Follow the Money

This piece has numbers in it. Not many. But they matter.

Read them slowly.

In 1965, the average CEO earned 21 times what the average worker earned.

That seemed like a lot. A multiplier of 21 was debatable — but at least it was a number a human mind could hold. You could understand the distance between where you were and where the top was.

By 2021, the ratio was 399 to 1.

The average CEO now earns, before lunch on January 2nd, what the typical worker earns in a year. Not because the work got harder. Not because the decisions got more complex. Because something changed in who gets to decide how value is divided — and who doesn’t.

Between 1979 and 2020, worker productivity in the United States increased by 61 percent.

Hourly wages, adjusted for inflation, increased by 17 percent.

The gap between those two numbers is not an accident of math. It is a transfer. Forty-four percentage points of value, created by workers, sent somewhere else, over forty years.

In the United States, the federal minimum wage is $7.25 an hour. It has not changed since 2009. If it had kept pace with productivity since 1968, it would be approximately $24.

In Canada, depending on the province, it is between $15 and $20. In the United Kingdom, £11.44. In Australia — which has one of the highest minimum wages in the developed world — $24.95 Australian dollars, which converts to roughly $16 US.

Different countries. Different floors. Different distances from what productivity would justify.

The same direction.

In every country where this calculation has been done, wages have grown more slowly than the value workers produce — for forty years, without interruption, across governments of every stripe. The gap is different in size. It is not different in kind.

In 1960, the top marginal tax rate in the United States was 91 percent.

That meant a dollar earned above a certain threshold — a very high threshold — was taxed at 91 cents on the dollar. Wealth could still accumulate. It did. But there was a ceiling on how fast, and a floor built from what was collected.

By 1988, that rate was 28 percent.

Today it is 37 — and that is the rate on income. Wealth — the money that makes money while you sleep — is taxed at lower rates still. In some cases, not at all until it is passed on. And when it is passed on, there are instruments designed to minimise even that.

The ceiling was removed.

The floor is still there. It’s just lower.

In 1982, share buybacks — corporations purchasing their own stock to inflate its price — were legalised in the United States.

Before 1982, they were considered market manipulation.

After 1982, they became standard practice. By 2018, American corporations spent over one trillion dollars buying back their own stock in a single year. Not invested in factories. Not paid to workers. Not spent on research. Returned to shareholders — the people who already owned the most — to make what they owned worth more.

One trillion dollars. One year. One direction.

The four hundred wealthiest Americans now own more wealth than the bottom half of the country combined.

Four hundred people. You could seat them in a restaurant. They own more than one hundred and sixty-five million Americans — people who work, who pay taxes, who were told the same story you were: work hard, and your life will be yours.

They came for the house first.

Then the time.

Then the things you thought you owned.

Now here are the numbers that show how it was done.

The economy grew. Productivity rose. Technology arrived. More value was created than at any point in human history. The people who went to work and made that happen ran harder every year.

And somehow — run the numbers — most of them ended up with less.

Not less than last year. Less than their parents. Less than their grandparents. Less, despite working more, producing more, losing more sleep, sacrificing more years to a future that kept moving further away.

The money went somewhere. These numbers show where.

What they cannot show — what no spreadsheet can show — is who was in the room when the structure was built.

Whether the room is still full.

And whether they have already decided what comes next.

The facts in this piece are documented and verifiable.

• CEO-to-worker pay ratio (21:1 in 1965, 399:1 in 2021): Mishel, Lawrence, and Jori Kandra. “CEO Pay Has Skyrocketed 1,322% Since 1978.” Economic Policy Institute, August 10, 2021. epi.org
• Productivity vs. wage gap (1979–2020): Economic Policy Institute. “The Productivity–Pay Gap.” Updated 2022. epi.org/productivity-pay-gap
• Federal minimum wage ($7.25, unchanged since 2009): US Department of Labor. “History of Federal Minimum Wage Rates Under the Fair Labor Standards Act.” dol.gov
• Minimum wage if tracked productivity since 1968 (~$24): Economic Policy Institute. “Minimum Wage Tracker.” epi.org
• International minimum wages: Government sources for each country — Canada (Employment and Social Development Canada), UK (Low Pay Commission), Australia (Fair Work Commission).
• Top marginal tax rates (91% in 1960, 28% in 1988, 37% today): Tax Policy Center. “Historical Highest Marginal Income Tax Rates.” taxpolicycenter.org
• Share buybacks legalised in 1982: US Securities and Exchange Commission. Rule 10b-18, adopted November 17, 1982.
• $1 trillion in buybacks in 2018: S&P 500 buyback data, widely reported. See also: Lazonick, William. “Profits Without Prosperity.” Harvard Business Review, September 2014.
• 400 wealthiest Americans own more than the bottom half combined: Federal Reserve Distributional Financial Accounts data. See also Forbes 400 annual wealth estimates.