One of the big debates right now, as we consider wealth inequality, is whether or not it's really worth it to pay CEOs millions upon millions of dollars to do their jobs.
With gap growing between CEO pay and the pay of the average worker (some estimates say it's now at 354 percent), and with many companies making record profits, it's disconcerting to me that we are so obsessed with tracking down so-called welfare cheats (even though there aren't really that many) and that we, as a society, are ok with cutting benefits to veterans, but we refuse to raise taxes on the wealthy. It's all about cutting, and almost never a discussion about raising revenue.
Of course, part of that is to be expected, thanks to the fact that our elected leaders are not only in the upper echelons of the socio-economic scale, but are also beholden to those intent on moving us closer to oligarchy.
It's a nice thought to say that these CEOs are “worth” their pay, but are the decisions they make really worth 354 percent more than their workers? Questions about this worth have many people thinking. Including staunch Republicans of a middle class persuasion. This is because it's hard to see the point of massive CEO pay at a time when most of the wealth is going to the top one percent, while wages stagnate for most of those in the middle class — in spite of the continued increases in worker productivity.
To add insult to injury, many of the very CEOs who have such high pay because of the “risks,” “decisions,” and “accountability” they are subject to actually don't have to take on any risk or deal with accountability. When it came to the financial crisis, there were plenty of people talking about how consumers should “have to accept the consequences” of their poor decisions. There's a completely different set of rules, though, when you're making the big money. None of the CEOs or companies making poor decisions saw the kinds of consequences that regular folks did. Some of them were even rewarded in the wake of their poor decision- making.
Indeed, even though Lehman Brothers went down in spectacular fashion, the CEO still had hundreds of millions of dollars to show for it when the dust settled. According to a recent report, 38 percent of CEOs in the 20 years prior to the 2008 financial crisis ended up paying fines due to fraud or other problems (but make no mistake; many of them could afford the fines), were booted out, or were bailed out.
But if you've been booted out of a position, isn't that a consequence? Perhaps. But it's hardly one that ruins the financial fortunes of the CEOs. If schmo making $45,000 a year loses a job, that's a huge impact. If a CEO making $10 million a year loses a job, there's probably a severance package worth millions waiting. Golden parachutes remain a fixture for many executives, meaning that they can do terrible things and then get paid for it. That's on top of the salary they've been pulling down.
Plus, higher-paid CEOs don't always translate to better profits. You can read comparisons about the difference between Costco and Walmart to see that, really, treating your employees well doesn't have to mean bad business.
The problem is that many CEOs feel they are entitled to making millions a year — and feel that they “deserve” their golden parachutes even when they make terrible decisions with terrible impacts. One CEO making a terrible decision can take down an entire company, impacting jobs and lives. And he or she will still get paid millions for it. I really don't think that person is worth 354 percent more than the regular worker who is mostly just trying to get by. And whose own mistakes aren't likely to devastate thousands of people.