Everyone knows economic growth has been sluggish lately, with unemployment high and wages barely keeping up with inflation. But there is at least one class of worker—the chief executive—who's doing quite well. This morning I attended a briefing at AFL-CIO headquarters, where Richard Trumka unveiled the latest version of the union movement's incredibly useful CEO paywatch database. There's lots of stuff in there, but the headline facts are just amazing. Among S&P 500 firms, CEO pay grew 22.8 percent on average in 2010 and then grew 13.9 percent in 2011. That's a total nominal increase of 40 percent when you aggregate it. Obviously nothing else in wages, incomes, economic growth, stock market performance, or anything else has been nearly that robust:
This makes me think that explanations for the poor performance of macroeconomic stabilization policy that focus on the interplay between debtors and creditors may be reaching for something too complicated. You would expect business to be a major political voice for economic growth. But "business" speaks in Washington, in the form of CEOs and other top executives. If such executives' ability to increase their own living standards were constrained by the overall fate of the economy, then this might all work out. But it isn't. Dialogue around further stimulating the economy is dominated by hazily defined "risks" in a way that's often led me to wonder about the risks involved in the status quo. But you can see quite clearly that for the people at the commanding heights of the economy the status quo is actually working pretty well. People who are seeing double-digit pay increases have very good reason to be risk averse.