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 average salary of his workforce, which is $29,544. The numbers are a little less staggering if you count only full-time employees. In that scenario, a CEO’s pay is a mere 240 times larger than that of her 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 CEOs? After all, even the Bible tends to defend salary disparities as being the purview of the boss. In the Book of Matthew 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 reduce monies available for research and development, and for 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 percent pay cut, they could pay for the 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 costing $8,000 per year), if every CEO who profits from healthcare took a 10 percent 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 US industries. And while they’re at it, our lawmakers also need to investigate companies like Blue Cross and Blue Shield of North Carolina, whose top executives make over $2 million per year, and who gave themselves 20-percent 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.