Our economic system is becoming top-heavy

Clouds are beginning to gather regarding our long-established core capitalistic principles. One of our greatest assets has always been equity in the system itself — a bond between those who own and manage the system and those who deliver it. It has been the two working cooperatively that has catapulted American industry into the giant that it has become today.

Opinion: Our economic system is becoming top-heavy

However, now, just as the workplace is becoming more global, there is developing a breech in the relationship. We are finding that there is developing a disturbing breech between the two — top management and the labor force.

According to the Economic Policy Institute’s most recent analysis, American top executives are being paid 262 times that of their average workers wages, as compared to just 24 times a few years ago. Further, the average differential between worker and top management of other industrial countries, with whom we compete, is less than 50 times.

The rationale for the premium pay for top executives once was the extra risk that they take, but today American workers are bearing the risk of layoffs, outsourcing and lost retirement; whereas CEOs increase their multiples of pay and lock in their retirement benefits.

Glaring examples are represented right here in Minnesota with recent actions of William McGuire, former CEO of United Health Group, and Richard Notebaert, CEO of Qwest. McGuire, who resigned under questionable circumstances, received $1.6 billion, including lifetime health benefits.

On the other hand, Qwest paid Notebaert $33 million last year, his first year at the company, in addition to crediting him with 30.4 years worth of service toward his pension, which amounted to a $9 million start on his retirement (according to the Star-Tribune). Institutional Shareholders Services, a Wall Street research firm, calculated that for every $100 made in 2006 at the 38,000-employee Qwest, $4.16 went to its CEO.

In the meantime, two of Qwest’s longtime employees are suing the company claiming that the company has been forcing them to work overtime without pay.

Those excesses of executive pay and benefits are becoming more and more widespread. Unions used to serve as a buffer for such indiscretions, but today, their strength and power are diminishing with the increase in non-union giant corporations and the outsourcing overseas.

In the just-concluded Minnesota State Legislative session, the DFL-lead Senate and House passed legislation that would impose additional taxes on the most wealthy to help fund K-12 education, but a threatened veto by Gov. Pawlenty killed it.

Matthew Little welcomes reader responses to mlittle @spokesman-recorder.com.