Thursday, June 22, 2006

could this be a problem?

CEOs earn 262 times pay of average worker

nah. it's go-go capitalism, baby, a rising tide lifts all boats and shit. right? right?

a CEO earned more in one workday than an average worker earned in 52 weeks, said the Economic Policy Institute in Washington, D.C.

in one workday. one.

can someone who wears an economics or public policy hat explain to me why we can't at least begin to regulate this kind of thing? i know the spectre of socialism is raised if you even mention the issue of pay parity, but why is it that nothing puts a check on this kind of thing?

for instance, why couldn't we establish that a CEO can only earn X times as much as the lowest-paid employees at his/her company? that way, if the CEO wants to make more money, well, he/she needs to find a way to boost profits to the point where the rising tide actually can lift all boats.

am i hopelessly naive to expect that there's something the government can do to address this? or am i just a dirty socialist who clearly doesn't grasp the supreme wonder that is the free market with my wee, english-degreed brain?


Jared Goralnick said...

Sorry, this case you are a dirty socialist.

It is beyond ridiculous that the market has driven these salaries so high...especially when few if any of these folks prove that sort of worth for their organizations.

But is it the government's job to tell a business how to compensate...imnsho, no.

educand said...

And IMNSHO, it's one of those glaring, aneurysm-inducing examples of how desperately flawed the capitalistic system is. I wouldn't be unhappy at all to see the U.S. embrace some elements of socialism, given its potential for decreasing exploitation and reducing power differentials.

kate.d. said...

so my (again very simplistic) question is, if it's not the government's job to regulate, then whose job is it?

elizalou said...

I did just read something the other day (a company article on my work's intranet, so I can't link) that Whole Foods actually has a rule that its executives cannot make more than x times the average employee. I can't remember if it was 16, 26, or 62. At any rate it's still a large amount, but at least it's not unlimited.

Toast said...

I had the same thought last week, although I included the idea as one item in a package of incentives/regulations that corporations could voluntarily sign up for.

Anyhow, yeah. 262 times. Pretty obscene. But then, some people really seem to believe that they can never have enough money, even if it entails driving everyone else into poverty.

kate.d. said...

wow toast, how did i miss that one? see, you're way more evolved than i am in thinking about this. and the "opt-in" thing makes sense to me...but i imagine the conservative caterwauling would then be about "small business owners," and how it's somehow unfair to them. if a plan benefits workers, it always seems to hurt that small business owner, and that somehow stops the train in its tracks.

hetherjw said...

Japan does this. I want to say CEO pay is 10 times the lowest paid employee. But don't count on that number.

As for these salaries being driven up by "the market" that is not true in the strictest sense of markets. The salaries of top execs are set by boards made up of other top execs, not normal market forces. As long as everyone on the Board and in the executive seats puts their own self-interest above the health of the company they are not behaving in line with markets or economics. Salaries like this are against market forces.

Toast said...

how did i miss that one?

Beats me. I mean, I'm good for roughly one serious, thoughtful post per quarter. You'd think you could at least make the effort to keep an eye out for it. ;-)