Sunday, July 23, 2006

The high cost of being poor

Barbara Ehrenreich and Troubled Times report on a new study from the Brookings Institution showing how people who are poor pay more for lots of things than those of us in more affulent neighborhoods.

As one goes up the ladder, this is even more pronounced. For example, from my own personal knowledge and experience in corporate America, many officers of corporations have their entire medical insurance paid for them, receive company cars (which they often get to keep post-employment) and have special, and often generous, pension programs separate from that of the "regular" employees. These special pensions are often protected and funded despite bankruptcy filings, unlike regular employee pension programs.

Derek Bok once remarked that perhaps the most interesting, yet disappointing aspect of wealth distribution in America may be the fact that the best paying jobs are the most presitigous jobs, while the least-paying jobs, e.g. changing bed pans at hospitals, have the lowest status. Bok recognized the economic logic of it, but reminds us that there is more to "logic" than economics.

To posit one example, I never understood why Michael Eisner, at Disney, was paid tens of millions of dollars each year to watch animated films before they were released (his taste was often terrible), be a jerk to his fellow execs and employees, and yet failed to significantly increase shareholder value (particularly after he chased away Jeffrey Katzenberg and Frank Wells died in a plane crash). Isn't the status of being the head of Disney something so awesome that it should lessen the need for excessive income and perks?* This is not a plea for equality, but a plea for some limits in a time when regular employees are constantly told there's not enough money or perks for "everyone."

* The way things work in the US, if I used a rock star or a ball player as an example, everyone would immediately get the point. For some reason, this particular class analysis doesn't get applied very much to CEOs, does it?

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