One of the biggest crises in the American economy is the rise of extreme income and wealth inequality.
And one of the causes of this inequality is the bizarre consensus that, when it comes to the pay scales of the folks at the top, there’s no such thing as “too much.”
CEO pay, for example, has skyrocketed in recent decades.
CEO pay is now so high that the average big-company CEO now makes 380 times as much as his or her average employee.
That’s not 380 times as much as the lowest-paid employee.
380 times as much as the average employee.
CEOs tell themselves that this is all fine and fair because they worked their way to the top and because being a CEO is a “hard” and “risky” job with lots of responsibility.
And that’s true.
But most jobs are “hard.”
Most jobs are also “risky”–starting with the “risk” that if your CEO makes a dumb decision, or the economy slows down, your CEO might decide to fire you.
Most jobs also come with a lot of responsibility. If an inspector on an auto production line screws up an inspection, for example, someone might die. If a soldier screws up on the battlefield, dozens of people might die. If a pilot screws up in the cockpit, hundreds of people might die. That’s responsibility. That’s risk. Inspectors, soldiers, and pilots don’t get paid a lot for having that level of responsibility.
The “risk” that you might screw up your CEO job and get sent packing with a severance package worth tens of millions of dollars, meanwhile, isn’t really “risk” — at least not as it is traditionally defined.
And the “CEO” job also comes with an enormous privilege–the privilege of leading hundreds or thousands or tens of thousands of dedicated people who are devoting their lives to a common mission. That privilege is so meaningful that lots of CEOs would eagerly do the job for vastly less than they are paid.
But, these days, the prevailing ethos is that CEO pay should be compared only to other CEO pay–not to the pay of the average employee. And because other CEOs are getting paid like sultans, the logic goes, then all CEOs should get paid like sultans.
That’s a pity.
And it’s no wonder that so many average employees in America think that they’re getting the shaft.
Because they are.
In case the “380-times” statistic doesn’t startle you, here’s another way of putting it:
The average CEO of a big American company makes more in an hour than his or her average employee makes in a month.
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