Column: The nation’s growing pay gap is no Disney fairy tale
Disney Chief Executive Bob Iger’s base pay was $2.5 million in 2014. But, like many CEOs, his total compensation -- $46.5 million -- was boosted by a performance-based bonus.
Oscar Martinez isn’t certain, but he thinks his starting pay as a Disneyland busboy and later a cook was just above $1 an hour. As you might have guessed, that was a long time ago.
He started in 1956, when the federal minimum wage was $1 an hour, and he still works there.
With 59 years on the job, Martinez has climbed the pay scale to about $21 an hour. Now 80, he said he still cooks occasionally, but because of his remarkable longevity, he spends much of his workday posing for photos with VIP guests who want to meet him.
“I love my job,†Martinez said, telling me he’d rather not think about retirement.
I checked in with Martinez because with all the news lately about sky-high CEO compensation, a reader had a suggestion for me on the subject of growing income inequality:
Check out what Walt Disney was paid, relative to regular employees when he ran the mouse empire. And then take a look at how the compensation of current boss Bob Iger compares to typical workers.
That’s easier said than done, because detailed information about Walt Disney’s income is hard to come by. The New York Times reported in his 1966 obituary that Disney’s base pay was $182,000, and that he also had a “deferred salary of $2,500 a week, with options to buy up to 25% interest in each of his live-action features.â€
In other words, Disney had some perks and sweeteners that added to his total compensation, as Iger does today. I think I’d much rather have Iger’s deal, though. His base pay in 2014 was $2.5 million, which isn’t much more than Walt Disney’s base pay adjusted for inflation. But Iger’s performance-based bonus lifted him to a staggering $46.5 million in total compensation.
That was a 35% increase over his tidy 2013 windfall of $34.3 million. “Performance pay,†as it’s called, became wildly popular in the 1990s because of corporate tax advantages.
Don’t get me wrong. Iger’s job isn’t to create a new cousin for Goofy. It’s to make money for the company and its legions of shareholders, and he’s worked magic there, with billions pouring in from around the world.
Meanwhile, down in the ranks, a new contract for food and beverage workers at Disneyland Resorts will take average pay for thousands of employees from roughly $11.85 an hour to $14.35 over the next five years. Chris Duarte, president of Workers United Local 50, told me he was pleased with the bump.
That’s understandable. When you’re making barely enough to survive, while doing the grunt work that inflates executive bonuses, a couple more dollars an hour means a lot.
On the other hand, if workers on the Disney food line made near the minimum wage of $1.50 in the mid-1960s, their hourly wage has increased by just eight- or 10-fold in half a century, from about $3,120 a year to about $25,000.
What do you think Bob Iger would say if the Disney board told him his compensation would be a mere eight or 10 times Walt Disney’s?
By the way, my intent here is not to pick on Iger or single out the Disney company. Income inequality is coast to coast. It’s as American as “Snow White and the Seven Dwarfs,†and while executive pay soars to obscene levels, wages are stagnant — “Frozen,†you might say — for average working folk.
How grotesque is the haul by the 1 percenters?
A June report from the Economic Policy Institute said the chief executives of the nation’s largest companies make three times as much as they did 20 years ago, or 300 times more than typical working stiffs. Between 1978 and 2014, inflation-adjusted CEO compensation increased 997%, while a typical worker’s compensation increased 10.9%.
In Walt Disney’s day, back in 1965, the CEO-to-worker pay ratio was 20 to 1. It peaked at 376 to 1 in 2000, and is currently at 303 to 1.
With the recent stock market tumble, CEOs could lose a bundle on paper, at least temporarily. But a favorite Wall Street tactic for raising revenue and stock prices is to cut costs by dumping employees, so watch your back.
“This is not just something that might seem aesthetically displeasing to some,†said Larry Mishel, president of the Economic Policy Institute. “It’s a matter of this group grabbing a larger share of our national pie, and by doing so, there’s less pie available to other people.â€
You hear the argument that CEOs are merely reaping the benefits of their brilliant leadership, but Mishel says compensation has been nearly double the growth of the stock market in recent decades.
And don’t forget this:
“People who make a lot of money get to keep most of it these days compared to Walt Disney. If you had doubled his salary, 70% or more of it would have gone to the treasury,†Mishel said, because that’s how high the income tax rate was before President Reagan came to the rescue of the wealthiest Americans.
Another report from Mishel’s institute, scheduled for release Wednesday, looks at how much money it takes for a family of four to pay for basics such as housing, transportation and healthcare. The Los Angeles-Long Beach area, unsurprisingly, is among the top 15% among 618 regions in the country.
It would take an annual household income of nearly $74,000 a year to secure “a decent yet modest standard of living.†That’s nearly $20,000 more than the L.A. County median household income.
Oscar Martinez told me he’s done OK on his Disneyland paycheck over the years. He bought a house and raised a family. For a while, his wife, Shirley Ann, worked at the park, too, and recalls serving milkshakes to Mr. Disney.
Martinez told me he’s aware of the big compensation packages at the top, but he doesn’t give it much thought. He knows that’s just the way things work, and he thinks he’s been treated well.
He keeps working at 80 because he likes the job, but he said he’s feeling a lot of pressure now. His wife is sick, and his health insurance leaves him with about 20% of the medical costs.
“I need the money to pay the bills,†he said.
Twitter: @LATstevelopez
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