Executive Grandeur Fuels the Growing Income Gap

Execs represent a bigger share of top incomes than thought
By Kate Seamons,  Newser Staff
Posted Jun 19, 2011 1:36 PM CDT

(Newser) – Explaining the growing income gap in terms of percentages is easy. But things get murkier when it comes to defining who makes up that top .1% of earners who pull in a whopping 10% of the country's personal income. Or they did. Writing for the Washington Post, Peter Whoriskey reports on a "landmark analysis" of the tax returns filed by that top .1%—and it didn't find a group chockfull of movie stars and Wall Street financiers, as you might expect. Executives and other managers make up the lion's share of these earners: Of these roughly 140,000 Americans who make upwards of $1.7 million a year, 41% are execs and managers at non-financial companies; another 18% are managers at financial firms.

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This "indicates that the rise in pay for company executives is a critical feature in the widening income gap," writes Whoriskey, and he shares a fascinating example to back up this research. He compares the situation of the CEO of Dean Foods in the 1970s, Kenneth Douglas, to the current CEO, Gregg Engles. Douglas made the equivalent of $1 million a year in today's dollars, belonged to a country club, and lived in a 4-bedroom home. Fast forward four decades, and Engles makes about $10 million a year, owns a six-bedroom home (plus 64 acres in Vail), and belongs to four country clubs. And yet the hourly wage for Dean Foods workers dropped 9% in real terms during that time. Whoriskey goes on to look at what could be behind the rise: arguments that CEOs are worth more because today's companies are more complex; changes in the way execs are paid; America's acceptance of a greed-is-good view. Click to read the entire in-depth piece. (Read more income gap stories.)

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