The Money Gap Gets Wider: Rich Folks Should Start to Worry

After some of the interesting comments on my remarks about a million dollars, I did some digging and found this staggering fact in an interesting piece by Jeanne Sahadi, senior writer, from July:
Last year, the average CEO of a company with at least $1 billion in annual revenue made $10,982,000, or 262 times what the average worker made, according to an analysis by the Economic Policy Institute (EPI) released Wednesday....Put another way, the average worker--who earned $41,861 in 2005--made about $400 less last year than what the average large-company CEO made in one day. That assumes 260 days of pay (52 weeks x 5 days a week).
Now, as a business person who gets some of his business from other business persons, it might be wise of me to keep my thoughts on these numbers to myself. After all, at times I have been hired by companies with at least $1 billion in annual revenues and I might like to work for them again. But 262x?!* Come on! That is just too much. (I'd love to hear from a CEO who truly believes he or she is worth that much.)

To picture the size of this disparity I created the bar chart that you see on the left. The black bar is the average big company CEO income. The red bar, more like a tiny red strip is the average employee's income.

And that 262 is an average. Which means some CEOs are taking home an annual salary of even more than 262 times the annual earnings of the average worker. In all my study of economics and all my years in business, I don't see a way to rationalize that. Sure, a CEO might make some amazing deals and lead the company into huge profits, but what about the employees? Any company doing more than $1Bn a year has to have several thousand employees, some of whom must have helped in the earning of those profits. Spreading the wealth is not only morally right but good business, in the long run.

So, dare I say that CEOs who pocket megabucks lack long term vision? I certainly think there is a good case for saying that sustainable prosperity depends on social equity. Sure, several generations of the mega-rich few may enjoy life conscience-free in the stratosphere of luxury, but how long can that last if the poverty gap keeps gnawing away at social stability?

And yes, I started this blog by saying that $1 million is not what it used to be. But surely there is still such a thing as too much money. I think a salary 262x that of the average worker might be it.

1 comment:

  1. I knew it was ridiculous, but not just how ridiculous. Thank you for blogging about it.