Explain to Me Why Wage Increases Are Inflationary and CEO Pay Is Not
According to CNBC, “Worker pay rose more than expected in Q1 in another sign of persistent inflation.” Digging a bit into the article, it turns out the ‘expectation’ came from the government Labor Department, as untrustworthy a source as can be found.
Elsewhere, the article mentions “that was higher than the 0.9% in the fourth quarter of 2023 and above the Dow Jones consensus estimate for a 1% increase.” I question if any of the wunderkinds over at Dow Jones have ever turned a wrench, driven a garbage truck or worked on an Amazon shipping floor.
“State and local government workers saw their compensation costs rise 4.8%, down just narrowly from the same period in 2023. The bigger increase likely was attributable to the high level of that group belonging to unions, which saw compensation costs increase 5.3%, compared with just a 3.9% gain for nonunion workers.”
The Consumer Confidence Index slipped to 97, a decline of 6.1 points that was below the Wall Street estimate for 103.5. Yep, Wall Street is in the estimating business as well, and all this expectationing, consensusing and estimating is enough to shake the confidence of the most individuals in the labor markets.
But fear not. All is going exceptionally well among the billionaire class
Blackstone CEO Stephen Schwarzman topped the list of laughingly highest-paid corporate dudes last year with a total compensation package of $253 million. The next CEO on the list, Sundar Pichai of Alphabet (Google's parent company), took home $226 million in 2022.
Well, what the hell, everyone can have an occasional off year.
But that’s just compensation. What’s going on in the net worth world? “It may be hard to believe, but the five richest men in the world just got a lot richer,” says Kiplinger’s Personal Finance publication. “The wealthiest of the wealthy have more than doubled their fortunes to $869 billion in 2024 from $405 billion in 2020, a 114% increase, a new study shows.”
To hear the whimpering from Business, 9/10ths of a percent increase on the factory floor is fueling inflation, but 200 percent growth in just four years affects inflation not at all, it’s simply what’s due at the top. And, for Schwarzman and Pichai, that’s only the compensation package—overall wealth increase is a whole different horse race.
Schwarzman (above and beyond compensation), collected $777 million in dividends alone last year, from his roughly 20 per cent stake in the alternative-asset manager (whatever the hell that is), according to a regulatory filing on Friday. He earned an additional $120 million mostly through incentive fees and the share of fund profits known as carried interest. He received a record $1.27 billion in 2022.
As for Pichai, his net worth stands at approximately $1.66 billion, which very nearly puts him on the poor-farm by comparison.
The Economic Policy Institute tells us average CEOs make 344 times as much as typical workers.
First quarter 2024 revenue for the top five corporations
Apple Inc., the company’s first quarter revenue stood at $119.60 billion, , reflecting a year-over-year revenue increase of 2.1%.
Amazon Inc., reported revenue of $169.96 billion for the quarter, marking a 13.9% increase compared to the same quarter last year.
Microsoft Corp., announced its earnings with a notable increase in revenue to $62.02 billion, an 18% increase from the previous year.
Exxon Mobil Corporation, had revenue of $90.76 billion for the quarter, (and that was below analysts’ expectations by $3 billion).
Meta Platforms (formerly Facebook), reported the company’s revenue for the quarter was $40.11 billion, marking a 24.7% increase compared to the same quarter last year.
Not too shabby, but certainly a larger influence on inflation than a miserly 1% increase in worker compensation.
This extreme imbalance in the financial lives of the haves and have-nots is setting America up for a crash that will make 2008 look like an afternoon picnic in the park
Seems to me that’s most likely to occur in the early months of the next presidency, no matter who’s elected. From what I understand, Warren Buffett feels similarly, and his opinion carries far more credibility than mine.
Even so, if you check my writings, I predicted the 2008 debacle well before it came crashing down around Barack Obama’s ears. Way back in my fox-hunting days, the sport was (quite rightly) called “the incredible, chasing the inedible.”
The same moniker is appropriate to Wall Street, the Big Banks, and the income gap between those who haven’t enough to survive a five-hundred-dollar personal disaster and those who want it all.
But to blame the worker for the inflation rate is not only cruel, but without so much as a thread of evidence.