Sunday, February 08, 2009

What Are You Worth?

What we make is one of the great touchy subjects. Think about yourselves (if retired, yourself while working). I'll bet more people in your circle of family & friends know details of your health than details of your paycheck. Given that, I suppose it shouldn't surprise me that it has taken this long for Americans to get good and riled up about executive pay. For the past few decades we've been told that executive pay was skyrocketing in comparison to the average worker's take home. But only after public bailout of private companies has it become acceptable for us to be annoyed at that in large numbers. Can you imagine anyone in the White House (from Clinton to Bush) calling Wall Street bonuses "shameful" before the buyouts?

So here we are, decades into what Rakesh Khurana & Andy Zelleke call "the grasping hand of the American executive" in today's WaPo.
It wasn't always this way. In 1960, the ratio of CEO pay at large companies to that of the president of the United States was about 2 to 1. In 2007, it was more than 20 to 1. In 1980, executives at large companies made about 40 times what the average worker made. Last year, CEOs made about 360 times more than the average worker. During the golden age of U.S. economic power, business schools taught future executives to see themselves as trustees of their companies and stewards of our economic resources.

But today, to the people who run them and the investors who own their stock (mostly very temporarily), public companies have become largely personal ATMs, machines from which to extract as much personal wealth as quickly as possible, within the boundaries of the law (usually). The distinction between creating something of enduring value and merely extracting as much value as possible has dissolved. Senior executives don't simply want to be paid well. Especially in the past 15 years or so, they have aspired to personal fortunes that were previously attainable -- or even imaginable -- only by the entrepreneur who risks everything in launching the (rare) new venture that proves wildly successful.

President Obama has proffered a ceiling of $500,000 for execs of companies receiving buy outs. But as the LA Times notes, such a law wouldn't necessarily end the run of greedy hands snatching all they can out of a company before fleeing.

"You're pitting a group of government bureaucrats against compensation consultants and lawyers who are paid lots of money, and they're pretty damn smart," said Graef Crystal, a former executive compensation consultant who has written six books on the subject. "It's a lot easier to find ways around things like this than it is to invent them in the first place."

Bonuses and options and goodness only knows what else has contemporary CEOs making 344 times the pay of an average US worker. And that is based on the average pay. And we all know a whole lot of people who aren't making anything close to average pay.

When I joined the job world in my 20s I remember someone talking about a concept called "make your age." As a 23 year old making $10,000 a year, that seemed as unreachable goal as could be imagined. I was lucky. I didn't have a family to support on that income.

In 2006 the median hour (including tips) for waiters & waitresses in the U.S. is $7.14 (the lowest 10% earn less than $5.78). Security guards' pay levels frange from $15,030-$35,840. Medical assistants earned between $18,860 to $36,840. Child care workers between $12,910-$27,050. Office cleaning crews come in between $14,010-$33,060. And teachers (K-12) came in from $28,590-$76,100.

These are just some of the people who take care of us and our families. People who were fighting to survive in our "good" economy are being tossed about and challenged to care for themselves and their families like never before. And while these millions of people who work to make our lives easier or better in so many ways struggle to keep roofs over their heads and food in their refrigerators we continue to be treated to the spectors of executives run wild. And even more depressing, arguments that executive bonuses should not be cut because companies won't be able to retain the good people. Good people?!!! It is these good people who ran the economy into the ground in their frenzy of greed and self-interest.

Forget Obama and his $500,000/year ceiling for executives. Let's give them a few years making what the lowest paid worker in their organization makes. Have fun guys.


Blogger buckarooskidoo said...

The president of my institution makes $750,000/year, of which he generously sacrificed $125,000 so as to look "better" as he makes cuts of up to 20-30% of the total university budget. Even making "only" $600,000, he STILL tops the compensation of President Obama and Governor Chris Gregoire COMBINED(!!!!!!).

10:04 PM  

Post a Comment

<< Home

Free Web Counter
hit Counter