The gap between America’s rich and poor is so extreme levels of inequality are worse in the land of the free than they are in many developing countries.
The U.S. ranks way behind the European Union and the United Kingdom in terms of inequality of pay, figures show.
In fact, the situation is so extreme the land of the free falls behind countries such as Cameroon, the Ivory Coast and revolutionary Egypt, Tunisia and Yemen – and only just in front of Uganda and Jamaica.
According to the CIA’s World Fact Book, which ranks countries in terms of how ‘equally’ wealth is distributed, the U.S. is the 42nd most unequal country in the world.
In contrast, Tunisia is the 62nd most unequal country, Yemen is 76th and Egypt, which has been ravaged by civil war, comes in at 90th place.
Income disparity in the U.S. has been growing for decades but the latest figures show it has now reached levels not seen since the Great Depression.
Ten per cent of the total personal income in America was taken home by the top 0.1 per cent of earners in 2008 – the latest year for which figures are available.
The top one per cent took home more than a fifth of all personal income in the U.S.
Research suggests the reason for this extraordinary disparity is a huge rise in pay for company executives, the Washington Post reported.
According to analysis of tax returns by economists Jon Bakija, Adam Cole and Bradley T. Heim, two thirds of the people that make up the country’s wealthiest 0.1 per cent are executives.
Perhaps surprisingly, almost half are executives, managers and supervisors at non-financial businesses while just less than a fifth are managers at financial firms.
‘Basically, executives represent a much bigger share of the top incomes than a lot of people had thought,’ Bakija, a professor at Williams College, who with his co-authors is continuing the research, told the Post.
‘Before, we just didn’t know who these people were.’
Compensation for executives at the biggest companies in America has quadrupled since the 1970s while pay for 90 per cent of the country has stalled, further research shows.
At food company Dean Foods, for example, chief executive pay has risen by ten times since the 1970s.
Meanwhile, wages for unionized workers at the company has fallen in that time. Workers who package the milk on the factory floor earn about £23 an hour – a decline of nine per cent in real terms.
Current chief executive, Gregg Engles, however, averages about $10 million in compensation each year. He owns 64 acres of land in Colorado, a $6million home in Dallas and travels in the company’s $10 million Challenger 604 jet.
‘Do people b***h because Engles makes so much? Yeah. But there’s nothing you can do about it,’ company worker Bob Goad, 61, told the Post.
The Dean Foods pasteurizer, who has to run an auction business in his spare time to supplement his daily income, added: ‘These companies have the idea that the only people that matter to the company are those at the top.’
Joe Bopp, 55, works at a cemetery in the summer to beef up his wage.
‘Twenty-three dollars an hour sounds like a lot of money,’ he said. ‘But when you pay $4 a gallon for gas and $3.29 for a gallon of milk, it goes away real fast.’
Those who defend executive pay say they are worth more than they used to be because companies have grown and become more difficult to manage.
‘You’re king of the hill, and you get paid for that,’ worker Ray Kavanaugh, 61, said of Engles. ‘He’s worth it if he keep the company making money.’
Engles declined to comment when approached.