No CEO should earn 1,000 times more than a regular employee | Sarah Anderson This is the reality in all areas of human endeavor where creativity and productivity intersect. CEOs earn 1,000 times as much as their average employee. In a business with 100,000 employees, only 316 of those will produce one half of all of the creative value. The same applies to artists, if one takes 100,000 artists, 316 of those will produce one half of the art. If those 316 artists create 100,000 pieces of art over their lifetimes, 316 of those artistic works will receive half of all views and will represent one half of the total value. More below. This is not something that can be "fixed." It is a feature of human creativity and productivity. You can take the value from the producers and give some of that value to those who are not very productive. Where is the fairness in rewarding the none productive while taking from the productive?
The other problem is when you do this you alter the incentives, and those highly productive people stop being as productive in the work environment and begin to focus their productive energies elsewhere. Sometimes that means in other business ventures, sometimes that means in personal hobbies or leisure activities, sometimes in the family. But once lost, it is not possible for the remaining workers to replace this lost productivity. This is the reason that companies like Toys 'R' Us and Sears are failing. Once it becomes clear to the most productive people that their productivity will not be rewarded, they quickly leave and go to other businesses which will reward them. The progressive left is unwilling to accept that this Pareto distribution is real or immutable, but it is. CEOs are paid so much because they are so much more productive than the average worker. Falsely making pay fair by taking the pay from these people ensures the loss of much of their excessive productivity, a loss which cannot be replaced by the other workers and which will not be replaced by others without sufficient compensation. The progressive left is on a mission to destroy the natural human order because it offends their idiotic sensibilities. This attempt is usually called socialism. The results are always the same the destruction of productivity, and mass murder. Venezuela is deep diving into the socialist cesspool right now, and the results are as expected with the average Venezuelan losing about 15-20 pounds of weight each year. How soon before the mass starvation results in the deaths of millions? Too soon. CEOs should be paid what they are worth, Sarah and her ilk are unqualified to determine that worth. The shareholders of the corporation are qualified. On a further note, I suggest that we all decide for Sarah how much she should be able to pay her physician for every procedure from now on. If too much, either she will need to forego the procedure or find a cheaper physician. I can hear her now arguing the unfairness. It always is so when the ox gored is hers. I should also note that Sarah is cherry-picking the numbers (see the article below). Sadly, Sarah, most CEOs are not paid the amounts you charge, the average is only five times average worker income. It is only a few CEOs running huge complex corporations which merit such high pay. Kvetching about the pay of these few is sour grapes. Have you decided to address the excessive pay of super athletes and artists as well? How about YouTube stars? No, why not? "In Oregon, the city of Portland has adopted what the economist Branko Milanović has labeled “the first tax that targets inequality as such”. Portland’s new levy imposes a 10% business tax surcharge on companies with top execs making over 100 times their median worker pay – and a 20% surcharge on firms with pay gaps that stretch past 250 times." I live in Portlandia, the land of the inane and the insane. Portland long ago ran off all of the large corporations from the city limits. This law is trivial silliness which to the extent it applies to any Portlandian business will only run them off to either Clackamas or Washington County beyond the reach of the Portlandia Clown College, er, city government. About That CEO/Employee Pay Gap "Income inequality is a key theme of Democrats’ 2014 re-election strategy, and the nation’s chief executive officers are an easy target. Before retiring to their districts for the fall, the House Democratic Caucus rallied behind the CEO/Employee Pay Fairness Act, which would prevent a public company from deducting executive compensation over $1 million unless it also gives rank-and-file employees raises that keep pace with the cost of living and labor productivity. Meanwhile, the AFL-CIO and its aligned think tanks have made hay of the huge difference between the pay of CEOs and employees. One of the most widely cited measures of the “gap” comes from the AFL-CIO’s Executive Paywatch website. The nation’s largest federation of unions laments that “corporate CEOs have been taking a greater share of the economic pie” while wages have stagnated for the rest of us. As proof, it points to a 331-to-1 gap in compensation between America’s chief executives and the pay of the average worker. That’s a sizable number. But don’t grab the pitchforks just yet. The AFL-CIO calculated a pay gap based on a very small sample—350 CEOs from the S&P 500. According to the Bureau of Labor Statistics, there were 248,760 chief executives in the U.S. in 2013. The BLS reports that the average annual salary for these chief executives is $178,400, which we can compare to the $35,239-per-year salary the AFL-CIO uses for the average American worker. That shrinks the executive pay gap from 331-to-1 down to a far less newsworthy number of roughly five-to-one. Of course, it’s true that some chief executives heading large multinational companies do command impressive seven- or eight-figure compensation packages. But the data don’t support the rhetorical claim that this slice of the “economic pie” is what’s driving stagnant pay for others on staff. Consider Yum Brands , the parent company of well-known fast-food brands like Pizza Hut, Taco Bell, and KFC. The compensation of the company’s five-member executive team has been a point of contention for the Service Employees International Union-backed fast food protests that have occurred periodically over the past two years. Filings with the Securities and Exchange Commission put the total pay package for the company’s executive team at $30.7 million. That might seem like a lot of wealth the company could “share.” But like many service-industry employers, Yum Brands has a lot of people to share it with. The company’s 2013 annual report indicates that it employs 539,000 people, 86% of whom work part-time. If the executive team were able to redistribute 25% of their salaries, incentive pay and stock options to these part-timers, the net impact on hourly pay would be just over a penny-per-hour raise before taxes. Even if the executive team took a 100% pay cut and distributed the money equally to the company’s 463,000 part-timers, hourly wages would only rise by five cents. The point is not that CEOs deserve more money, or less. If an executive is underperforming, the corporation’s board can and should adjust his pay appropriately or terminate his employment. And if the CEO is making the shareholders rich, the board might increase his compensation. But neither voters nor policy makers should make poorly informed decisions about redistributive public policies based on a faulty understanding of how much executives are paid and why entry-level employees aren’t paid more. Mr. Perry is a professor of economics at the University of Michigan-Flint and resident scholar at the American Enterprise Institute. Mr. Saltsman is research director at the Employment Policies Institute, which receives support from restaurants, foundations and individuals."
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