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In downtown Providence, as in other cities around the globe, protesters inspired by the Occupy Wall Street movement are trying to raise awareness about economic inequalities.
On a recent visit to Occupy Providence’s encampment at Burnside Park, a Providence Journal reporter spotted a hand-written sign that compared the earnings of a minimum wage worker with those of Goldman Sach’s CEO, Lloyd C. Blankfein.
The sign read: "Minimum wage = $16,000/year CEO-Goldman Sachs (Lloyd Blankfein) $16,000/Hour."
It goes without saying that Goldman’s CEO earns piles more money than most Americans, never mind Rhode Island’s minimum-wage workers.
Ever since the New York investment bank accepted a $10-billion government bailout during the financial crisis in 2008, Goldman Sachs has made national headlines for its super-sized executive compensation packages.
But we had our doubts about whether Blankfein, Goldman’s chief executive, actually earned in one hour what a minimum wage worker in Rhode Island earned in an entire year. So we decided to check it out.
The minimum wage in Rhode Island is $7.40 per hour, so simple math shows that someone who works 40 hours per week for 52 weeks (or 2,080 hours) will earn $15,392 a year. (The minimum wage was the same in 2010 as this year. Many minimum wage workers don’t get benefits, unlike CEOs. But we’ll get to that later.)
The protest sign said $16,000, which is pretty close.
But calculating the pay of chief executives is more complicated because a large share of their compensation is typically in the form of stock options, pension contributions and other non-cash payments.
In 2010, Goldman reported it paid Blankfein a salary of $600,000 plus a bonus of $5.4 million, for a total of $6 million, according to its 2011 proxy statement, the most recent available data.
That’s 375 times more than a minimum age worker would earn in Rhode Island. But it’s a mere $2,885 an hour, not $16,000. (We’re basing this calculation on a 40-hour work week.)
But wait, there’s more.
Besides his salary and bonus, the company reported that it gave Blankfein $12.6 million in restricted stock, boosting his annual compensation to $18.6 million. If he worked 40 hours per week, his hourly rate would amount to $8,942. And that’s without benefits.
Goldman also paid Blankfein $464,067 in 401(k) matching contributions, term life insurance premiums, medical and dental premium payments, long-term disability insurance premiums, life insurance premiums and perks such as his company car and driver.
(The protesters might have mentioned that the $185,000 Goldman paid for Blankfein’s car and driver last year is more than 3½ times Rhode Island’s median household income in 2010.)
In all, Blankfein’s compensation in 2010 totaled about $19.06 million.
But once again, simple math shows that the estimated cash value of his compensation that year is $9,165 an hour -- not $16,000 an hour as the protest sign declared.
The Occupy Providence protest sign was close when it stated that the minimum wage in Rhode Island is $16,000 a year (it’s actually just under $15,400). And its point -- that CEOs such as Blankfein make enormous sums of money while people at the bottom of the economic ladder make almost nothing -- is well taken. But the claim that Goldman Sachs’ CEO earned $16,000 an hour was way off. We rate it False.
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www2.GoldmanSachs.com, "Proxy Statement for 2011 Meeting of Shareholders," April 1, 2011, accessed Oct. 20, 21, 2011
U.S. Department of Labor, Minimum Wage Directory, accessed Oct. 21, 2011
Interview and e-mails, Donna Murray, Rhode Island Department of Labor and Training, Oct. 20, 2011
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