CEO Bullshit

The folks at MediaWatch constantly look for ways in which our local news sources could improve. It's not a grueling task. Local newspapers, TV, and radio are generally the ways in which citizens learn about the world in which we live.

Often, improvements could be made to the journalistic methods employed by local reporters. For instance, in articles on social issues where citizens are divided, the journalist should show balanced arguments from both sides.

One article produced by the Seattle Times recently, titled "Northwest CEO Salary Survey," (Times 6/15, Front Page) demonstrates the lack of attention given to certain voices in our local media. The article fails to put into a broader social context the huge increases in CEO salaries. It does a poor job of remaining true to the subhead: "CEOs in big-name companies averaged 26% more pay. Unions objected--as might be expected. But now, even stockholders are wincing." Dissenters are given little space.

The trend of rising CEO pay is a disturbing one--but reporter Michelle Flores ignores the question of exactly why the trend exists. She numbs the reader with numbers that don't address the siphoning of revenues upwards within a corporate structure that produce higher CEO salaries and corporate profits.

Flores also misleads the reader into believing that pay is increasing for most workers, but CEO salaries are simply increasing at a faster rate: "base pay [for CEOs] rose 13 percent. That compares to an average 5.3 percent raise for all workers in Washington, where average annual pay is $28,000."

Now, we at MediaWatch are about as far from being economists as you can get--but we won't be tricked into thinking that "average annual pay" is an accurate measurement of workers' actual income. In fact, average pay is skewed by the exceptionally high salaries of a privileged minority, like the CEOs featured in this article.

The increase in CEO salaries is disgusting. To put it in perspective, CEOs earned about 60 times the pay of the average worker in 1978. In 1989, their pay reached 122 times the average workers earnings. By 1995, the ratio had increased to 173.

For the bottom 80% of workers (i.e., the vast majority), after-inflation wages actually dropped during the period 1989-1995. The "typical" worker, whose salary is at the 50th percentile of all workers, experienced a 6.3% decrease in his or her wages during this period. Poverty rates also increased during this period by 0.6%, during a period of economic "growth."

Explanations for falling wages aren't hard to come by, but this article would have us believe that it's a non-issue--that CEOs salaries are simply increasing faster than ours. Explanations for the crisis include: minimum wage stagnation; the movement of higher-paying manufacturing jobs overseas while unions were busted and decertified at home; and the growth in temporary, part-time, and job-share arrangements.

Who does the Times let speak on the issue? Privileged pay consultants and investors. Those in support of rising CEO salaries are allowed to speak in paragraph 17 ("lucrative deals are needed to attract and keep quality managers"). Yet the ire of the workers is not explained until paragraph 34 in a 38-paragraph story ("[Boeing's] Phil Condit, was chastised by the union for getting a 14.6% pay raise and a $3.3 million "windfall" [in 1995 while] Boeing laid off 25,000 workers.")

A more effectively written article would remain true to the subhead, present a few numbers, and then detail the arguments for and against the seemingly ceiling-less increase in CEO pay. The vexation of investors over CEO gluttony is given much more space than the anger of unions and workers. Yet workers comprise the majority of citizens, while 10% of the population own 70% of stocks. Investors are likely among the small part of the population whose wages are increasing. Why are the unions and the workers --the majority--so muzzled in this feature story? You guess.

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