No wonder unemployment remains high. Just as ADP was issuing a dismal August employment report, another group provided a study that helps explain why the job market is going nowhere: CEOs of the 50 companies that account for the bulk of the nation's layoffs paid their chief executive officers 42% more than the average company, according to a report released today.
The 17th annual "Executive Excess" report, compiled by the Institute for Policy Studies, focused on 50 companies that account for three-quarters of the 697,448 people who were laid off between November of 2008 and April of 2010, according to the Forbes Layoff Tracker. These "layoff leaders" jettisoned an average of 3,000 workers during that period, but paid their CEOs average wages of nearly $12 million vs. the $8.5 million pocketed by the typical CEO of a Fortune 500 company.
"Our findings illustrate the great unfairness of the Great Recession," said Sarah Anderson, lead author of the study. "CEOs are squeezing workers to boost short-term profits and fatten their own paychecks."
There's no dollar-for-dollar correlation between the number of workers you fire and the hike in your paycheck, Anderson said. But there's a clear trend -- and it's not a healthy one for corporate America or society.
"There is a perception that these executives are making their companies lean and mean. But this cavalier approach to mass layoffs is devastating to workers in the middle of this economic crisis, and it could also have serious costs to the companies down the road," she said.
Anderson believes Layoff Leader companies will suffer from bad morale and will eventually face higher hiring costs when the economy recovers and they're forced to add employees. In other words, what's bad for workers today, could be bad for shareholders tomorrow.
The layoffs were not a consequence of losses that left the CEOs looking for ways to help their companies survive, Anderson added. Roughly 72% of the companies were profitable when they started toss employees. Instead, she said, it's a reflection of a new era in Corporate America, where workers are sacrificed in order to maintain bloated paychecks at the top.
Which Layoff Leaders took home the most? The Top 10:
1. Fred Hassan of Schering-Plough took home $49.65 million in total compensation, while laying off 16,000 employees.
2. William Weldon of Johnson & Johnson earned $25.57 million, while laying off 8,900.
3. Mark Hurd, the recently ousted CEO of Hewlett-Packard, earned $24.2 million. Layoff count: 6,400
4. Robert Iger of Walt Disney earned $21.58 million and laid off 3,400.
5. Samuel Palmisano of IBM took home $21.2 million, while sending home 7,800 former employees.
6. Randall Stephenson of AT&T got $20.2 million, while 12,300 of his workers got pink slips.
7. Michael Duke of Wal-Mart Stores earned $19.2 million. Layoffs: 13,350
8. Alan Mulally of Ford Motor earned $17.9 million, while laying off 4,700.
9. Louis Chenevert of United Technologies took home $17.9 million, while cutting 13,290 jobs.
10. Ivan Seidenberg of Verizon earned $17.5 million and cut 21,308 members of Verizon's staff.
The tragedy in all of this is how many jobs could have been saved were these executives less greedy. Anderson says there's no current way to know the average pay of the laid off workers. But if you assumed that the average worker was paid $50,000 annually, the $598 million these companies shelled out to their CEOs could have been used to kept 11,960 people employed.