The real
question is just what took so long. CEO’
have grossly leveraged their positions during the past three decades to absurd
heights and even generally avoided a lot of risk while at it. This has led to gross salary acceleration in
a wide range of government and monopoly situations where the high price paid
was seriously unnecessary and avoidable.
I would add one
other condition to this eight times rule.
A great leader sometimes needs to be recruited. In that case, a five year super contract can be
warranted with clear objectives. For
example, I suspect that I know just how to convert Facebook into the richest
single company of earth. In that case a
reasonable reward should entail a significant ownership position locked in
immediately, but discharged in five years on meeting specific minima that
reflects a clear change of the corporate trajectory.
Such an
arrangement would have worked for any great leader past and future. What has happened is that mediocre leaders
are happily using these precedents to beg their own private greed. It has now become obscene.
Understand
something. If I am paid 50 mill cash,
my core problem over the next year will be to properly invest that money. If I had no conflict before, I immediately
have a huge one.
From Canada, a
New Gold Standard
The 32,400 employees at Goldman Sachs averaged $383,374
each last year, the Wall Street banking giant has just disclosed.
Typical employees at Goldman, of course, didn’t take
home anything near that $383,374. Bank clerks nationally only average $24,100
a year. In 2012, Goldman CEO Lloyd Blankfein took home $26 million.
This means he’s making over 1,000 times that of the lowest paid Goldman Sachs
employees.
Across our nation, CEOs are pulling down over 350 times average
U.S. worker pay. This isn’t just happening here. Canadian CEOs took home 105
times average Canadian pay in 1998. They’re taking home 171
times today.
What can we do to reverse this trend toward
ever-wider pay gaps? Toronto-based public policy analyst Peter MacLeod has one
idea. We need, he says, to start “naming and normalizing” a more rational and
equitable standard for who gets what.
We need, in effect, to start honoring enterprises
that practice fair pay and stop rewarding — with our consumer and tax dollars —
those enterprises that are making our societies more unequal.
Last summer, MacLeod founded a new international
effort to put this standard in place. His new initiative — Wagemark — has already begun
certifying those enterprises that pay “competitive, responsible and sustainable
wages.”
To gain Wagemark certification,
enterprises must pay their top earner no more than eight times the pay of their
workforce’s lowest-paid 10 percent.
This 8-to-1 standard may seem hopelessly utopian in
a world where corporations routinely pay executives hundreds of times what they
pay workers. But at least 90 percent of all businesses, MacLeod tells me, are
currently operating “in a 15-to-1 or better universe.”
The “most conspicuously equitable” of these small-
and medium-sized employers make up the initial core of Wagemark-certified
organizations. Some of them — like the Bellwoods Brewery — already
enjoy widespread
name recognition in Canada, and this spring Wagemark will be announcing many
more.
Wagemark-certified companies, nonprofits, and public
agencies have all had an independent accountant confirm that their organization
meets the Wagemark eight-times standard.
The word about Wagemark’s certification process is
beginning to spread well beyond Canada’s borders. In Denmark, the nation’s
largest newspaper gave Wagemark front-page coverage that sparked a week of
national media dialogue about equity and pay.
Scandinavians, Peter MacLeod would learn from this
discussion, “don’t find the 8-to-1 ratio particularly radical.” And Americans
back in the middle of the 20th century, he adds, wouldn’t have considered an
eight-times standard all that radical either.
Back then, even the largest American corporations
seldom had pay divides between top executives and workers that went wider than
30-to-1. And America prospered. With a relatively narrow corporate pay gap in
place, a mass middle class, the world’s first and finest, took root.
Our cultural pay paradigm — how we value workers and
their work — has almost totally changed since then. Pay differentials that
would have seemed unconscionable only a few decades ago now are business as
usual.
Reversing this inequality “is going to take pressure
from a lot of different directions,” MacLeod stresses. The folks at Wagemark
see their work as a complement to campaigns for minimum and living wages and
the drive to make tax systems more progressive, he says.
The Wagemark team has no illusions
about Fortune 500 companies getting in line anytime soon to apply for
its 8-to-1 ratio certification. But they do see Wagemark really helping to turn
up the heat on corporations that continue to brazenly manufacture inequality.
Wagemark hopes to work with city officials, for
instance, on incorporating pay ratios into the government procurement process, by giving firms that meet the Wagemark pay ratio
standard a leg up in the contract bidding process.
“We’re really excited about starting small at the
municipal level and then expanding,” MacLeod says. “Check back with us in five
years.”
This piece was reprinted by Truthout with permission
or license. It may not be reproduced in any form without permission or license
from the source.
1 comment:
That is fine and dandy for someone to come up with a ratio in THEIR head of 8 to 1, that THEY like, but THEY did not START the business, STRUGGLE with the business all through the lean years, having to decide what to do and how to do it to GROW the business, and face hurdles and GOVERNMENT RED TAPE and pay year after year of rising TAXES, but if I were the one to do that, for decade after decade, you can bet I would want to have more than 8 times the average of the lowest paid workers, who might be so barely functional nowadays, thanks to the IDIOTIC PUBLIC SCHOOL SYSTEM, the mailroom clerk or janitor or secretary WHO AGREED TO TAKE ON THE JOB FOR THE WAGE PRICE OFFERED, (in this free market we have) may be ONLY capable of handling the few tasks assigned, while I would be the one having to LEARN AND KNOW HUNDREDS of tasks, all the while having the WEIGHT of the decision making on my shoulders that could seriously affect dozens, hundreds, or thousands of employees.
I would NOT want my hard earned and hard won success to be limited by some outsider's 8 to 1 ratio, that would be set by those newly hired unskilled workers, when I would DESERVE to be better rewarded for my greater skill.
If people do not want to work for others who are succeeding in the top of their business, then GO START YOUR OWN BUSINESS, and RUN IT the way YOU want, but don't go running OTHER PEOPLE'S BUSINESS!
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