Disney Heiress Calls Out Company's Worker Pay Practices

We are beginning to see a stirring over worker pay which hopefully will culminate within a couple decades into a widespread belief that CEO's and high end execs should make less, and investors should make less, and workers should make more. That is the meaning of "income equality" , and for the first time in a long time it is becoming an everyday political issue. 

The people making the noise on this issue are bad at both math and economics.  They have childish, emotional reactions to the announcement of CEO salaries along the lines of "that's not fair!!"  

The real problem is not inequality, it's poverty and lack of opportunity.  The real solutions have less than zero to do with CEO pay and everything to do with raising educational standards.  But that's a problem that actually requires thought, not just feelings, so they stick to whining about how much money somebody a few dozen people make.

If workers are dissatisfied with their pay, it would behoove them to seek employment elsewhere, or to start their very own business, with all the risks that entails.

Or unionize.

Or unionize.

Sure thing--perfectly legal, and nothing is stopping them from doing so.

Pay needs to keep up with inflation, or else the very wealthy are going to start losing their heads. The French aristocracy found that out the hard way. 

or else the very wealthy are going to start losing their heads.

This might be a factor in why the wealthy are hiring more security and not flaunting their wealth and foolishly taunting the peasants who work for peanuts in order to support the lavish lifestyles of the trust fund babies.  The vast majority of wealthy people did not work for their wealth.

whorulesamerica.ucsc (But it's important to note that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)

and an article on security concerns and expenses...

businessinsider

He added that while the wealthy still spent money on boats and planes, they didn't want to attract the kind of attention open displays of wealth bring; they're increasingly opting for what Allen called "under the radar" living, which takes shape on both small and big scales.

This involves blocking GPS from locating property with a jamming signal, removing homes from the grid, and hiring architects to conceal buildings — whether by designing an underground home or by using a "stealth concealment design" for aboveground properties, Allen reported.

These privacy tactics don't come cheap — one underground mansion was  listed for $185 million last year . And those without underground homes are paying up to $500,000 to install luxe panic rooms, which are becoming more popular than ever among the rich as gun violence increases,  Business Insider's Katie Warren previously reported .

Forbes told Allen that shell companies and ownership structures enabled anonymity to property buyers, as do gated communities. Homeowners are also spending more on home security systems, he said.

Gavin de Becker & Associates provides a very high level of protection. At residential estates, that involves a dedicated security office, elaborate technological early-warning systems, and strict access control to keep people out, Howlin said.

"It is common for a successful, well-known executive to spend a million dollars a year — or much more — for a comprehensive security and privacy program," Howlin said.

But such security isn't limited to the home — the ultrarich are also taking steps to travel more discreetly.

"If you're driving a convertible Bentley right now in the South of France, you're asking for trouble — you'll be followed back to your villa by a couple of scooters,"   Forbes told Allen .

Perhaps that's partly why so many billionaires avoid driving luxury cars.   Zuckerberg   has been seen in an Acura TSX, a Volkswagen hatchback, and a Honda Fit, each valued at or under $30,000. The Walmart heiress Alice Walton,   the world's richest woman , drives a 2006 Ford F-150 King Ranch, which retails for about $40,000,   according to CNBC .

The vast majority of wealthy people did not work for their wealth.

The statistic you cite is deceptive.  Given the source, I suspect intentionally so.

Wealth not coming from "wages and salaries" is very different from "not working for their wealth".  Indeed most of America's richest people worked very hard for their wealth, building companies that are now worth billions.  None of that appeared on their W-2.  That doesn't mean they didn't work their asses off.

That doesn't mean they didn't work their asses off.

At what exactly?  Manipulating interest rates and stock prices?

whorulesamerica.ucsc

Folks in the top 0.1% come from many backgrounds but it's infrequent to meet one whose wealth wasn't acquired through direct or indirect participation in the financial and banking industries. One of our clients, net worth in the $60M range, built a small company and was acquired with stock from a multi-national. Stock is often called a "paper" asset. Another client, CEO of a medium-cap tech company, retired with a net worth in the $70M range. The bulk of any CEO's wealth comes from stock, not income, and incomes are also very high. Last year, the average S&P 500 CEO made $9M in all forms of compensation. One client runs a division of a major international investment bank, net worth in the $30M range and most of the profits from his division flow directly or indirectly from the public sector, the taxpayer. Another client with a net worth in the $10M range is the ex-wife of a managing director of a major investment bank, while another was able to amass $12M after taxes by her early thirties from stock options as a high level programmer in a successful IT company. The picture is clear; entry into the top 0.5% and, particularly, the top 0.1% is usually the result of some association with the financial industry and its creations. I find it questionable as to whether the majority in this group actually adds value or simply diverts value from the US economy and business into its pockets and the pockets of the uber-wealthy who hire them. They are, of course, doing nothing illegal.

I think it's important to emphasize one of the dangers of wealth concentration: irresponsibility about the wider economic consequences of their actions by those at the top. Wall Street created the investment products that produced gross economic imbalances and the 2008 credit crisis. It wasn't the hard-working 99.5%. Average people could only destroy themselves financially, not the economic system. There's plenty of blame to go around, but the collapse was primarily due to the failure of complex mortgage derivatives, CDS credit swaps, cheap Fed money, lax regulation, compromised ratings agencies, government involvement in the mortgage market, the end of the Glass-Steagall Act in 1999, and insufficient bank capital. Only Wall Street could put the economy at risk and it had an excellent reason to do so: profit. It made huge profits in the build-up to the credit crisis and huge profits when it sold itself as "too big to fail" and received massive government and Federal Reserve bailouts. Most of the serious economic damage the U.S. is struggling with today was done by the top 0.1% and they benefited greatly from it.

Not surprisingly, Wall Street and the top of corporate America are doing extremely well as of June 2011. For example, in Q1 of 2011, America's top corporations reported 31% profit growth and a 31% reduction in taxes, the latter due to profit outsourcing to low tax rate countries. Somewhere around 40% of the profits in the S&P 500 come from overseas and stay overseas, with about half of these 500 top corporations having their headquarters in tax havens. If the corporations don't repatriate their profits, they pay no U.S. taxes. The year 2010 was a record year for compensation on Wall Street, while corporate CEO compensation rose by over 30%, most Americans struggled. In 2010 a dozen major companies, including GE, Verizon, Boeing, Wells Fargo, and Fed Ex paid US tax rates between -0.7% and -9.2%. Production, employment, profits, and taxes have all been outsourced. Major U.S. corporations are currently lobbying to have another "tax-repatriation" window like that in 2004 where they can bring back corporate profits at a 5.25% tax rate versus the usual 35% US corporate tax rate. Ordinary working citizens with the lowest incomes are taxed at 10%.

I could go on and on, but the bottom line is this: A highly complex set of laws and exemptions from laws and taxes has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules. I am not optimistic.

The bottom line here is that I think it is very difficult to create a net worth in excess of $10M from income alone. Yes, sports stars, entertainers, and some business people do — but they are rare. Those with a higher net worth tend to acquire most of their net worth from capital gains, not income that has been saved and invested. Large capital gains tend to come when private businesses are acquired by private or public companies with stock or when executives are paid directly by options or stock. Wall Street and the banking industry are frequently involved, either directly or indirectly.

That doesn't mean they didn't work their asses off.

Main Street suffers at the expense of Wall Street. This is not a sustainable situation.

whorulesamerica.ucsc

Since I wrote my   analysis of the wealth and income of the top 1%   for WhoRulesAmerica.net in mid-2011, economic and financial events have supported my original thesis. Wealth and income are streaming to the very top of the system and, particularly, to those who are direct or indirect beneficiaries of the financial industry. Professionals and workers have slipped further behind. The Federal Reserve's near-zero interest-rate policy and QE programs have pushed over 3 trillion dollars into the economy since 2009, stimulating speculation and Wall Street profits — while punishing conservative investors and savers with record low interest rates. The US government's bail-out programs, student and car loan subsidies, state support, and countless other expenditures have cost future taxpayers around $7 trillion. Much of this money has already been spent; at best, it created anemic economic growth on Main Street, while greatly helping Wall Street and masking a weak underlying recovery in the US economy.

The years 2009-2012 saw an enormous transfer of wealth upwards to the top 1% and, particularly, the top 0.1%. According to economists working with Census data at the Pew Foundation, from 2009 through 2011 (the latest available data), the net worth of the top 7% gained 28% while the bottom 93% dropped 4%. These wide variances were driven by gains in stock, bond, and real estate prices. Since the end of 2011, these markets have continued to climb, further enhancing wealth and income at the top.

According to the Census Bureau, the official U.S. Gini coefficient — a measure of income inequality — was 46.9 in 2010, the most recent year for which data is available. It rises to 57.4 if capital gains are included, and capital gains primarily boost the incomes of the rich and very rich. Depending upon how income is defined, the US Gini varies from 37.0 (OECD) to 57.4 (Fed data). The CIA Factbook ranks the US as the 42nd most unequal country in the world, with a Gini of 45, and the OECD ranks it the 26th most unequal out of 33 developed countries. Most developed countries have Gini's in the high 20's to mid 30's, and even countries like Egypt (34.4) and Yemen (37.7) are more equal. The Gini can also be applied to net worth distributions, in which the U.S. scores in the very high mid-80s.

At what exactly?  Manipulating interest rates and stock prices?

Building a business. 

If you read your first cited article carefully, you saw that 63% of the wealth of the top 1% is in "business equity".  That's not publicly traded stocks, which are a different category.  It's equity in businesses they have built.

From your most recent citation:

One of our clients, net worth in the $60M range, built a small company and was acquired

and 

The 99th to 99.5th percentiles largely include physicians, attorneys, upper middle management, and small business people who have done well.

Main Street suffers at the expense of Wall Street. This is not a sustainable situation.

Main Street suffers because of its own financial ignorance, perpetuated by an educational system that is still debating whether or not it wants to move forward and participate in the 1970s or revert back to the good ol' days of the 1950s.

Yes, money does continue to flow to those who understand how to make it.  

Most of America is so ignorant about money they think it's finite and that rich people having more means they have less.

Yes, money does continue to flow to those who understand how to make it.  

If it is via Wall Street, then it is via speculating on the prices of food, energy, healthcare and education - necessities of life and holding down "expenses" in order to return a profit to the speculators.  Why is it legal to profiteer from denying or exploiting human necessities? 

Why is it legal to profiteer from denying or exploiting human necessities? 

Some people see this existence as a dog eat dog proposition. 

The 99th to 99.5th percentiles largely include physicians, attorneys, upper middle management, and small business people who have done well.

Usually do not wind up with tens of millions of dollars in their lifetime.  And are actually working instead of profiteering by gambling on Wall Street.

Let's include the remainder of that paragraph.....

whorulesamerica.ucsc

The 99th to 99.5th percentiles largely include physicians, attorneys, upper middle management, and small business people who have done well. Everyone's tax situation is, of course, a little different, but on earned income in this group, we can figure that somewhere around 25% to 30% of total pre-tax income will go to Federal, State, and Social Security taxes — leaving them with around $250k to $300k post-tax. 

This group makes extensive use of 401(k)s, SEP-IRAs, Defined Benefit Plans, and other retirement vehicles, which defer taxes until distribution during retirement. Typical would be yearly contributions in the $50k to $100k range, leaving our elite working group with yearly cash flows of $175k to $250k after taxes, or about $15k to $20k per month.

Some people see this existence as a dog eat dog proposition. 

There are any number of psychological reasons why this happens.   Some societies have enough people who have evolved beyond this mindset, but in the US, war is still our #1 domestic and international business.   How many trillions of dollars haves been wasted on unnecessary wars in the last 17 years?

Our elected leaders budget almost a trillion dollar a year for just military maintenance and expansion without much notice by the majority of our population.  However, it is a call to arms if the medical insurance industry is threatened by Medicare for all.  Heaven forbid, if the banksters and Wall Street have any oversight and regulators.  Repeal of the Glass Steagall act was one of the most heinous things ever done to US citizens.

We have far too many citizens' lifestyles tied up in speculating on Wall Street without giving due consideration for the harm it is causing domestically and throughout the world.  I believe that the majority of them honestly do not realize the harm they are causing to others, but I could be 100% wrong.  It could well be that they honestly do not care at all.

We have far too many citizens' lifestyles tied up in speculating on Wall Street without giving due consideration for the harm it is causing domestically and throughout the world.  I believe that the majority of them honestly do not realize the harm they are causing to others, but I could be 100% wrong.  It could well be that they honestly do not care at all.

Whether they care, or, not, they will find a way to rationalize it. Usually the rationale is that they have done something outstanding or otherwise deserving of great financial reward. And they are better than the average everyday slob. 

People who are amoral can easily rationalize exploiting others. One of my favorite movie quotes is from The Magnificent Seven. The bandit leader Calvera rationalizes why it is ok for him to steal from the poor farmers to get food for his gang  "If God did not want them sheared, he would not have made them sheep" , he says. 

If it is via Wall Street, then it is via speculating on the prices of food, energy, healthcare and education

The VAST majority of money on Wall Street is loaned out to provide capital for everything from housing to roads to schools to new factories creating new jobs.  The bond market dwarfs the stock market which dwarfs the commodities market.

- necessities of life and holding down "expenses" in order to return a profit to the speculators.  Why is it legal to profiteer from denying or exploiting human necessities? 

Describe in detail exactly how you think this "profiteering" takes place.

Usually do not wind up with tens of millions of dollars in their lifetime.  And are actually working instead of profiteering by gambling on Wall Street.

They do, actually.  The threshold for being in the top 1% of wealth is $10 million.

Let's include the remainder of that paragraph.....

What was your point about the remainder of the paragraph?

Repeal of the Glass Steagall act was one of the most heinous things ever done to US citizens.

It was a terrible idea.  It caused the 2008 recession. 

But let's keep things in perspective.

Let's not forget that we imprisoned 80,000 US citizens simply for having Japanese ancestry.  

We have far too many citizens' lifestyles tied up in speculating on Wall Street without giving due consideration for the harm it is causing domestically and throughout the world.  I believe that the majority of them honestly do not realize the harm they are causing to others, but I could be 100% wrong.  It could well be that they honestly do not care at all.

Capital markets are complicated.  It's not uncommon for people to get overwhelmed by all the money being made in an environment they really don't understand and presume that it's all nefarious.  It's not.

"Disney Heiress Calls Out Company's Worker Pay Practices"

GOOD FOR HER !

Hopefully she has pull within the PRIVATE company !

At least she wasn't advocating for "Government" to fix it !