In 1883, at the dazzling height of America’s original Gilded Age, a noted trade union editor of the era came before the U.S. Senate Committee on Education and Labor. Karl Dovai, an immigrant from Germany, testified that sewing women were currently earning no more than 9 to 11 cent a day. Tycoons like the infamous Jay Gould, Dovai added, were making $10,000 an hour.
“Suppose the difference between the highest and lowest wages will be as one to ten — that will perhaps be the most that will occur — would not that be better than it is now?” Dovai asked the assembled senators.
Railroad magnate Jay Gould
Did those senators snicker at Dovai’s query? Did they roll their eyes? We have no record of their response. We do know that Americans who shared Dovai’s sense of outrage spent the next three generations struggling to forge a nation where no corporate executive could make more in an hour — or even a day — than that executive’s workers could make in a lifetime.
And those outraged Americans, to a remarkable extent, succeeded. By the mid 1960s, Economic Policy Institute research details, corporate chiefs were averaging no more than 20 to 25 times the pay of America’s typical workers.
But the equality tide would soon begin ebbing. By the early 1980s, the CEO-worker pay gap had doubled to between 40 and 50 times. That gap would soon grow much wider. Indeed, in the early 21st century, one of America’s more thoughtful economic insiders would look back at the early 1980s as almost an egalitarian golden age.
That insider, William McDonough, served as the president of the Federal Reserve Bank of New York. On September 11, 2002 — the first anniversary of 9/11 — McDonough stepped to the podium at Trinity Church, a grand old edifice that sits along Wall Street, and urged his listeners to help correct the “remaining imperfections in our democracy.” McDonough had one specific imperfection in mind: the gap between America’s most privileged and everyone else.
Two decades earlier, the New York Fed president observed, top American corporate executives had earned 42 times more than average production workers. Some top execs of the early 2000s, he pointed out, were collecting over 400 times the income of America’s average workers.
“I am old enough to have known both the CEOs of 20 years ago and those of today,” McDonough told his Trinity Church listeners. “I can assure you that we CEOs of today are not 10 times better than those of 20 years ago.”
McDonough retired the next year, in 2003, and would pass away early in 2018. He didn’t live long enough to witness a reality that would have anguished him even more: In 2018, 50 U.S. CEOs took home over 1,000 times the pay of their most typical workers.
We have, in effect, reentered Jay Gould territory. But a key U.S. Senate panel has just begun what could become the pullback we so desperately need from that hazardously unequal turf. The Senate Budget Committee held a hearing yesterday on the “Income and Wealth Inequality Crisis in America,” and that hearing welcomed the introduction of the best federal legislation yet on outrageous CEO pay.