Wealth remains solidly the hands of few, finds inequality nonprofit warning of new ‘Gilded Age’
Taking the modern-century idea of “let them eat cake,” shareholders get to have the whole cake, and eat it too. It is not surprising that the board has been able to stay out of the fray, as wealthy members are more prepared to weather an economic downturn. But it turns out that CEOs and shareholders get a bigger slice of the profits than one might think.
Until he finds something new a report From Oxfam, a British non-profit focused on eradicating poverty, which analyzed more than 200 US companies to assess their “inequality footprint.” Most of the money ends up in the mouths of those at the top, with 90% (or $1.1 trillion) of the $1.25 trillion in combined net profits of those companies analyzed going to paying wealthy shareholders.
Executives are doing well, too. CEO pay has swelled since the pandemic, increasing 31% from 2018 to 2022. “Shareholder and CEO pay has risen to record levels in the wake of the COVID-19 crisis,” according to the report.
“The rules are being manipulated and companies are helping to manipulate them,” says Irit Tamir, director of the private sector division at Oxfam America. luckspeaking about corporate taxes that have decreased due to the strong presence of corporate pressure.
Why have there been so many layoffs in technology?
The past year has been marked by layoffs in the finance, technology and media sectors with many CEOs claiming they need to downsize in light of economic pressures. But it seems as if companies are doing better than ever. Revenue and profits at Fortune 500 companies grew significantly between 2014 and 2022, and rose even more in the years following the pandemic. At the same time that Mark Zuckerberg, founder of Meta, announced the layoff of more than 10,000 workers in the name of the “Year of Efficiency,” the company announced a new plan 40 billion dollars Stock repurchase option. Less than a year later, Meta announced plans to buy back Another $50 billion.
While the money seemed tight to some, it was Christmas for those at the top: stock buybacks in 2022 reached a record $681 billion, according to Oxfam.
The consolidation of power at the top has been a decades-long process. The concept of shareholder primacy began to take hold in the 1970s, according to Tamir, who added that as companies began to prioritize this group, safeguards for workers were fading as union membership declined. In the 1980s, stock buybacks, once banned as a form of… Stock manipulationbecame legal; Tamir says this change, specifically, allowed companies to inflate their stock prices. Meanwhile, corporate tax rates fell dramatically thanks to a series of tax cuts, first under Reagan and again during the Trump administration, while corporations gained more and more ability to directly influence policy, culminating in tax cuts in 2010. Citizens United The decision in which the Supreme Court gave corporations and wealthy individuals carte blanche to spend unlimited amounts of money on elections.
“All of these things together have created sort of this perfect storm in which companies are getting bigger, corporate power is rising, and the benefits that have accrued from profits are being funneled to fewer people,” Tamir says. Adding that other stakeholders – the workers – are “losing out.”
What causes increasing wealth and income inequality?
There are some signs of change. Unions are Increasing popularity After a summer of strikes and some notable victories on behalf of workers, such as the UAW and, more recently, the Starbucks union.
“There are some promising signs, but if we don’t continue down this path, we will truly be in a new golden age,” says Tamir. President Joe Biden The rhetoric is about vetting companies more.
While wages remain Fairly stagnantOr barely high enough to compete with the pace of inflation, CEOs gave themselves a huge bonus. A total of $4.1 billion was paid to CEOs in 2022, according to an Oxfam analysis of 186 companies with reliable data. Only 5% of companies examined publicly said they support a living wage. The pay gap continues to widen among large companies: McDonald’s, for example, has a CEO-worker pay gap of 1,745 to one. Another typical American brand, Coca-Cola, has a pay gap of 1,594 to one.
The gap is more evident in the retail sector. Retail workers are predominantly people of color and women, although senior leaders at these companies are often white men, according to Oxfam. While many companies have said they are looking to meet DEI goals, many have come up empty-handed when it comes to hard data.
“They talk a good game, but when it comes to doing something about it, most of them don’t do anything that’s at least transparent to the public,” Tamir says. “All of these things are technically legal and unfortunately at the expense of the rest of us.”
In the long run, Tamir says, even the wealthy will suffer. Dollar Tree may be the least equitable of companies from a gender and racial perspective, according to Tamir, and the company recently close 1000 of its stores.
“At the end of the day, it’s bad for business,” Tamir explains. “Having wealth in the hands of fewer people is not good for the economy.”
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