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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.
(Get updates from PolitiFactRI on Twitter. To comment or offer your ruling, visit us on our PolitiFact Rhode Island Facebook page.)
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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