U.S. workers are the most productive in the world and they put in longer hours than workers in any other developed country. Yet, even though our economy generates more than $13 trillion in income, the economy is not delivering for workers. In fact, average wages today are only 15 percent higher than in 1980, despite a 67 percent increase in productivity.

The annual release of CEO compensation last week highlights one reason why the gap between the richest in America and the rest of us has grown significantly over the past 25 years.

In 2006, the average CEO of a Standard & Poor’s 500 company made $14.78 million in total compensation, according to initial estimates by the Corporate Library and highlighted on the 2007 AFL-CIO Executive PayWatch website, which includes some of the executive compensation data required under new rules issued by the U.S. Securities and Exchange Commission (SEC) in 2006. The new disclosure rules go further than ever before in revealing just how much executives are paid, making transparent previously hard-to-find information such as pension totals.

One CEO, Occidental Petroleum Corp.’s chairman and chief executive took in more than $400 million in compensation last year, one of the biggest single-year payouts in U.S. corporate history.

From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each person at the top of the cash pile earned an extra $18,000.

One way the rich get richer is to rig the system. There are many methods by which CEOs squeeze a billion here and a billion there, out of already outrageous pay packages. This year, Executive PayWatch features case studies of CEOs who backdated stock options to wring the most they could from their companies and their shareholders. (The case studies highlight the need for reform to protect companies and their investors and the PayWatch site also makes it easy to contact the SEC and members of Congress to urge new rules governing executive pay.)

Here’s one way they do it. Bruce Karatz, former CEO of KB Home, received the second-largest pay increase among 83 CEOs of large companies between 1995 and 2005. Since 2001, he made nearly $166 million from exercising stock options.

Karatz resigned in November 2006 after an internal investigation found he had backdated his own stock option grants to boost his compensation. The internal investigation into the backdating of stock options at KB Home blamed Karatz and Gary A. Ray, the head of human resources, for altering the dates of grants between 1998 and 2005. The company also is under criminal investigation by federal prosecutors, in addition to a formal SEC investigation.

KB Home has frozen Karatz’s severance pay—estimated at as much as $175 million—until an agreement is reached regarding how much he actually will receive. But because Karatz’s exit package is part of a legally binding employment agreement, it might be difficult for the company to defend its position if it decided not to pay Karatz.

As a result of the stock option backdating scandal, KB Home seems to have taken some positive steps in corporate governance, such as adopting a new policy requiring all stock option grants and their terms to be approved by the board compensation committee and not granting any stock options to any executives in 2006. But that’s just one company out of many more.

CEOs also wrangle unbelievably gilted golden parachutes before bailing out. In fact, these “golden goodbyes” may be one reason behind merger-madness—consolidations that all too often, are not in the best interests of shareholders or employees. Take the example of Caremark Rx. When it merged with CVS recently, it triggered a golden parachute for Caremark CEO Edwin Crawford that could soar beyond a quarter of a billion dollars, even though no other company employee will get any bonus, retirement benefit or severance due to the merger.

Such 21st-century Gilded Age excess is even starker when you consider that special interests seeking business tax breaks are holding hostage an increase in the federal minimum wage. The U.S. House and Senate each passed a minimum wage bill that would increase the current $5.15 an hour rate to $7.25 and would be the first increase in a decade.

And starker again when we recall just two weeks ago, when Circuit City fired 3,400 employees, the company didn’t even bother to go through the usual corporate charade in which staff are cut now and the announcement about hiring lower-wage employees to replace them is made months later.

Instead, the Richmond, Va.-based company baldfacedly said it was eliminating the employees because their salaries were too high—and the workers could apply for their former jobs at lower pay.

Meanwhile, Circuit City CEO Philip Schoonover and Chairman W. Alan McCollough received nearly $10 million in salary, bonuses, stock options and other perks.

One of the major causes of this state of the U.S. economy is a massive shift in bargaining power away from workers toward employers that has occurred over the past 30 years, according to Ron Blackwell, AFL-CIO chief economist.

This increased employer power allows corporations to outsource work, deny wage increases and walk away from obligations to provide health care and retirement security to employees. Workers and families need a stronger voice to balance corporate power, Blackwell says.

The Employee Free Choice Act would be a big first step in restoring the balance between workers and management, says Blackwell. The legislation, which the House passed March 1, would level the playing field and allow workers to freely decide whether to join a union.

At the same time, the union movement is taking action to increase worker awareness of the underlying causes of this gap between productivity and wealth. The AFL-CIO Executive Council in February approved a new economics education program that will:

* Expose the corporate agenda that invokes privatization, deregulation, globalization, labor market flexibility, price stability and new technology as excuses and seeks to expand so-called free trade. Some 3.4 million manufacturing workers have lost their jobs since 1998, partially as a result of trade deficits that were run up in a rush by corporations to compete in a global economy by seeking the lowest wages.
* Reinforce with workers the importance of a strong government and what we need from it (accountable elected representatives, Social Security, education, universal health care, fair trade and labor laws that work). At the same time, we must stop starving our public services, and we must remind our officials of what we don’t need (deregulation, corporate welfare, privatization and regressive taxes).
* Heighten awareness among working families that our struggles are not the result of our individual failures to work hard, play by the rules or make good decisions. Our problems are not personal ones; they are part of a national pattern that can be addressed only through organizing and collective action.

Among the many spring rituals—the first baseball game, Washington’s cherry blossoms, daylight-saving time—the annual release of corporate compensation should be the one to wake us from our long winter’s nap and into action.

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