You can blame the stagnant economy on a "handful of women and men" who run the country's largest companies. And that's according to a man who used to be one of those people.
Executive pay has gotten so out of hand, former AT&T Broadband CEO Leo Hindery told HuffPost Live on Thursday, that it has caused a "structural breakdown of the meritocracy of our nation."
Hindery pointed out that, even as CEO pay has skyrocketed in recent decades, it has not "trickled down" to workers, who must increasingly borrow money to finance their spending. That dynamic helped set the stage for the most recent recession and helps explain today's sluggish recovery.
Fortune 500 CEOs now make more than 200 times what their average workers make, according to Bloomberg data. That ratio has increased by 1,000 percent since 1950. As CEO pay has exploded, worker pay has stagnated: Workers have not had a real cost-of-living increase since the 1960s, Hindery argued.
And these CEOs are not exactly earning their exorbitant pay, said Hindery.
"It's a fraud," the former executive said. "It's born out of cronyism."
That cronyism is demonstrated in a new Huffington Post analysis of executive-pay data showing the compliance of corporate boards in approving CEO pay, regardless of corporate performance. Those directors are themselves well-paid for their vigorous rubber-stamping.
The problem, Hindery said, isn't just that the rich are getting richer. The tragedy, he said, is the rise of the low-wage workforce. Half of the jobs created in the past three years have been low-paying while the wealthiest Americans continue to capture record earnings.
The federal minimum wage, which stands at $7.25, is worth much less today than was in 1968. And all recent efforts to raise it have been stalled by Congress.
It's no wonder most of us are feeling entirely fed up. Two-third of Americans think CEO pay is out of hand, according to a recent HuffPost/YouGov poll, which also found that a majority of respondents thing the government should be doing more to help the poor.
Hindery would agree. After all, rising income inequality is putting a damper on the economy as a whole.
"The only time the U.S. economy and any of the developed economies prosper is when there's a vibrant middle class that grows from the bottom up," he said. "We've trashed that whole principle."
Clarification: The post has been updated to clarify a quote from Hindery about low-wage workers.
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