For most of the past century, CEOs earned roughly 20 times as much as the average employee, according to the Economic Policy Institute, as quoted in The New York Times on Dec. 18, 2005, and again on Jan. 1, 2006. And also for much of the past century, there was nothing like the excesses within the financial industry that we see today, which enable its managers to earn almost obscene levels of compensation -- and then get favorable income tax treatment to boot.
Today, however, average public company CEO compensation is 400 times that of the average employee. And thousands of senior managers in addition to CEOs are drinking at the same frothy trough, especially, as we have all just seen, senior managers in the financial services industry. [By contrast, the ratio of CEO pay to that of the average employee has remained around 22 in Britain, 20 in Canada, and 11 in Japan.] And with such U.S. exalted compensation, management has so elevated itself above average employees as to have become, in my opinion, a constituency unto itself -- and one that, to compound the inequity, largely sets its own compensation.