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Overpaid Execs and Destitute Moms

executive overcompensationLast time, House the Homeless considered the inability of small shareholders to influence corporate policy, including executive pay packages. In related news, the Economic Policy Institute gave some statistics about American companies during a chosen time period, 1978 to 2011. During those 33 years, the report says, the compensation received by CEOs “increased more than 725 percent.”

In other words, some of those top executives were making 6 or 7 or 8 times as much as they would have 33 years earlier. The typical worker’s pay increased 5.7 percent over the same time period. The difference between 725% and 5.7% is so ludicrous, you have to wonder if the EPI did the math right.

In 1965, the report says, a CEO was paid about 20 times as much as a worker. In 2011, a CEO was walking away with 231 times as much as a typical employee. Corporate America is permitted to decree that one hour of one Person A’s life is worth hundreds of times as much as one hour of Person B’s life.

In a recent Fortune article, Eleanor Bloxham discussed the ideal CEO-to-average worker pay ratio, which in a sane world would be more like 20-to-1 than 231-to-1. Richard R. Troxell is also quoted in this article, and it was not the first time Bloxham had turned to the president of House the Homeless for authoritative information about homeless issues.

She is deeply concerned with how inequality affects the soundness of the whole social fabric, saying,

Inequality invites us to examine long-held beliefs and the real poverty of greed. It asks us to not only put our brains to work but also to raise our emotional IQs, to challenge ourselves to feel what it is like to walk in other people’s shoes.

Footnote on Foster Care

As a family defense lawyer, Gaylynn Burroughs has known many parents accused of child neglect. One case concerned a young mother named Lisa who called social services because the building’s landlord ignored the raw sewage leaking into her apartment. When a caseworker visited, she asked for a place in a family shelter. Instead, the caseworker took her children away. Adding insult to injury, the system treated Lisa like a criminal, making her take parenting classes, have a mental health evaluation, sign up for therapy, and show up for random urine testing. As for requiring the landlord to make repairs, or finding her and her kids a better place to live, the bureaucracy did nothing.

Mary Ratcliff, an online commenter, wrote that in San Francisco children were routinely taken from parents who lived in dilapidated housing, even when the landlords responsible for the unlivable conditions were the local, state, or federal governments. Burroughs quoted Dorothy Roberts, Stanford University law professor and author of Shattered Bonds: The Color of Child Welfare, who states that poor families are 20 times more likely than wealthier families to have dealings with the child welfare system, and that poverty is the main reason why children are sent to foster homes.

Race is a big part of the picture, since black families are four times as likely to be poor. Fifteen percent of American children are black, but 34 percent of the children in foster care are black. But, says Roberts,  caseworker reports make it personal, accusing parents of neglect because their children don’t have adequate food, clothes, education, medical care, or even decent shelter, when the root problem is simple destitution. Going back to the question we asked in a previous post — “Are homeless parents paranoid?” — the answer is “No.” Roberts said:

One thing most women in the United States do not worry about is the possibility of the state removing children from their care. For a sizable subset of women, though — especially poor black mothers […] — that possibility is very real.

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Source: “CEO Pay and the Top 1%,” epi.org, 05/02/12.
Source: “Inequality in the U.S.: Are We Making Any Progress?Fortune.com, 08/04/14.
Source: “Too Poor to Parent?MsMagazine.com, Spring 2008.
Image by Tax Credits.