The list of reasons Donald Trump won the 2024 presidential campaign seems endless:
- Fox News and right-wing media.
- The rise of Christian Nationalism.
- Twitter (OK, X) tilting heavily toward Trump.
- The power of the Big Lie.
- Inflation and the Economy.
- A massive failure of public education.
- Misogyny toward women candidates.
- Racism toward black candidates.
- The absence of a Democratic primary.
- Wokeism, trans athletes and identity politics.
- Foreign interference.
- The six-second attention span of young voters.
- Elon Musk’s billions.
- Latino defections.
- Democratic failure to sell the benefits of the infrastructure investment and jobs act.
- Divine intervention.
- Demonic intervention.
- Sunspots.
- A bad Tarot reading.
- Who knows.
Nowhere on this still-expanding list are these words: The Gini Index and the American CEO-to-median worker pay ratio.
So let’s unpack this. American corporate CEOs routinely earn more than twice the compensation of their counterparts in other comparably rich, industrialized nations.
According to the Economic Policy Institute, American CEO compensation has risen 1,085 percent since 1978, while median worker compensation has risen 24 percent. Hmmm. Could that be an issue, hiding in a forest of data that the average American doesn’t know even exists?
Putting this issue in broader context, in 2023, American CEOs were paid 290 times as much as a typical worker. Back in 1965, the ratio was 21-to-1.
By comparison, German CEOs have a CEO pay ratio of 136-to-1, in Canada the ratio is 149-to-1, and in Switzerland, the ratio is 152-to-1.
Which brings us to the Gini Index, an annual coefficient compiled by the Commerce Department that measures household income distribution. The lower the number, the more evenly household income is distributed, the higher the score, the more income is concentrated in fewer, richer households. Since 1990, the U.S. Gini index has steadily grown, meaning that more and more wealth is being concentrated in the hands of fewer and fewer households.
The U.S. Gini index in 1990 was 0.43, in 2023 it was 0.47. By comparison, the Gini index in Canada is 0.33. In Japan, it’s 0.31. What does this mean in terms of actual income distribution?
According to Statista.com, in the first quarter of 2024, almost 66 percent of the total wealth in the U.S. was owned by the top 10 percent of earners. By contrast, the lowest 50 percent of earners only owned 2.5 percent of total wealth in the U.S.
According to the Economic Policy Institute, these statistics reveal that, “Exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with. CEOs are getting more because of their power to set pay and because so much of their pay (more than 80-percent) is stock-related, not because they are increasing their productivity or possess specific, high-demand skills. This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of income for the top one percent, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90 percent.”
Sure, inflation was a campaign issue, but voters with the least ability to absorb inflated prices did not put the blame on an imbalance in wealth distribution. They disproportionately blamed the party in power.
The irony of all this is that President Biden’s infrastructure bill was designed, in part, to address the disproportionate distribution of income in America. The voters didn’t seem to notice.
A solution is not likely to come from the policies, whims, delusions or imperial dreams of Donald Trump. But some income inequality relief was baked into The American Rescue Plan Act of 2021, which blocks corporations from taking tax deductions for all compensation over $1 million for any of a company’s top ten executives. And in Portland, Oregon, a 10 percent surtax was adopted in 2016 on companies that have CEO-worker pay disparities of 100-to-1 or higher, and 25 percent if the ratio is more than 250-to-1.
If the Democratic Party wants to launch a comeback after the humbling failure of 2024, it would do well to address the radically expanding disparity between CEO pay and the comparatively stagnant income of ordinary workers. And, if the middle class can’t have a fair share of the American Dream, it’s going to become a continual nightmare.
David Bolling
This is the real reason why we are were we are in the US today. But, in order to understand this, one must be able to read something longer than a sentence and have critical thinking skills. Over half of voters in the last elections do not have these abilities. As our investment in education continues to erode, the percentage of those lacking these skills grows. If I contrast my education in Minneapolis Minnesota with that of my step children here and in other states, I see the evidence. My stepdaughters did not know how World War II started, they did not know about the interment of Japanese Americans, they did not know what blacklisting in the 50’s was and much, much more. These were things we discussed in detail in the 60’s in Minneapolis middle and high schools.
Income inequality and high prices have been listed as one of the main reasons why Harris lost the election but, of course, the rest of the list is relevant too. In addition to the ratio of CEO pay to the average worker, many Americans are in debt due to medical, dental and housing expenses and/or just trying to keep their heads above water. Recently, many of us have received notices from credit card companies that as of Jan. 1, 2025, they are raising interest rates on credit card balances to 35%. This is usury and should be illegal, but apparently banks issuing credit cards can charge any rate they want. There is no legal cap. There are so many ways that our economy is rigged that there isn’t enough space here to elaborate. Not having a government medical plan like Medicare- for-all means many more people will end up in debt and bankruptcy. America has fallen far behind many European countries where medical care is guaranteed as a right, where corporate boards allow worker members, or like the ultimate fair work example, the Mondragon Cooperative businesses in the Basque region of Spain where the CEO receives only 6 times the average worker pay, a region with no poverty and no homeless.