Unemployment took an unexpected turn for the better, with 216,000 new jobs added to payroll last month. And while The USA Today reported that 2010 saw median incomes rise 2.1%, it also reported that median CEO pay jumped 27% for the same period.
To summarize today versus last year:
- If you didn’t have a job, there’s a 12% chance* you found one.
- If you did have a job, your income went up about 2%
- If you are a CEO, your income went up an average of $1.9 million.
If you’ve found a job, congratulations. That is an important step towards your personal financial recovery, though it may not mean much compared with the extra $913 per hour CEOs earned**… That’s in addition to the $3,413 per hour they were already earning in 2009.
It was vehemently argued that if the Bush tax cuts were left to expire, it would harm American capitalists, and thereby American capitalism. While it’s impossible to know what would have happened, so let’s look at the brass tacks… brass tax?
According to CNN Money, these tax cuts save the highest earners 4.6% on marginal income. Rather than boil it all the way down, let’s just say it’s a flat 4.6% (even though this is an overly generous measure, and it figures out to less than that.)
If a CEO in 2009 earned $7.1 million and paid 35%, he netted $4.6 million.
If the same CEO in 2010 earned $9 million and paid 39.5%, he still netted $5.4 million
That’s an increase in personal income of $821,000, assuming these rates of tax are actually paid, which in many cases they are not.
Instead, the average CEO, thanks to the extension of the Bush tax cuts, saved $87,400 in federal income tax liability for 2010.
In a time of severe budget deficits, conventional wisdom would say that such deep cuts in taxes would create serious problems in the future, assuming God let’s us get that far. But maybe we should stick to common sense instead.
When we talked about the attacks on the salaries of the NPR, PBS and CPB CEOs, we didn’t hear anything from the GOP about any of the other American CEOs and their pay. We didn’t hear about the inequality of the $30 million earned by Thomas Montag at Bank of America, the $34.7 million earned by Steve Burke at the new Comcast/NBC conglomorate, or the $26.5 million paid to Alan Mulally at Ford.
Then again, we also didn’t hear any calls to cut the salaries of NCAA coaches, who average $1.4 million in salary each.
And we also didn’t hear crusader for fiscal responsibility Rush Limbaugh say a word about this either. Then again with his $50 million contract, he’s saving $2.3 million a year thanks to these tax cuts. Considering he only works 15-hours a week, that savings in unpaid taxes figures out to $2,948 per hour… that’s not his income, that’s 4.6% of his income.
So again, congratulations on your 12% odds of leaving the ranks of the unemployed, and your 2% raise if you already had a job. But most of all, congrats to the CEOs on your 27% raise, and your tens, if not hundreds of thousands in taxes you didn’t pay.
All this seems pretty fair, right?
* This is based on the reduction in unemployment rate from 10% to 8.8%.
** Based on $1.9 million divided by 2080 hours; 40-hours per week for 52 weeks. There is overtime, but there is also vacation time.
Image courtesy of Blog.Sarwalk.org