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BRIDGING THE GAP
MARCH 20, 1996
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While corporate profits and Wall Street are experiencing record growth, many workers are facing declining wages and job insecurity. Economics correspondent Paul Solman of WGBH-Boston investigates the wage-profit gap and what politicians are saying about it.
PAUL SOLMAN: What is good for the country is good for General Motors, and what's good for
General Motors is good for the country. Well, that 1952 quote may have been something of an
exaggeration, but it is true that throughout the 20th century, American corporate profits and wages
have been more or less in sync, both rising in the good times, falling in the bad. But now the
relationship seems to have dissolved. Since the late 1970's, there's been a growing gap between
corporate profits, which have been rising, and wages, which adjusted for inflation, have actually be
falling for almost 20 years. The wage-profit gap became part of the political landscape this year
when Pat Buchanan struck a nerve and temporarily pay dirt early in the campaign.
PAT BUCHANAN, Republican Presidential Candidate: (February 28) The middle income, the
median income of Americans, is not going up the way it used to when I was a boy. It's going down.
But the corporate profits are soaring. I don't mind corporate profits soaring, but why aren't the
working men and women and the American families sharing if the times are good?
PAUL SOLMAN: Buchanan is no longer the lone Republican addressing the wage-profit gap. Of
late, Bob Dole has started using more populist rhetoric on the campaign trail.
SEN. BOB DOLE, Republican Presidential Candidate: (February 13) Corporate profits are setting
records, but so are corporate layoffs. And middle class families feel less and less secure about
the future. And there's a wide and growing gap between what the government statistics say about
our economy and how Americans feel about it.
PAUL SOLMAN: Indeed, the latest government statistics might suggest that everything is just
dandy. Since 1979, only 43 million jobs lost compared with 70 million jobs created. But, of course,
the problem is what kind of jobs, with what kind of benefits, and how long will the new jobs last,
compared to those being downsized at places like good old General Motors, itself? 
Seventy-four
thousand layoffs announced back in the early 90's, and then in succession, IBM, 63,000; Sears,
50,000; Boeing, 28,000. Most recently, it's been AT&T, 40,000, a number the company's been
struggling with ever since it was announced in January. What's allegedly vanishing with these jobs
is the sense we once had of economic security. And as if to add insult to anxiety, pay for top
executives has shot up in the 90's, while wages have continued to trail inflation, even though
inflation is running at 3 percent or less. Compensation consultant Graef Crystal quotes a recent
survey.
GRAEF CRYSTAL, Compensation Consultant: CEO pay among the top 100 companies in the
United States has rise 23 percent in the last year alone between 1984--94 and '95, and that
compares to about a 2.7 percent increase for the average American worker. In the study I did
back in '94, the ratio of pay to the average CEO of a major company to the average American
worker was about 187 times. And it's just been growing and growing and growing.
PAUL SOLMAN: So add corporate pay packages at the top to the continuing wave of corporate
downsizings below and you've got a recipe for insecurity which mainstream politicians for the first
time in a long time have begun asking corporations responsibly to address.
PRESIDENT CLINTON: (March 4) And we need people to really think about whether it's the fair
and right thing to do when you see these downsizings. If they have to do it to keep the business
afloat, every American can understand that, but no one should lose a job for short-term
considerations that are not necessary for the long-term well-being of the profitable enterprise. We
all need to do our part to keep America growing and growing together.
