The significant income growth at the very top of the income distribution over the last few decades was largely driven by households headed by someone who was either an executive or was employed in the financial sector. Executives, and workers in finance, accounted for 58 percent of the expansion of income for the top 1 percent and 67 percent of the increase in income for the top 0.1 percent from 1979 to 2005. These estimates understate the role of executive compensation and the financial sector in fueling income growth at the top because the increasing presence of working spouses who are executives or in finance is not included.

Over the last 30 years, CEO pay has increased 127 times faster than worker pay. The average Fortune 500 CEO is now pay 380 times as much as the average worker; in 1980, those CEOs received 42 times the average worker’s pay.

And of course, it’s no secret that Wall Street employees are pulling in humongous paychecks, even after they crashed the global economy. As one former Wall Street trader put it, “There’s no other industry where you could get paid so much for doing so little.” And while they’ve been collecting bigger and bigger bonuses, the rest of the American workforce has dealt with stagnating wages and the Great Recession.

Since 1978, CEO pay at American firms has risen 725 percent, more than 127 times faster than worker pay over the same time period, according to new data from the Economic Policy Institute:

From 1978 to 2011, CEO compensation increased more than 725 percent, a rise substantially greater than stock market growth and the painfully slow 5.7 percent growth in worker compensation over the same period.

In 1978, CEOs took home 26.5 times more than the average worker. They now make roughly 206 times more than workers, EPI found. The pay isn’t always tied to the performance of their businesses — as ThinkProgress has noted, CEOs at companies like Bank of America often pocket huge pay increases even as the company’s stock price plummets and jobs are cut.

Workers’ wages aren’t tied to productivity either. Despite substantial gains in productivity since the 1970s, worker pay has remained flat. According to Labor Department data cited by the Huffington Post, inflation-adjusted wages fell 2 percent in 2011.

As a result, American income inequality has skyrocketed, growing worse than it is in countries like Pakistan and Ivory Coast. Wealth inequality is worse than it was even in Ancient Rome. And, as pay skyrockets and tax rates fall for the richest Americans, the rising inequality has left the bottom 95 percent of Americans saddled with more debt than ever before.

The ratio of CEO-to-worker pay between CEOs of the S&P 500 Index companies and U.S. workers widened to 380 times in 2011 from 343 times in 2010. Back in 1980, the average large company CEO only received 42 times the average worker’s pay.

This explosion in pay certainly isn’t justified by corporate performance. In fact, “while the average CEO pay increased 13.9 percent at S&P 500 Index companies in 2011, the S&P 500 Index ended the year at the same level as it started.” Just this week, shareholders at Citigroup voted to reject CEO Vikram Pandit’s pay package (in a non-binding vote), saying that he was collecting millions while the company floundered.

Meanwhile, workers saw their pay increase by just 2.8 percent last year. Already, most of the gains of the nascent economic recovery have been going to the richest Americans (just as they have for recent economic expansions). In 2010, the richest 1 percent captured 93 percent of the nation’s income gains.

The AFL-CIO is calling for regulators to implement a rule included in the Dodd-Frank financial reform law that requires companies to disclose their CEO-to-worker pay ratio. “Astronomical CEO pay is based on the false idea that the success of a corporation is due to one CEO genius. In reality, all employees create value, and CEO pay levels should be more in line with the rest of their company’s employee pay structure. CEOs should be paid as a member of a team, not as a superstar,” said AFL-CIO President Richard Trumka.

Sears Holdings Corp. paid its chief executive $9.9 million last year, including incentives the ailing department store operator offered to lure the former technology executive, according to an Associated Press analysis of a regulatory filing.

Lou D’Ambrosio, who became Sears’ CEO in February 2011, received a signing bonus of $150,000 plus a base salary of $930,769 and $8 million in stock awards, according to a filing the company made Friday with the Securities and Exchange Commission.

D’Ambrosio got another $852,037 in perks, including $803,856 for charter and commercial airfare and ground transportation to commute from greater Philadelphia, where he lives, to Hoffman Estates, Ill., where Sears is based. And he received $29,985 for temporary housing in Hoffman Estates. Sears paid part of the income taxes due on those benefits.

Of course, it’s the company’s prerogative to pay its CEO this much. But at the same time that it was doling out perks to D’Ambrosio, Sears was planning to lay off thousands of workers. Sears has announced that it will be closing 173 stores this year — up from previous estimates of 120 stores — which means that nearly 14,000 workers could be seeing a pink slip.

Adding insult to injury, Sears was also pocketing millions of dollars in tax incentives from the state of Illinois, even as it fired Illinois workers. In fact, under the terrible deal that the state signed with the retail giant, Sears can lay off another 1,750 Illinois workers without losing its taxpayer largesse. But perhaps bilking a state of its needed tax revenue is what Sears pays D’Ambrosio the big bucks for.

To counter those losses, Gannett shed jobs, and a lot of them. Industry estimates say the company has laid off at least 20,000 workers since 2005, reducing its workforce from 52,000 to roughly 32,000. Despite those losses, Gannett awarded Dubow a severance package worth $32 million, NPR reports:

Dubow’s final compensation package includes $12.8 million in retirement benefits, $6.2 million in disability benefits and a $5.9 million severance payment, according to the filing. Gannett stock options and restricted stock, which Dubow had accrued during his years of employment with the company, were also part of the package. Those stock awards are valued at nearly $7 million.

Separately, Gannett will pay $25,000 to $50,000 annually for a $6.2 million life insurance policy covering Dubow and another $70,000 annually for benefits such as health insurance, home computer and secretarial assistance and financial counseling. He will receive most of these benefits for three years unless he goes to work for a competitor, according to the filing.

The lavish severance package Gannett is giving Dubow stands in stark contrast with how it treated many of the 20,000 employees it let go. After giving severance packages to employees during early rounds of layoffs (a common industry practice), Gannett decided in 2009 that it would no longer offer such packages, instead paying supplemental unemployment benefits that shifted most of the costs to states. At the time, Gannett claimed the decision would help many employees get more than they would from severance. But for those who worked or freelanced at other jobs, that meant they’d get much less — and perhaps nothing at all.

“Craig championed our consumers and their ever-changing needs for news and information,” the chair of Gannett’s board of directors said when his retirement was announced in October. The question, as former reporter Peter Lewis asked at the time, is how exactly Dubow served consumers or his employees. “They laid off journalists. They cut the pay of those who remained, while demanding that they work longer hours. They closed news bureaus. They slashed newsroom budgets,” Lewis wrote on his blog. “As revenue fell, and stock prices tanked, and product quality deteriorated, they rewarded themselves huge pay raises and bonuses.”

Caterpillar reported a 36 per cent increase in after-tax profit for both the fourth quarter of 2011 and the full year 2011. Revenues for the year increased four per cent to $2.65 billion.

Despite the record profits, the company is pressuring its employees at the London [Ontario] locomotive plant to accept a pay cut from $32 per hour to $16.50. Caterpillar locked out the workers on Jan. 1 after union members rejected the pay cut.

While certainly not in the same league with Apple’s abuses, Caterpillar is just the latest company attempting to force workers to accept wage cuts at the same time its hauling in huge profits and paying its CEO millions. AT&T, Navistar, John Deere, and Wellpoint have all pulled the same trick in the last few years, laying off hundreds of workers. Caterpillar’s CEO, Doug Oberhelman, made $10.5 million in 2010.

“This is all about greed,” says Bob Scott, union chairman at the plant. “How are workers supposed to go back to earning wages last paid nearly 25 years ago, while the company is richer than ever?” CEOs today make about 343 times the amount earned by the typical worker.

Haruni cites the work of Rochdale Securities analyst Dick Bove and shows how banks have seen their value and stocks plunge by double-digits while executive compensation remains high:

According to data from Rochdale Securities analyst Dick Bove, the heads of major banking groups including JPMorgan Chase (JPM), Goldman Sachs (GS) and Bank of America (BAC) are out-earning their employees and shareholders even as shares of bank stocks as a group lost about 26% this year.

Bove found that while the 23 financial institutions he follows saw their stock prices and market cap drop by more than 30% and 11%, respectively, bank CEO compensation averaged $7.74 million. That means the banking heads brought in 50 to 100 times the average worker. Take BofA’s CEO Brian Moynihan who will earn $2.26 million this year while his bank’s market value dropped 60% – the worst in Rochdale’s study.

Chase CEO Jamie Dimon will earn $41.9 this year — the most among the bank CEOs in Bove’s coverage list — for a bank that saw its stock lose roughly 23% this year. There’s also Goldman’s Lloyd Blankfein whose compensation was nearly $22 million, while the investment bank he runs – Wall Street’s most powerful — lost more than 46% of its market cap.

Haruni notes that press “reports have suggested that compensation pools at seven of the biggest U.S. banks will total about $156 billion (including salaries, benefits and bonuses) in 2011, which would be 3.7% higher than last year’s record breaking number.”

On Nov. 28, the New York-based law firm Cravath, Swaine & Moore told its staff that 2011 year-end bonuses would be almost identical to those for the previous two years. At the low end, first-year associates will receive $7,500, while seventh-year associates will get $37,500. Other firms quickly fell into line, as they have tended to do each year following Cravath’s announcement, which is traditionally the first of the bonus season [...] The only problem is that major law firms are actually making more money in 2011 than they did in 2010. [...] A survey released by the American Lawyer on Dec. 1 revealed that 84 percent of law firm leaders said that they expected profits per partner to rise next year.

The reason behind this stunning freeze in bonuses at elite law firms? Thomson Reuters quotes a lawyer at DLA Piper — an elite firm that “represented AIG, Lehman Brothers, and Merrill Lynch during the bank bailouts” — saying that the big law firms are “part of Wall Street” and that there’s a “sensitivity” around the issue of bonuses. Another lawyer at a New York firm quoted anonymously directly blames Occupy Wall Street for the restraint in bonus growth:

“I think there is a sensitivity there,” said Leroy Inskeep, head of the associate compensation committee at DLA Piper. “We’ve got clients who are struggling. They don’t want to see big bonuses.” Inskeep said big law firms are “part of Wall Street,” and that the Street’s reputation of excess extends to them as well as the investment banks. [...] “On the one hand, firms put out this image that they’re doing fine,” said a fifth-year associate at a New York law firm who requested anonymity because she was not authorized to speak for her firm. “On the other hand, we understand with Occupy Wall Street that the public isn’t going to look kindly on lawyers making big bonuses at the end of the year. It’s a calculated move.”

The fact that Occupy Wall Street and related protests are forcing some of the nation’s most prestigious law firms and corporate allies to restrain the bonuses they’ve doled out to employees is a huge victory for the 99 Percent. (HT: @atlblog)

Democratic lawmakers have been rightly upset by the bonuses as well, with Senate Majority Leader Harry Reid (D-NV) saying yesterday that they induced his “gag reflex.” But while it’s welcome to see a Republican senator care about excessive executive compensation, especially at a bailed out firm, where was Barrasso when this happened back in 2009?

Back then, President Obama wanted to cap executive compensation at banks bailed out by taxpayers, but “Republicans hate[d] the idea.” “[I]s this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?” Sen. James Inhofe (R-OK) asked at the time. Senate Minority leader Mitch McConnell (R-KY) explained, “I really don’t want the government to take over these businesses and start telling them everything about what they can do.”

Had Barrasso broken with his party at the time to take a stance similar to the one he is now espousing, he could have helped tip the political balance in favor of reigning in executive compensation at bailed out firms, whether they be banks or Fannie and Freddie.

There are several factors driving this income inequality — including preferential treatment of investment income, weak estate taxes, and stagnant middle-class wages — but one of the problems is that executive pay has jumped by leaps and bounds, far outstripping the income made by workers. CEOs at America’s largest companies now earn 343 times more than the typical worker. In 1970, the average CEO earned 28 times as much as the typical worker. As the Washington Post noted today, this increase occurred at the same time that worker pay was actually falling, in inflation adjusted dollars:

The gap between what workers and top executives make helps explain why income inequality in the United States is reaching levels unseen since the Great Depression.

Since the 1970s, median pay for executives at the nation’s largest companies has more than quadrupled, even after adjusting for inflation, according to researchers. Over the same period, pay for a typical non-supervisory worker has dropped more than 10 percent, according to Bureau of Labor statistics.

And much of the increase was driven by nothing more than companies simply trying to ensure that their CEO’s pay was above the median for their industry, regardless of that CEO’s performance:

Companies have long hid the way they set executive pay, but in late 2006, the Securities and Exchange Commission began compelling companies to disclose the specifics of how they use peer groups to determine executive pay.

Since then, researchers have found that about 90 percent of major U.S. companies expressly set their executive pay targets at or above the median of their peer group. This creates just the kinds of circumstances that drive pay upward.

For those keeping score, the median CEO pay in 2010 was $9 million. For “top executives,” the median pay package comes in at about $4.9 million. This cuts across industries, while companies tend to target their pay within their respective industry, but it gives you a sense for the scale of the pay packages these companies are looking at when deciding what to pay their own people.

The nation’s biggest banks could be the poster children for this sort of corporate excess, as their CEOs received huge salaries and bonuses, even as their firms were blowing up themselves (and the global economy) on toxic mortgages. The Post noted that Countrywide CEO Angelo Mozillo “earned more than $180 million as he led the company to the brink of ruin during the five years before the housing bust. At times, his pay had been set at the 90th percentile of peers.” For those looking to address income inequality, it seems that reining in executive pay is a good place to start.

Ford has had nine profitable quarters in a row, and paid its CEO, Alan Mulally, $26.5 million last year. But at the same time, it is fighting against giving its factory workers their fair share of the profits from the company’s success:

At The Rouge, Ford’s massive, 94-year-old factory complex in Dearborn, Mich., there’s talk along the assembly lines of winning back raises and bonuses lost when the company was near financial collapse in 2007. Workers, who assemble F-150 pickup trucks at the site, are upset that Ford is trying to cut labor costs, especially after nine straight profitable quarters and a $26.5 million pay package for CEO Alan Mulally.

When the company was going to fail, the workers “gave up cost-of-living pay raises, performance bonuses and other benefits.” Last year, Ford reinstated merit pay and some bonuses to the company’s salaried, white-collar workers, but has yet to do so for its hourly-wage factory workers.

“We have the big honchos taking multimillion-dollar bonuses and they can’t even give us back” concessions, said Joe Pack, 50, who works at Michigan Assembly in Wayne, Michigan. “Ford has to do a lot more,” agreed Gary Walkowicz, who works at Ford’s Dearborn, Michigan plant.

In 2010, CEO pay across the corporate world went up 27 percent, while worker pay went up just 2 percent. Ford’s continued profitability would not have been possible without its workforce, and the company should be sure to recognize that fact during contract negotiations.

Goldman Sachs CEO Lloyd Blankfein

Wall Street is planning to lay off thousands of workers in a supposedly underperforming quarter, and Goldman Sachs is no exception, saying that it plans to cut $1.2 billion in costs by laying off 1,000 people, roughly 3 percent of its workforce. The mega-bank is also going after small savings by downsizing its drinking cups.

Even plants aren’t safe from the bank’s tightened budget. The London office removed potted plants, reportedly causing “disquiet” among employees and led “to a stand-off between the plant pickers and staff.” Morgan Stanley has also cut back on office foliage, while Bank of America skipped an annual field day.

However, the real measure of whether Wall Street is serious about cutting costs will be if bonuses go down during lean times. And so far, the chances do not look good. The New York Times’ Dealbook reports that banks, including Goldman, have set aside $65.69 billion for bonuses at the end year, an 8 percent increase over last year:

Wall Street executives are also preparing their staffs for smaller year-end bonuses, although the change is not yet reflected in the expenses. During the first six months of the year Citigroup, JPMorgan, Goldman, Morgan Stanley and Bank of America set aside $65.69 billion to cover compensation and benefits, up 8 percent from a year ago, according to data provided by Nomura. But financial firms tend to wait until the fourth quarter to make the call on the annual payouts.

Unless Goldman and other banks follow up a tough season by handing out smaller bonuses later this year, its cost-saving initaitves are only superficial. A group of shareholders challenged the Goldman board of directors for showing “scant regard” for their interests, having handed out billions in bonuses the same year it received federal aid. Goldman won a dismissal of the case yesterday.

The bonuses may have been a part of “God’s work,” which Goldman CEO Lloyd Blankfein claimed to be doing in 2009, but if Goldman practiced the same austerity toward bonuses that it did toward office plants, it could afford to keep both its employees and its 12 ounce cups.

– Rebecca Leber

– Of last year’s 100 highest-paid corporate chief executives in the United States, 25 took home more in CEO pay than their company paid in 2010 federal income taxes.

– These 25 CEOs averaged $16.7 million, well above last year’s $10.8 million average for S&P 500 CEOs. Most of the companies they ran actually came out ahead at tax time, collecting tax refunds from the IRS that averaged $304 million.

– CEOs in 22 of these 25 firms enjoyed pay increases in 2010. In 13 of these companies, CEO paychecks ratcheted up while the corporate income tax bill either declined or the size of the corporate tax refund expanded.

Included amongst the 25 are well-known corporate behemoths like General Electric, Boeing, Verizon, and Ebay. Prudential CEO John Strangfeld, in one example, made $16.2 million last year while his company reaped a $722 million tax refund. Bank of New York Mellon CEO Robert Kelly received $19.4 million, after his bank got a $670 million tax refund.

Eighteen of the 25 companies that the IPS studied operated subsidiaries in offshore tax havens. In fact, “the firms, all combined, had 556 tax haven subsidiaries last year,” including 128 for just one company (the reinsurance corporation Aon).

Currently, corporate taxes have plunged to historic lows, with many of America’s largest companies literally paying no federal income taxes. Meanwhile, according to researchers at Northeastern University, corporate profits accounted for 88 percent of real national income growth since 2009, while wages and salaries made up less than 1 percent. In 2010, executive pay grew by 27 percent while wages grew by only 2 percent.

The IPS also found that “of the 25 companies that paid their CEO more than Uncle Sam, 20 also spent more on lobbying lawmakers than they paid in corporate taxes. Eighteen gave more to the political campaigns of their favorite candidates than they paid to the IRS in taxes.”

The AP News Service filed a video report about the strike. Watch it:

Cutting workers benefits as a cost-saving measure is a natural part of a market economy when times are bad, but what is particularly outrageous about Verizon’s demands is that the company’s fiscal health is actually rapidly improving and its profits soaring. The company’s quarterly report released in January found that their profits nearly doubled from the same point last year. Then in April, Bloomberg reported that the company’s profits “more than tripled” after the company began offering services on Apple’s popular iPhone, with net income approaching $1.44 billion:

Verizon Communications Inc. (VZ), the second-largest U.S. phone company, reported earnings that more than tripled as taxes decreased and the carrier attracted new customers after introducing Apple Inc. (AAPL)’s iPhone. Net income rose to $1.44 billion, or 51 cents a share, New York-based Verizon said today in a statement.

Their 2010 annual report shows that their stock returns are actually outperforming the wider market, easily overcoming the S&P 500 index:

“They are outperforming the overall industry,” said financial analyst Michael Nelson of their Spring 2011 returns. Meanwhile, one person at Verizon who is not being asked to take any cuts is Ivan Seidenberg, the company’s CEO. His compensation actually rose four percent in 2010 to $18.1 million. The Communications Workers of America note that the “top five executives [at the company] received compensation of $258 million over the past four years.”

It appears that Verizon’s stockholders and executives are being treated well by the company while it demands sacrifice from its workers. “We are regular folk like most other folk out here trying to pay our mortgages, pay our bills and survive and we don’t think that is a lot to ask when the company is making billions of dollars in profits,” said one striking worker.

After the longest recession since WWII, many Americans are still struggling while S&P 500 corporations are sitting on $800 billion in cash and making massive profits. Now, economists from Northeastern University have released a study that finds our sluggish economic recovery has almost solely benefited corporations. According to the study:

“Between the second quarter of 2009 and the fourth quarter of 2010, real national income in the U.S. increased by $528 billion. Pre-tax corporate profits by themselves had increased by $464 billion while aggregate real wages and salaries rose by only $7 billion or only .1%. Over this six quarter period, corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income. …The absence of any positive share of national income growth due to wages and salaries received by American workers during the current economic recovery is historically unprecedented.”

The New York Times adds, “According to the Bureau of Labor Statistics, average real hourly earnings for all employees actually declined by 1.1 percent from June 2009, when the recovery began, to May 2011, the month for which the most recent earnings numbers are available.”

So as average wages fall, and nearly 14 million people remain unemployed, America’s economic recovery has almost entirely benefited corporations. This development adds another chapter to the decline of the middle class, whose incomes are shrinking and wages are stagnating. Last year, top executives’ salaries increased 27 percent, while workers’ salaries increased only 2 percent. At the moment, income inequality in America is the worst it’s been since the 1920s, as the richest 1 percent make nearly 25 percent of the country’s income.

–Sean Savett

The panel also approved, 33-21, the repeal of an 18-line provision from Dodd-Frank that requires all publicly traded companies to report the ratio between chief executive officer compensation and that of their median employee salary. The provision in Dodd-Frank is “a burdensome regulation that provides no benefit and has substantial costs,” said Representative Nan Hayworth of New York, the Republican sponsor of the bill.

There is plenty of evidence that outsized and poorly designed executive pay at the nation’s biggest banks played a role in bringing about the financial crisis of 2008. As outgoing FDIC Chair Sheila Bair said last year, there is “an overwhelming amount of evidence that [executive compensation] is clearly a contributor to the crisis and to the losses that we are suffering.”

The provision that the GOP repealed is aimed at keeping workers, investors, and shareholders informed of the amount by which the growth in CEO pay is outstripping that of worker pay, in the hopes that transparency will lead to restraint in the growth of executive compensation. Today, American CEOs make 263 times the average compensation for American workers, up from a 30 to 1 ratio in the 1970s. In 2010 alone, CEO pay went up 27 percent while average worker pay went up just 2 percent. Over the last 10 years, as Americans experienced a lost decade for wages, bank CEOs made $19 million per year.

This week, a new report shows that 32 companies in the S&P 500 spent more on pay for their top executives last year than they paid in taxes. Meanwhile, “a mounting body of economic research indicates that the rise in pay for company executives is a critical feature in the widening income gap.” Still, House Republicans are attempting to repeal an extremely modest step towards reining in executive pay by claiming that it “provides no benefit.”