These days, it's hard for those in middle
Hollywood may have started it, and professional sports then picked it up, but now it has become pervasive across our economy — and is not serving it well.
I’m referring to the “superstar syndrome,” as it’s come to be called, which, simply defined, is the practice of lavishing big bucks on top performers and telling everyone else to stick it.
No, this is not another diatribe on whether Johnny Depp and Angelina Jolie are worth $30 million per picture (I would argue they’re not). Rather, I’m pointing to the trend across the business world, from movie studios to insurance companies, to redefine the way in which society rewards honest (or dishonest) labor.
According to several recent surveys, CEO compensation packages continue to soar while the average annual raises to employees have shrunk from 4% three years ago to less than 2% at present. Plus, much of the workforce now consists of temps who get no raises or benefits at all. Thus CEOs, actors and athletes are the new superstars.
Overall, the wealthiest 10% of the population now commands a vastly bigger slice of the pie than in nearly all other western economies — even Britain or Sweden. There’s also less mobility between income classes. Only 6% of those born to low-income households ultimately have a chance of making it into the top 20% of income earners, according to a new study from the Brookings Institution.
Now, I realize that inequality is a basic tenet of capitalism, but I would also argue that the “let them eat cake” attitude can become aggressively counterproductive.
Hollywood provides an intriguing microcosm. Superstar paydays continue to escalate while character actors work for barely above SAG scale. Still, recent films starring the likes of Depp, Jolie, Russell Crowe, Ben Stiller, and Reese Witherspoon have disappointed at the box office.
SAG recently settled for a 2% pay increase, while also agreeing to the proviso that actors no longer receive automatic first-class transportation to their locations — the ultimate thespian indignity.
In sports, the NBA’s practice of throwing money at superstars has all but guaranteed a total shutdown next season. Eduardo Porter of the New York Times reminds us that the New York Yankees organization coveted its superstars so much that it lavished $206 million on its players, six times as much as the Pittsburgh Pirates, the lowest-paying team. The Yankees still came away empty.
But this isn’t just about Derek Jeter and his pals: A Portuguese forward named Cristiano Ronaldo, playing for a Spanish soccer team, was paid $17 million last year and, of course, the ubiquitous David Beckham made $33 million from endorsements on top of his $7 million salary from the Los Angeles Galaxy and AC Milan.
Sherman Rosen, an economist at the U of Chicago, came out with a recent article titled “The Economics of Superstars” arguing that this is an inevitable result of technology: Big stars can now reach a bigger market and thus deserve their gluttony.
But an argument can also be made that, with declining economic growth, the multitude of performers and workers at the middle or bottom of the scale are less incentivized to originate anything.
Top writers and showrunners in Hollywood are experiencing richer paydays than ever, but it has become all but impossible for newcomers and neophytes to make a living.
When a superstar movie fails in Hollywood, all of this takes on a fascinating perspective. Does one weak release erode the viability of a Depp or a Tom Cruise? These questions take on special relevance in a wobbly movie economy when attendance was down 12% in the last quarter and when 20% fewer filmgoers went to the plexes during the summer.
Perversely, only five of the top 10 stars on USA Today’s “Celebrity Heat Index” are movie stars: The others are freaks from reality television or professional losers like Lindsay Lohan.
The bottom line is this: The mega-rich deserve their huge piece of the pie — whether they be actors, athletes, bankers or CEOs — but at such point when the superstar syndrome undermines the basic economics of their industry, or discourages innovation and growth, it’s time to blow the whistle on greed.
The mega-rich have always enjoyed watching people fighting for the crumbs — but there have to be more crumbs to spread around.