CEOs and Income Inequality

      

Income Inequality 2025

 

This week the Connecticut Mirror, an online news source, reported on a study by the AFL/CIO that indicated there was a growing disparity between the income of corporate CEOs and ordinary workers. The Connecticut Mirror likes to run such stories since they seem to provide hard statistical evidence for its pet issue of inequality in Connecticut, whether it be racial, gender or economic. 

Considering that the source of this story is a large labor union, one should be careful about evaluating its results and conclusions. Actually, one only has to read a couple of paragraphs of the Mirror article to see that the AFL/CIO study is a classic, self serving case of comparing apples to oranges. 

In the first place, the study compares the average compensation of CEOs in large corporations to the median compensation of all other employees of these companies. I don’t want to bore readers with a discussion of the difference between “average” and “median” but using one or the other can be statistically significant. The “median” batting average of the NY Yankees would be the number that half the team is over, and the other half is below. Outliers like Aaron Judge with his .350 average would have little impact on the median figure, but a large impact on the team average. 

Not only does the AFL/CIO study compare the “average” compensation of CEOs to the “median” compensation of all other employees, but also, it includes the total compensation of CEOs, including stock options and bonuses, but excludes the value of benefits like health insurance and retirement contributions received by ordinary corporate employees.

Moreover, the AFL/CIO study includes part-time employees in its calculations, something that obviously drives down the median income figure.  On the other hand, it does not factor in the huge amount of income tax that would effectively reduce average CEO compensation. *

Nevertheless, the study concludes that the disparity between CEO compensation and ordinary corporate employees reached an all-time high of 285-1 in 2024, up from 268-1 in 2023. One union executive claimed that the numbers in the study “only begin to scratch the surface of how runaway executive pay is fueling economic inequality.”

The Connecticut Mirror headline agreed, “Report: Gap between CEO and worker pay is widening in US, CT.” It makes you wonder if reporters and editors read their own stuff. The article did report that median income in Connecticut is about $60,000 per year, 50% higher than the national median income of about $40,000. Apparently, half the people in Blue State Connecticut make more than $60,000 per year. 

Ironically, the AFL/CIO reported alarming income inequality in 2024, the last year of the Democratic Biden Administration. In Connecticut, Democrats have also ruled for decades.

 

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* Note: For those interested in a more professional examination of these figures, here is a Weekly Bystander post originally written during the first Trump administration.

I have long suspected that the statistics used by progressive advocates to complain about income inequality in America were either flawed or misrepresented. In the June 25 edition of the Wall Street Journal an opinion piece co-authored by Phil Gramm, a former chairman of the Senate banking committee, and Robert B. Ekelund, Jr., a professor emeritus in economics at Auburn University, bore out my suspicions.

The authors cite a new study prepared by the Cato Institute’s John F. Early, a former assistant commissioner of the Bureau of Labor Statistics that provides the “most comprehensive accounting to date of how taxes and government payments affect income distribution in the U.S. Apparently, the traditional statistics used by the Census Bureau do not take into consideration about $1 Trillion dollars in annual government spending.

The value of Medicaid, food stamps, the earned income tax credit and about 85 other Federal government programs is not included. Also, state and local income supplements are not included in calculations of income. On the other hand, reductions in income due to all sorts of taxes are not factored into income distribution statistics.

Here is the authors' conclusion. 

“The most surprising finding is the astonishing degree of equality among the bottom 60% of American earners, generated in part by the explosion of social-welfare spending and the economic and wage stagnation during the Obama era.”

In 2013 the income of the bottom 20% in this country amounted to only 2.2% of total earned income but when other forms of income and taxes are factored in, its share jumped to 12.9%, a six-fold jump in earnings. Similarly, the next 20% saw its share of the nation’s income jump from 7% to 13.9%. 

When we get to the middle class in the next 20% or third quintile, their total income was not far from their earned income. Primarily wage earners, this group took home only 15.4 % of the national income, not much more than those in the two quintiles at the bottom. 

The real inequality, however, is in the fact that this group had to work for most of its income while those in the lower quintiles did not. In fact, many of these middle income families had to work two or more jobs to just stay even with those in the lower quintiles. 

Not surprisingly, when taxes are taken into consideration, even the well to do in the top 20% saw their share drop from “57.7% of earnings to 39.3% of consumable income.” I suspect that a society in which the top 20% make only 40% of the consumable income is unprecedented in American or even world history. Even in Communist countries like the former Soviet Union, China, and Cuba, the disparity between rich and poor was much greater.

Based on these new statistics it would appear that income inequality is not the great problem that progressives make it out to be. According to the authors, a much greater problem is the discontent in people who have to work hard to have the same spendable, after tax income of people who do not work at all.

Rather than Russian collusion or Hillary Clinton’s lackluster campaign, Senator Gramm and Professor Ekelund believe that it was this discontent in the middle class that led to Donald Trump’s victory in 2016. The headline above their article was "How Income Equality Helped Trump." The Gramm/Ekelund article was adapted from their forthcoming book, “Freedom and Inequality.” Progressives will never stop complaining about income inequality, but it was income equality that did them in in 2016. 

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French Film Noir

  

 

American films could not be shown in Nazi occupied France during World War II, but after the war the flood gates were opened, and the French became enamored of the dark crime films of the 1940s that French film critics called film noir. Jean Pierre Melville, one of France’s greatest directors, even named himself after the famous American novelist. In Le Samourai, one of his best films, the main character, played by Alain Delon, resembles the young Clint Eastwood in looks and manner.

French filmmakers emulated these American dramas with their dark themes, dark lighting, both indoors and out, and underworld settings. They also humanized the criminals in the way American films like The Asphalt Jungle and Criss Cross did. The French criminals are ordinary men, not psychotic killers. They make their living through crime but usually hope to make enough to retire into normal life. Below are brief reviews of four French film noir.  Although not as well known as Rififi or Shoot the Piano Player, they are among my personal favorites.

 

Touchez Pas au Grisbi: Famed French film star Jean Gabin plays Max, a gentleman French gangster who hopes to retire after pulling off his last most successful heist. However, things go wrong in this French film noir set in the streets of post-war Paris when Max’s partner is kidnapped by rival gangsters and held for ransom.

Max is no psycho or evil villain. He dresses well, and he eats well. He dines at a bistro where the clientele are all gangsters, and the proprietress will not seat strangers or tourists.  We even see him getting ready for bed wearing pajamas and brushing his teeth. His girlfriend is no floozy but a sophisticated gentlewoman. He is also consistently loyal to his partner whose foolishness gets them into trouble  Jacques Becker directed this 1954 film that also featured a young Jeanne Moreau. 94m.    

 

Classe Tous Risques: French director Claude Sautet directed this 1960 crime drama that stars Lino Ventura, a former wrestler turned actor. After hiding out in Milan for over a decade, a fugitive gangland chief, returns to France with his wife and two young sons even though a death sentence hangs over his head. 

Ventura plays a tough guy, and he looks and acts the part, but his character is a devoted husband and family man despite his occupation. His relationship with his two young sons endears him to us. In France, he seeks a normal life, but his old associates have all become respectable businessmen and try to keep their distance. He is only assisted by the young Jean-Paul Belmondo in a role that makes us see why he became such an international star. 104m.

 

Le Doulos: Jean-Pierre Melville directed this 1963 French crime thriller that stars Jean-Paul Belmondo as an enigmatic gangster who may or may not be responsible for squealing on a fellow mobster played by Serge Reggiani. The word “Doulos” is gangland jargon for an informer. Once again, our hearts go out to the criminal who has finally found the right girl, as well as a home in the countryside where he can escape his past and live a normal life. Shot and edited with Melville’s trademark cool, and featuring masterfully stylized dialogue and performances, Le Doulos is a gripping drama right to its tragic ending. 108m.

                  

Le Samourai: Jean-Pierre Melville also directed this 1967 mixture of 1940s American gangster movies, 1960s French pop culture, and Japanese lone-warrior mythology. As noted above Alain Delon, who looks and acts a lot like the young Clint Eastwood, plays a contract killer with samurai instincts. After a successful hit, his employers attempt to kill him rather than pay him off. He becomes hunted by them and the police. 

For some reason we sympathize with Delon’s character as he goes about his business. It is a business, and he shows very little emotion. Like the warriors in the Japanese samurai epics he has his own code of behavior to which he faithfully adheres. A deadly killer, he is still kind and caring toward his girlfriend, a call girl played by his beautiful wife Nathalie Delon. Shot in subdued color, Melville’s masterpiece defines cool. 103m.

These films may be available on streaming services but I still prefer to use DVDs. There are no ads, and the discs often come with interesting commentaries. It is truly amazing that we can all have our own collection of great film art that we can watch over and over again at no cost.

Here is a link to reviews by the famed movie critics, Siskel and Ebert on the German classic "M", and Le Samourai, or watch the brief video below.

 

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Trump: the First Six Months

 

I do not like to know about the private lives of movie stars whose films I so admire. Nor am I interested in the private lives of great athletes and entertainers no matter how talented they are at their chosen professions. I like to watch them perform, and marvel at what they achieve, but that's it. 

 

I have come to believe that it is the same with politicians and other leaders. They should be judged not on their private lives or past behavior but on what they actually achieve or fail to achieve in office. Perhaps a good person can be a better President than a bad one, but it is debatable, and I will put that discussion off for another day. For now, I would just like to consider what President Trump has achieved in in the first six months of his current term.

 

In foreign affairs his administration has had one success after another. After the bombing of the Iranian nuclear facilities, the President brokered a cease fire in the 12-day war between Israel and Iran. Later, he brokered a cease-fire between Israel and Hamas in Gaza. About the same time, he brokered a cease-fire between Rwanda and Congo, two warring African nations. Leaders of both countries signed the deal in the Oval office. Earlier, President Trump intervened to prevent a war between India and Pakistan, two nuclear powers.

 

Critics may claim that these deals will not last, or that they are flawed, but no one can deny that for now the killing has largely stopped in these troubled areas. Nevertheless, Trump haters cannot give him credit for anything. It is as if they would have preferred these negotiations to have failed and the killing to have gone on rather than give Trump an ounce of credit.

 

It is true that the President has so far failed to achieve his stated goal of peace in Ukraine where the killing continues on both sides. But no one can accuse him of not trying to end the conflict. 

 

At home the President’s achievements have been almost as remarkable. The passage of the Big Beautiful Budget bill through Congress, despite unanimous Democratic opposition, allowed for the continuance of the very successful tax reforms of his first administration. The Tax reform act of 2017 proved to be a model of common sense and simplicity. It bolstered the economy and made the tax code fairer especially for those with incomes below $100,000, the great majority of the population. 

 

Even the lowering of tax rates on corporations was a matter of fairness. Why should American corporations be taxed at higher rates than corporations in other countries? Why were American corporations put at such a disadvantage that they had to build factories and transfer jobs overseas to compete? In addition, higher corporate rates forced these companies to keep their profits overseas to avoid excessive double taxation. 

 

As mentioned in a previous post, the 2017 tax reform did not mean that Federal revenues declined. On the contrary, lowering tax rates increased Federal revenues dramatically, something that allowed the Biden administration to break spending records. 

 

It remains to be seen if the Budget bill will have the same effects as the reforms of the first Trump administration. Back then, salaries and real wages for all people were at record highs, and there was virtually no inflation to cruelly wipe away these gains. So far in his second administration, the border has been effectively closed, inflation is down despite tariff fears, and the country is on the road to energy independence. Remember how low gas prices were at the pump during the first Trump administration. We seem to be there again.

 

Nothing will stop “no Trumpers” from hating the President. They have seemingly been inoculated from giving the President one iota of credit for anything. Even retired baby boomers at my local Senior center cannot give him any credit for an increase in the standard deduction that effectively makes their Social Security benefit tax free.

 

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