few limited restrictions on CEO pay at bailed-out financial institutions, and the Department of Labor has begun hiring 250 more wage-and-hour inspectors – far too little to combat abuses both by executives and of workers — those at each extreme of America’s great economic divide.
David Moberg, a former senior editor of In These Times, was on staff with the magazine from when it began publishing in 1976 until his passing in July 2022. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.
