From NPR, A Puritan View Of The Crash by Dick Meyer:
But it wasn’t OK when midlevel, 30-year-old workers in big, corporate investment banks were routinely making over $5 million a year. It wasn’t OK when the top hedge fund operators could make a billion a year.
“In 1960, the ratio of CEO pay at large companies to that of the president of the United States was about 2 to 1. In 2007, it was more than 20 to 1,” wrote Harvard scholars Rakesh Khurana and Andy Zelleke in The Washington Post. “In 1980, executives at large companies made about 40 times what the average worker made. Last year, CEOs made about 360 times more than the average worker.”
“On the NYSE today, the average share is held for less than a year, as compared to about five years in 1960 and two years in 1990,” the authors wrote. “What matters isn’t what the companies are actually doing but the expectation that the shares can be unloaded to a ‘greater fool’ at a higher price. In the prevailing business culture, little has been meaningfully valued by either executives or shareholders beyond the short-term accumulation of wealth.”
The rise of both the financial services sector and executive compensation contributed to a deeper and more important shift in the economy: the growth of income inequality.
Economists gauge differences in income using a measure called the Gini index. According to the U.S Census Bureau, the index went from 0.38 in 1968 to 0.47 in 2006, a rise in income inequality of 24 percent.
In 2004, the top 10 percent of earners made 42.9 percent of all the income Americans earned, accorded to a well-known study by Thomas Piketty and Emmanuel Saez. The top 1 percent alone swallowed 16.2 percent of total American income. By the way, to get into that top 1 percent in 2004, you needed to earn $20 million a year or $385,000 a week. Good luck with that.