An innovative binational analysis details how plutocracy is squeezing low- and middle-income Americans.
Since 1871, over 19,000 athletes have played baseball at the major league level. Not one of them has played the game any better, most experts today agree, than the 27-year-old outfielder Mike Trout.
Trout’s other-worldly talent now has a price-tag. Trout has just signed a 12-year, $426.5-million contract with the Los Angeles Angels, the biggest player pay deal in pro sports history.
That contract has lots of people smiling, starting with the family and friends of Mike Trout. But plenty of people Mike Trout has never met are smiling, too. And many of them sit in the executive suites of America’s largest corporations.
Corporate CEOs — and those who sing their praises — love to see big paydays for big-time athletes. Every million a ballplayer makes seems to give top execs and their cheerleaders still another justification, another excuse, for stratospheric CEO pay.
How can we rate as “overpaid,” goes the corporate chief executive line, when even a second-string second basemen can take home a few million bucks a year?
One example: A few years back, a New York Times analyst rationalized away the immensity of Walmart CEO Douglas McMillon’s $19-million annual pay by pointing to baseball paychecks. Nineteen ballplayers, the analyst noted, were then making more per year than McMillon. The “future of the United States economy,” the columnist would go on to harrumph, “depends more heavily on how well Mr. McMillon does his job than how well” any baseball player performs.
McMillon, the Walmart CEO since 2014, has certainly done his job well for the heirs of Walmart founder Sam Walton. The Waltons currently rank as the richest family in the world, with a fortune worth over $151.5 billion.
On the other hand, McMillon hasn’t performed particularly well at all for Walmart employees — or average American taxpayers either. Walmart workers take home paychecks so low that many qualify for food stamps and other federal safety net programs. Average U.S. taxpayers, in effect, are subsidizing the low wages that have made McMillon so many millions and the Waltons so many billions.
The world’s best ballplayers, by contrast, can perform herculean feats on the baseball diamond and still not come close to approaching the career earnings of America’s corporate elite. That becomes glaringly evident when we compare Mike Trout’s new 12-year, $426.5 million deal with what America’s top CEOs have been pulling down over a similar span of years.
Researchers at Equilar, a leading executive compensation research firm, have compiled some useful numbers. They’ve found 14 U.S. corporate CEOs who’ve pocketed at least $426.5 million from their chief executive labors over the past 12 years.
Four of the CEOs on this Equilar list have pulled in more than Trout’s new deal in fewer than 12 years. Oracle’s Safra Catz needed only four years to collect $497.7 million in executive compensation, and Facebook’s Mark Zuckerberg has even done a bit better than that. Over the last seven years, Zuckerberg’s work at Facebook has returned him $5.6 billion.
Zuckerberg — like Walmart’s McMillon — has “performed” brilliantly for the deep pockets who hold oodles of his company’s shares and far less nobly for the millions of people worldwide who merely use Facebook, a reality headlines drive home on a regular basis now. The latest of the Facebook scandals: The company has just “agreed to overhaul its lucrative targeted advertising system to settle accusations that landlords, lenders and employers use the platform to discriminate.”
Zuckerberg’s $5.6 billion for seven years of executive labor, we should note here, pales against the loot our top hedge fund kingpins have been grabbing. In 2017, the last year with good data available, four hedge fund kingpins cleared over $1 billion.
The year’s 25 top-paid hedgies averaged $615 million for their 2017 efforts, half again more than Mike Trout will be making over the next 12 years. These 25 hedge fund managers together collected $15.4 billion for the year, a sum that equals almost five times what all the baseball players on last year’s opening-day team rosters took home.
The typical ballplayer on a major league roster last year took home $1.32 million, a healthy paycheck but nowhere near what Mike Trout will now be walking off with. Trout may be, for his part, the best-paid player in baseball, but he isn’t making nearly as much as those lucky souls who profit the most off the labor that Trout and other baseball stars so exquisitely perform: baseball team owners.
Consider Frank McCourt, the wheeler-and-dealer who owned the iconic Los Angeles Dodgers franchise for eight years. The team sputtered over the course of McCourt’s tumultuous reign, and one sportswriter ended dubbing him “one of the most-crooked owners in sports history.”
But crime certainly did end up paying in this case. The Dodgers franchise sold at auction in 2012 for $2.15 billion. After paying off his debts, McCourt cleared “a crisp $1 billion profit,” well over twice as much as Mike Trout will earn making magic in our ballparks.
Sam Pizzigati co-edits Inequality.org. His latest book: The Case for a Maximum Wage. Among his other books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.