Posted by: coastcontact | June 28, 2014

Why the Rich get much Richer

Monopoly ManOn My 28 I posted a commentary titled Goodbye Middle Class.” On June 26 David Lazarus posted this column in the Los Angeles Times.

His column abridged, (underlined and bold not part of the Times editing)   At CVS Caremark, it doesn’t pay to be really good at your job. The nation’s second-largest drugstore chain adjusts its annual raises to how much an employee makes. The higher your salary, the lower your raise. The top workers at CVS stores — those earning the highest hourly wage for their job classification — are “red lined” by the company and receive no raises at all. CVS, which gave its chief executive a 26% raise last year to almost $23 million in total compensation, isn’t alone in making sure its rank-and-file workers don’t make too much money.

And this is why, in any discussion of income inequality, we keep reaching the same point — the rich get richer, while everyone else gets table scraps. “It’s not personal. It’s business,” said Mike Lipis, a Los Angeles compensation consultant. “You’re trying to make the most of your limited compensation dollars.”

I wrote recently about a report showing that the head of CVS, Larry Merlo, enjoyed the widest gap in the country between a CEO’s salary and that of his less-worthy underlings. According to compensation researcher PayScale, Merlo’s $12.1-million salary last year was 422 times the size of the median CVS wage of $28,700.

A top-performing CVS pharmacy technician earning a base wage of $9.30 an hour will similarly merit a 4.75% raise. But a red-lined pharmacy technician earning $15.67 an hour will see no raise.

Politicians have an excellent issue for the coming elections. It’s a good bet that none of them will even address the pay discrepancy. The reason? The source of the contributions for their campaigns.

Don’t look for the media to emphasize the salary discrepancies. Those heading the media companies are some of the highest paid people.

Leslie Moonves, CEO of CBS Corp.  $62,157,026 in 2012

Philippe P. Dauman, CEO of Vaicom Inc.$37,165,750 in 2013

Marissa A. Mayer, CEO of Yahoo Inc.  $36,615,404 in 2012

Robert A. Iger, CEO of Disney Co.  $34,321,055 in 2013

David M. Zaslav, CEO of Discover Communications $33,349,798 in 2013


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