Tuesday, November 19, 2013


I was going to put this information in with my regular Weekly Readings post but CEO-to-Worker pay gaps deserves its own post ...

Cool interactive ... CEO-to-Worker pay ratios around the world (AFLCIO).

Here's another graph on CEO-to-Worker pay ratios in the United States. The numbers are different from the AFL-CIO piece, but the story is the same (Washington Post).

The 5 highest CEO pay ratios ... and, yeah, Wal-Mart is #1, with a CEO-to-Worker pay ratio of 1,034: 1 (Payscale.com). For more on the topic click here.

Here's what Politifact has to say about a misleading, but viral, FB post on CEO-Worker pay ratios (Politifact).

- Mark


Anonymous said...

There is a direct correlation between wealth and power. How does a supposed democracy justify these kinds of differentials?

Anonymous said...

@Anonymous: First, we are NOT a democracy. We are a Constitutional Republic with Democratic elements. The Founding Fathers intended it to be this way. Second, can someone provide a justification as to why CEO pay is so frowned upon? I mean, these people are in charge of the viability of hundreds of thousands of employees, responsibilities to shareholders, and providing products in high demand by the American consumer. Without the leadership of CEO's (who are constantly under pressure to deliver to their shareholders), a profitable company could turn downhill rather quickly e.g., Leo Aptheker (HP) and John Corzine (MF Global) to name a few.

Just a thought.

Anonymous said...

It’s a bit late to begin invoking narrow, pedantic, technocratic definitions to justify disproportionate power and wealth given that our form of government has been equated with democracy by our leadership for over a century as evident from the following examples:

“Democracy is worth dying for, because it's the most deeply honorable form of government ever devised by man.” –-Ronald Reagan

“As I would not be a slave, so I would not be a master. This expresses my idea of democracy”. –-Abraham Lincoln

“We will not be intimidated or pushed off the world stage by people who do not like what we stand for, and that is, freedom, democracy and the fight against disease, poverty and terrorism.” --Madeleine Albright

“If we are to keep democracy, there must be a commandment: Thou shalt not ration justice.”--Learned Hand

Constitutional republics like the United States have generally been considered to be liberal democracies not plutocracies.

Pedantic emphasis on a constitutional republic with democratic elements sounds a shade like government a la carte: a few people get to pick the best parts of the menu while leaving the rest of us to pick up the tab and clean up the mess.

Suggesting that the Founding Fathers intended to design a form of government that condoned concentrated power simply ignores their concerted efforts to provide a system of checks and balances.

As to the justification of egregious salaries to CEOs because of the crushing burden of their responsibilities, perhaps it is time to divide that crushing load of responsibilities (and the salary) among several people. Surely this would be far better for the corporation and shareholders. The entity and its owners would not be scrambling to replace their CEO should he or she decide to leave. This course of action might also begin to alleviate some of the unemployment with which we are dealing.

Also are we to believe that corporations were not well managed back in the 50s, 60s, and 70s when the CEO to average worker pay was considerably more equitable?

And would it not be far better for the corporation and its shareholders if a significant portion of the huge revenue streams accruing to its CEO were to be used instead to fund R & D and/or worker training?

Anonymous said...

Did the founding fathers intend wealth to equate political power? The system is corrupt and the captains of industry are a part of the problem. They will pay their due; and sell the rope used to hang them.

Just a thought.

Anonymous said...

From the Founding Fathers:

"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!" -Ben Franklin

“A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.” - Thomas Jefferson

“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.” -John Adams

I wholeheartedly agree that the Founding Fathers would not condone concentrated power (from any party) if it usurped the system of checks and balances they had foresight to put in to the Constitution. However, I don't quite follow as to what this has to do with CEO pay?

CEOs provide a level of talent that is required to produce the desired product - in this case, a strongly performing company. Yes, the CEO of Wal-Mart, Target, Amazon, Apple, etc. should be paid disproportionately more than the Greeter, shelve stocker, truck driver, or analyst. Furthermore, it's rare that a CEO of one of these companies "decides to leave." Rather, they are often forced out or fired for underperformance.

If funding R&D or worker training with "huge revenue streams" paid to the CEO proves to be more profitable to the shareholders then by all means I say absolutely. Again, it's up to the shareholders to decide these things.

Anonymous said...

No, the Founding Fathers did not intend for Crony Capitalism to rule. It's a real problem and a threat to market capitalism.

Anonymous said...

Perhaps you overlooked the first sentence in the first posting.