With executive pay, rich pull away from rest of America

It was the 1970s, and the chief executive of a leading U.S. dairy company, Kenneth J. Douglas, lived the good life. He earned the equivalent of about $1 million today. He and his family moved from a three-bedroom home to a four-bedroom home, about a half-mile away, in River Forest, Ill., an upscale Chicago suburb. He joined a country club. The company gave him a Cadillac. The money was good enough, in fact, that he sometimes turned down raises. He said making too much was bad for morale.

Forty years later, the trappings at the top of Dean Foods, as at most U.S. big companies, are more lavish. The current chief executive, Gregg L. Engles, averages 10 times as much in compensation as Douglas did, or about $10 million in a typical year. He owns a $6 million home in an elite suburb of Dallas and 64 acres near Vail, Colo., an area he frequently visits. He belongs to as many as four golf clubs at a time — two in Texas and two in Colorado. While Douglas’s office sat on the second floor of a milk distribution center, Engles’s stylish new headquarters occupies the top nine floors of a 41-story Dallas office tower. When Engles leaves town, he takes the company’s $10 million Challenger 604 jet, which is largely dedicated to his needs, both business and personal.

The evolution of executive grandeur — from very comfortable to jet-setting — reflects one of the primary reasons that the gap between those with the highest incomes and everyone else is widening.

For years, statistics have depicted growing income disparity in the United States, and it has reached levels not seen since the Great Depression. In 2008, the last year for which data are available, for example, the top 0.1 percent of earners took in more than 10 percent of the personal income in the United States, including capital gains, and the top 1 percent took in more than 20 percent. But economists had little idea who these people were. How many were Wall street financiers? Sports stars? Entrepreneurs? Economists could only speculate, and debates over what is fair stalled.

Now a mounting body of economic research indicates that the rise in pay for company executives is a critical feature in the widening income gap.

The largest single chunk of the highest-income earners, it turns out, are executives and other managers in firms, according to a landmark analysis of tax returns by economists Jon Bakija, Adam Cole and Bradley T. Heim. These are not just executives from Wall Street, either, but from companies in even relatively mundane fields such as the milk business.

The top 0.1 percent of earners make about $1.7 million or more, including capital gains. Of those, 41 percent were executives, managers and supervisors at non-financial companies, according to the analysis, with nearly half of them deriving most of their income from their ownership in privately-held firms. An additional 18 percent were managers at financial firms or financial professionals at any sort of firm. In all, nearly 60 percent fell into one of those two categories.

Canadians to board Gaza flotilla expect federal help

Canadians joining a maritime convoy to bring aid to Palestinians are counting on federal government help if the mission goes awry.

But Foreign Affairs Minister John Baird has already denounced the effort to visit the Gaza Strip — which is under a naval blockade by Israel — as "provocative."

The first mission by the international fleet last year ended in bloodshed. Nine people were killed and 45 injured after Israeli soldiers boarded a Turkish ship.

Organizers insist they are not transporting arms to the Palestinians but Israel has already indicated it will stop this year's effort from getting through the blockade.

Among the Canadians are Manon Masse of Quebec solidaire, a small left-wing provincial party, and Marie-Eve Rancourt of the Quebec league of human rights and freedoms.

They insisted Friday that the trip is necessary and the travellers' actions are peaceful.

But Rancourt acknowledged the mission is risky and said she expects she might end up in jail. 

"What we're doing is legal," she said. "Killing people who are delivering humanitarian aid — that's illegal and, frankly, it's immoral."

Both women said they expect the Canadian government to intervene and protect its citizens if there is trouble.

They criticized the government of Prime Minister Stephen Harper, which they accused of doing nothing for Palestinians.

"We're not going there to get shot at," Masse said. "But if anything were to happen to us, we would turn to our governments. All governments have a responsibility to protect."

Rancourt said the Canadian government would have several responsibilities to fulfill in case protesters are arrested, including providing diplomatic and consular services.

"If the Canadian government doesn't work to free us in case of imprisonment or to insist that our rights be respected, it will be responsible," Rancourt said.

Other Canadians setting sail on the Tahrir as part of Freedom Flotilla 2 are Robert Lovelace, a former chief of the Ardoch Algonquin First Nation and now a Queen's University professor and filmmaker John Greyson.

Beside the Canadians, there will also be delegates from Australia, Belgium, Denmark and Germany.

They say that humanitarian aid to the Palestinian territory is at a trickle and insist the blockade is illegal and isolating, resulting in a humanitarian crisis.

The vessel, which will carry medicine and medical supplies, will leave from Greece early next week in a convoy of 10 ships.