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Is your boss 373 times smarter and better than you? Because that’s what he or she is getting paid like, according to the AFL-CIO.
The large labor organization just released its latest Executive PayWatch data. It shows the pay gap between CEOs and average workers is getting even bigger.
CEOs of S&P 500 companies earned an average of $13.5 million in 2014, up almost 16 percent from a year earlier. The average nonsupervisory/production worker? He or she took home around $36,100. That’s good for that 373x ratio, up from around 350 times a couple years ago.
|Wal-Mart’s CEO, Doug McMillon, earns the equivalent of $9,323 per hour, compared with $9 an hour for a starting employee.|
Groups like the Economic Policy Institute have leveled similar charges. The organization noted that in 2013, CEOs earned around 300 times as much as typical workers — compared with a ratio of roughly 20-to-1 back in the 1960s.
Of course, not everyone agrees with the union’s methodology. It’s based only on CEOs of the large S&P 500 companies, not private- and smaller-company CEOs who make a lot less, as this Wall Street Journal letter explains. Factor in those “cheaper” CEOs and the gap shrinks dramatically.
But regardless of the precise numbers, it’s hard to argue that typical Americans have shared in the economic recovery as much as they should. I have repeatedly highlighted the lack of healthy wage growth, and the fact this recovery has favored the 1 percent much more than the 99 percent.
Companies like McDonald’s (MCD, Weiss Ratings: C+) and Wal-Mart Stores (WMT, Weiss Ratings: B) have started to raise wages in response to increasing political pressure. But the AFL-CIO wants to see more aggressive action, one reason why it just highlighted how much more money WMT’s CEO makes than his own workers. It maintained Doug McMillon earns the equivalent of $9,323 per hour, compared with $9 an hour for a starting employee.
|“It’s hard to argue that typical Americans have shared in the economic recovery as much as they should.”|
So is there a solution? Should we get government action on the federal minimum wage? More hikes at the state and local level? Increased pressure from lazy, big-money shareholders on management to “spread the wealth?” Action from the SEC? Or absolutely nothing — because corporations should be free to pay their workers whatever they want?
I want to know what you think, in light of this AFL-CIO report. So please do hit up the Money and Markets website to add your voice to the debate.
|Our Readers Speak|
What are you thinking about energy investing? The latest mess in the Middle East? Let’s go right to the comments on the website …
Reader Jim said: “I know it’s not over till it’s over. But you have to admit Mike’s contrary position on energy is starting to look pretty good! If you don’t believe me, check a chart!”
Reader Tommr added: “I’m with you one hundred percent, Mike! I think you are spot on and I am managing my investments accordingly, too!
“I have been investing in oil and energy stocks heavily as they were bottoming out over the last six months. First, I was short oil and buying oil related stocks and then I switched to long on oil right at the bottom. I just got lucky there. The oil related stocks are starting to really take off now!
“I have also placed a starter bet on European stocks with an eye on the euro exchange rate. I started out with a hedged ETF, then switched to half hedged and half unhedged. I will go to all unhedged as soon as I see the euro really start to break out to the upside.”
Thanks, guys. I’m glad to see that some of these investment ideas and views are working out for you! I’ve had my share of bad calls over the years, and I’m going to make my share of mistakes.
But all my fundamental, technical and sentiment-based indicators were calling for a major, major low in energy stocks and oil at the start of 2015. That’s why I was so vocal and aggressive about the buying opportunities I was seeing, and why I remain so now.
Meanwhile, with regards to foreign policy, Reader Sid K. said: “A major flaw in our Mideast dealings is lack of remembrance of the history of Babylon and Persia. Our strongest ally is Israel. They have the strongest intelligence gathering organization AND the strongest military even as small as they are.
“As for the Iranians, they have been historical cheaters on their “Ten-Year Treaties” for thousands of years as a basic strategy of theirs. And do not forget their kidnappings and attacks of Americans in our lifetimes.”
On the other hand, Reader Tee K. said: “I have been fortunate enough to travel to 37 countries in my 72 years on Planet Earth. The most common complaint that I hear about the U.S. is that we have not learned to mind our own business. If we are going to ally with anyone in the Middle East, Iran makes more sense than either Egypt or Israel.
“A military approach is not the answer in dealing with the ‘crazy fundamentalists.’ So far, our policies in that region have not improved anything; not for them and not for us! We need to act in a manner that does not push Iran toward an alliance with Russia. Other than that, we should monitor but be very careful in our actions.”
Thanks for offering more thoughts on our policies. Sometimes it really does help to stop and think about how other countries view our actions, and a global perspective is important. If you haven’t already weighed in on these issues, here’s the link to get you started!
|Other Developments of the Day|
Amtrak Northeast Regional Train 188 derailed last night outside of Philadelphia, killing seven passengers and injuring dozens more. Investigators, firefighters, and first responders were combing through the wreckage to try to figure out what caused the latest transportation tragedy. But early speculation centers on the train’s speed; it was reportedly traveling around 100 miles per hour in a 50 mph zone.
The mega deals keep piling up in the energy patch! Today, Williams Cos. (WMB, Weiss Ratings: B) said it would buy the remaining 40 percent of its affiliated master limited partnership Williams Partners LP (WPZ, Weiss Ratings: Unrated) for a hefty $13.8 billion.
That’s the biggest offer Williams Cos. has EVER done, and it gave WPZ shareholders an instant 18 percent profit premium to where the stock closed yesterday.
In other deal news, the industrial giant Danaher (DHR, Weiss Ratings: B+) said it would swallow Pall Corp. (PLL, Weiss Ratings: B+) for $13.8 billion. Then after the deal closes, Danaher will split itself into two new companies. One will be focused on pure industrial businesses and one will include its science and technology-oriented divisions. The news helped send DHR shares up 1.6 percent on the day.
What did we learn about the global economy today? Things continue to get “less bad” overseas and “less good” here. The European economy grew at a 0.4 percent rate in the first quarter, up from 0.3 percent in the fourth quarter of 2014 amid strength in France, Italy, and elsewhere. U.K. unemployment also fell to a seven-year low of 5.5 percent, while wage growth accelerated to its fastest rate since 2011.
But here in the U.S., retail sales flatlined in April. That was notably worse than the 0.2 percent increase forecast by economists. Even if you strip out volatile categories like autos and gas, you get a “core” reading of zippo. That missed forecasts for a 0.5 percent rise by a wide margin!
What happened in the wake of these numbers? Foreign currencies rallied against the dollar again, just as I have been forecasting them to for months! Leaders like the Australian dollar and Canadian dollar look particularly strong.
So what do you think about all these mergers in energy and industrials? How about the ongoing deterioration in the dollar versus foreign currencies? Let me know over at the website.
Until next time,