The rich and the rest of us

In the last 20 years the gap between the so-called rich top one percent of the population and the lower 99 percent has grown by nearly 40 percent, or so that is what the Liberals and the Occupy folks would like us to believe. However the truth behind the claim isn’t so black and white.

In order to find facts supporting the left’s misleading assertions you must start with an examination of average salary trends over the last 20 years.  Below you’ll see one example which compares the salary of an executive in the building and construction trade and a simple laborer. The average salary for the rich construction executive in 1985 was $85,000 per year while the poor laborer $18,000 per year. In 2005 the executive became even more rich earning $135,000 per year, a 69 percent increase. Meanwhile the salary of the average laborer increased to a measly $26,500, an increase of 67 percent; so the gap between the rich and the rest of us has increased by two whole percent? Hardly a dramatic shift, so what are the left-wing ninty-nine percenters upset about?

The construction laborer’s salary increased just $8,500/year as opposed to the rich executive’s $50,000 increase; could anything be more unfair? In 1985 the average executive earned $67,000 more than the average laborer, but in 2005 that same executive earned $108,500 more. The gap has increased by over $40,000 annually; those hateful filthy rich people.  Are the Liberals and Occupiers really this dumb?

In 1985 the average construction executive had 29.8 years on the job, but the average laborer had less than one year on the job. Perhaps in 1985 the pure experience difference explained the $67,000 difference in annual salary, so why has the gap increased by more than the average laborer earns in a year? Let’s analyze.

We’ll assume a few facts….first we’ll agree that both the executive and the labor are outstanding employees. They each rate a 2.5 percent annual increase in salary:

YEAR INCREASE EXECUTIVE INCREASE LABORER DIFFERENCE
1985   $ 85,000.00   $ 18,000.00 $ 67,000.00
1987 5% $ 89,250.00 5% $ 18,900.00 $ 70,350.00
1989 5% $ 93,712.50 5% $ 19,845.00 $ 73,867.50
1991 5% $ 98,398.13 5% $ 20,837.25 $ 77,560.88
1993 5% $ 103,318.03 5% $ 21,879.11 $ 81,438.92
1995 5% $ 108,483.93 5% $ 22,973.07 $ 85,510.86
1997 5% $ 113,908.13 5% $ 24,121.72 $ 89,786.41
1999 5% $ 119,603.54 5% $ 25,327.81 $ 94,275.73
2001 5% $ 125,583.71 5% $ 26,594.20 $ 98,989.51
2003 5% $ 131,862.90 5% $ 27,923.91 $ 103,938.99
2005 5% $ 138,456.04 5% $ 29,320.10 $ 109,135.94

In both 1985 and 2005 the average laborer worked 38.5 hours per week, but the average executive’s week grew from 42.5 hours in 1985 to 45.5 in 2005. In this one example there is virtually no difference in compensation rates for the past 20 years, so where are these claims about the growing gap coming from? It’s not from the one percent, it’s actually from the .005 percent.

The "real" rich are the exception

A very small group of entrepreneurs whose names are quite famous represent the biggest gap between the average folk and the richest of the rich. This small group skews the average because a very few have been immensely successful. Imagine the difference in the salaries of the executives at Home Depot from 1985 to 2005; in the intervening years the company went public and the executives that formed the company with their own money at risk made hundreds of millions from the value of their stock when the company went public.

In 1978 Home Depot was formed by Bernie Marcus and Arthur Blank along with Ron Brill, and Pat Farrah. Their efforts produced the largest home improvement retailer in the United States and the fourth largest general retailer. Their vision, hard work and persistence to bring the fledgling company through the Jimmy Carter recession into the global powerhouse it became brought jobs to hundreds of thousands of people. Without the efforts of entrepreneurs like Marcus and Blank thousands of other employees and yes, executives, might never have achieved the success they did.

In those intervening years we had the explosion of the Internet that made many entrepreneurs very wealthy. Bill Gates, Steve Jobs and many others became vastly rich through their vision of personal computing, the Internet, cable television, cell phone technology and the big-box stores like Costco and Sam’s Club. A very small group who saw where technology and sales trends were headed amassed huge business empires and massive personal fortunes; that relatively small group of imaginative entrepreneurs skewed the gap to make it appear the have’s and have-nots have diverged. In this time more multi-millionaires were created than at any time in our nation’s history. During the same period more jobs were created than at any time in our history. More than 64 million jobs can be directly tied to the expansion of the economy during these 20 years.

Liberals will point to these select few and claim this is the rule when in fact the gap has not significantly changed. Most CEOs don’t make millions of dollars in salary and are by no means rich. How many founders of businesses went years without even drawing a paycheck? Most executives in U.S. corporations haven’t had their rate of pay increased in multiples of hundreds that the left would like us all to believe.

We should all thank God for those that saw an opportunity and risked their welfare and that of their families to by chance create something that helps millions find successful employment; their success helps us all and if they get rich in the process, more power to them. Attacking those that help expand the U.S. economy is to remove opportunities from our children and risk everything that makes America the economic engine of the world.

If we fall for the half-truths and blatant lies of the Occupy forces and the Liberals the American Dream is forever lost.