
January 11th / 13th, 2008
"Moneychangers Making Too Much Money"
Not long ago, the Institute for Policy Studies and United for a Fair Economy
released their latest report on the growing pay gap between workers and CEOs
in America’s top industries. According to IPS/UFE, the average total
compensation package for a CEO in a large company was $10.8 million. That’s 364
times the salary of his workforce, whose average pay is $29,544. The numbers are
a little less staggering if you count only full time employees. In that
scenario, CEO pay is a mere 240 times larger than that of their employees, who
make an average of $40,000 annually.
As bad as the report seems, the news is probably worse. That’s because,
according to author David Callahan, the pay disparity six years ago was a margin
of 531 and growing. But no matter whose figures you rely upon, the fact
remains that compensation for America’s top executives is obscene. Just ask
their European counterparts who make three times less, but whose companies boast
significantly higher sales.
Still, this is capitalistic America, so why should anyone care how much
money is made by greedy CEO’s? After all, even the Bible tends to defend salary
disparities as being the purview of the boss. In the book of Matthew (ch.
20) a vineyard owner makes a deal with his workers to pay them a denarius for
a full day’s labor. Coming up short on field hands, however, the owner makes
one trip after another into town, scrounging up extra help, and promising the
add-ons the same pay. The problem is that the original employees
discovered that the last guys to be hired received full pay for only a few hours
work.
The owner dismissed their complaints, saying that the wage of the last
group had no affect on the deal he made with the first group. Thus the famous
phrase, “the last will be first, and the first, last.”
Clearly Matthew was speaking of pay disparities among employees, but the
lesson can also apply to CEOs. It teaches us not to covet the salary of others
and to keep our mouths shut so long as a pay disparity doesn’t adversely
affect our own deal. But today, that’s exactly what’s happening. Russell
Whelton of Saginaw Valley State University warns that excessive CEO salaries
often reduces monies available for research and development, and employee
training. Moreover, says Whelton, these CEOs are building their personal fortunes
while reducing wages, relocating plants out of the country, and laying off
American workers. He also notes that this atmosphere of greed has resulted in
higher subordinate turnover, lower job satisfaction, and lesser quality
products. Clearly then, salary disparities are having an adverse affect on
workers. So much so, that Matthew would roll over in his grave if he knew how bad
things were, especially in the health insurance and pharmaceutical fields
which are supposed to be engaged in helping patients. According to WebMD’s
Dr. Ira Kirschenbaum, the total earnings and compensation for the nation’s top
23 healthcare CEOs is $14.9 billion dollars. Ironically, if these 23
individuals took a 10% pay cut, they could pay for medical coverage of 35,000
Americans for five years. Moreover, applying the same formula (which he says is
based on the average family’s health insurance premiums being $8,000 per
year), if every CEO who profits from healthcare took a 10% pay cut, we could offer
free medical insurance to every family in America.
Those of us toiling in the vineyard might have agreed to a low salary, but
clearly our wages and the health of our families are, in fact, being adversely
affected by corporate greed. It’s time for Congress to investigate the
correlation between excessive CEO salaries and the rate of plant closings,
employee lay-offs, and foreign outsourcing, especially among the top U.S.
industries. And while they’re at it, our lawmakers also need to investigate
companies like Blue Cross & Blue Shield of North Carolina, whose top executives make
over $2 million per year, and who gave themselves 20% bonuses last year while
preparing to raise customer premiums by that same amount in 2008.
It’s time for the moneychangers to take a little less and give a little
more. Here endeth the lesson.
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