Larry Ribstein has been waging a lonely fight (examples here and here) against the politicians and media pundits who think that executives make too much money because . . well, . let’s see, . . because some of them make a lot of money. Or some logic similar to that.
At any rate, Dominic Basulto — who is the editor of the Fortune Business Innovation Insider — observes in this American.com op-ed that the conventional logic on executive pay actually has it backwards. Most executives are underpaid:
In fact, thereís strong evidence that, far from being paid too much, many CEOs are paid too little. Not only do the top managers of multibillion-dollar corporations earn less than basketball players (LeBron James of the Cleveland Cavaliers makes $26 million), they are also outpaced in compensation by financial impresarios at hedge funds, private equity firms, and investment banks. Should we care? Yes. If other positions pay far more, then the best and the brightest minds will be drawn away from running major businesses to pursuits that may not be as socially usefulóif not to the basketball court, then to money management.
Read the entire piece. I wonder what Gretchen Morgenson will say?
It’s not the amount. It’s the disparity between what they make and what people on the factory floor make that bothers me. If the CEO was making $100 million every year and the janitor was getting a liveable wage and health insurance, good for both of them. But, as long as employees are being laid off as a strategic way to boost the bottom line and the disparity between the lowest-wage employee and the highest is so great, I have zero sympathy.
Jeff,
As technology advances, many processes once done by individuals are being automated. This necessitates the reduction of staffing levels at the same time that overall productivity and profits increase. What’s wrong with shedding employees as a strategic way to boost the bottom line?
Nothing…unless you are one of the employees. It just seems like, increasignly in America, we value money more than we value people. I have nothing against people making tons of cash. I’m all for it. But, I do begin to find it, at the very least, sad and, at worst, immoral for we as a country to see a substantial increase of those living at or below the poverty line while techonolgy cuts more and more from the payrolls of corporations.
I would be fine with it if we gave a damn about re-educating our workforce when technology or jobs in other contries make the obsolete. Even better, we could pay people a living wage and help keep them insured.
Sometimes, it’s not about profit or the bottom line. Sometimes, it’s about doing the right thing for other human beings.