I have been ranting about income disparity for years. (I encourage my denomination, the United Church of Christ, to have a conversation about poverty and economics, By the way). I have believed, since I was a teen, that the system is rigged and the “American Dream” of work hard ==> getting ahead wasn’t valid, as my mother and father worked harder than anyone I knew and we didn’t get ahead. I am also aware of people’s response to that news. My mother was mortified that I believed that, and that it was un-American to knock her beliefs that hard work was the way out of poverty. The fact is, though, I love America and wish it would live up to it’s potential.
That was 40 years ago, and things have only gotten worse since then. In the 1980’s, Studs Terkel wrote a book of interviews which said that the gap between rich and poor was growing. That was 30 years ago and things have only gotten worse since then. My wife and I were talking yesterday and we agreed that the Bush tax cuts weren’t needed then — that was 10 years ago, and things have gotten worse since then.
I have felt like I was yelling into a sound-proof world for 40 years about just how unfair things have gotten.I have been looking for the right fact or metaphor to convince people just how absurd and unfair this all is. Today in the mail it came. On page 4 of this week’s The Nation magazine:
=> Percentage of fast-food workers enrolled in public assistance programs — 52.
=>Hours a McDonald’s employee must work to earn the CEO’s salary — 1 million.
I kid you not. 1 million hours 1 person has to work to equal a year’s salary of a particular CEO,
That means — at a 40 hour week, one person would have to work 25,000 weeks to earn that particular CEO’s salary. Given that there are 52 weeks in a year, a person would have to work 480 years to equal the yearly salary of another. That employee would have to work twice as long as there has been an America to make the salary of that CEO. Those 480 years mean that a line worker at McDonalds would have to have started working in the year 1533 in order to make what their CEO makes!
In 1533, King Henry the VIII was on the throne, Anne Boleyn was being beheaded and Queen Elizabeth I was being born. Pizzaro had just made his way to Peru. It would be another 80 years before the Pilgrims would get on a boat to arrive in America. Put another way, a line worker at present-day McDonald’s would have had to start working in the time of King Henry the Eighth at a forty-hour week to make the same amount of money his CEO makes!
Put another way, 480 people work for a year to make the same amount of money that a CEO makes. If those people are single-earners in a family of 4, then the CEO makes the same as 920 people living on the salary of a full-time employee of McDonald’s. With 20 houses on a street, as in my neighborhood — 80 people — 6 streets worth of people live every year on one other person’s salary. The entire town of Hall, NY, where my first church was, plus 80 more people — an entire town could live for a year (if McDonald’s actually had full-time workers) on the salary of the CEO of McDonald’s,
And he’s only one rich person. There must be many more, but that’s it, that’s how it is in America today. Could we please redistribute it so that people get homes and don’t freeze this winter or that kids get education or that people get to eat. Is it really too much to ask? Seriously?
Peace,
John
Because It Matters 
Success requires more than just hard work. It requires hard *and* smart work. If I have a pile of bricks and move them from left to right then back again, It might be working hard but it isn’t very smart.
I think someone is entitled to be paid for whatever value they can bring to a company. And value is generally derived from a combination of smart and hard work. Additionally, if someone has an “extra” god-given ability (for example a fantastic singing voice), they can also be paid a premium because of the rarity of that talent or ability.
While these CEO’s are generally very bright individuals, I agree that they are not SO bright that they deserve 50-100 times the salary of a worker bee. After all, it’s the worker bees who actually do the work (thereby actually generating the profits). If I sat on a board of directors, it would be hard to convince me to offer so many millions of dollars to these people- there are plenty of others would can do those jobs for a lot less, just as well.
Bob:
While we agree on most of this, I hope you aren’t saying my mother or father weren’t smart enough because that would not be true.
Obama never says … “And smart enough” because that’s not the promise of America.
Finally, I ask the question. — is there any point at which someone makes enough money?
Peace,
John
Also, and here’s the rub– employees don’t set the rates generally. Management does.
Hi!
Of course I wasn’t talking about your parents! I was just making a point that there is more than “hard” work required to get ahead.
There is currently a debate about fast-food workers in the USA. Fortunately and unfortunately, these jobs require very little brainpower – the employees just follow some basic procedures (all of which are dictated by management). Therefore there is a wide pool of candidates for these jobs, and we run headfirst into the old supply & demand adage (a huge supply of potential employees means that only a low wage is required to fill the positions with suitable candidates). And for the most part, candidates are usually willing to work “hard” (standing on their feet for long periods, moving quickly, etc.), or they risk being replaced by someone else who will.
On the other end of the scale, you have doctors and lawyers. These professions typically command much higher salaries- not always because they work hard, but because these professions require a lot of *smarts*. They can very quickly look at a set of facts and determine an outcome, and they have fantastic problem-solving skills. In these cases, their brains are very hardworking even though the physical work is much less demanding. This is why they are paid well- for their “unusual” brain & abilities.
And there is also the case of the “rarity” of a skill. As I said, sometimes a singer can (deservedly) make a lot of money because of a God-given gift (their voice). Many famous people neither work hard nor are very smart, but because of a special gift they are able to make a lot of money.
Does a singer deserve a lot of money, even though they don’t work hard or are very smart? The answer is YES…. Read on…
Think about the effect that a singer has on someone’s life. (You can think of your favorite singer here.) That person has made YOUR life more enjoyable. You might sit in your evening chair and enjoy their voice. When you multiply this effect by the number of other people’s lives who has also been made better (your neighbors, your cousins, and millions of other people), turns out that these people have a HUGE benefit for the standard of living in this country. Because these people make SO many other people’s lives better, they “deserve” a lot of money (even though they might not be smart or work hard).
Dr. Dolby just died. He was a billionaire. But, he deserved it because he made millions of lives better by inventing “Dolby surround sound”. So by making millions of lives better, he deserved to be rich.
Management “sorta” sets rates… in some cases. In other cases, however, employees determine a pay rate.
For me, I have a quite unusual set of talents. However, I have a very small pool of potential employers, too. But when I find a company who needs my particular skill set, I can request a lot of money (again because of the supply & demand thing). There might be a small demand for my talent set, but there is an even smaller pool of candidates – therefore the candidates can determine the salary. (However even though there are very few candidates with my talent set, there are others out there- therefore I can’t just demand a $10 million salary because there are plenty of people who would take these jobs for a lot less).
So unfortunately the whole job market, like the rest of the economy, boils down to a supply & demand scenario. If all fast-food workers leave their jobs tomorrow, there is a huge pool of potential candidates who could step in their place. Therefore they can only demand a minimal salary.
BUT… I completely agree that CEO’s are overpaid. Their talents are NOT that unusual or rare, and many of them don’t work that hard. They don’t have SO much benefit to their companies (or to society) that they should be paid these exorbitant amounts. In fact, in most cases, I believe that a manager should make LESS than their subordinates – because the subordinates (who actually do the work) require more brains and hard work than the respective manager! A CEO’s talents are not commonplace, but they aren’t that unusual either .There is no CEO who is SO smart that they effectively do the work of 480 worker-bees.
(Sorry, I don’t know what Obama says, so I’m not sure what to say about that. But If he says that it is only necessary to work hard but not smart in order to be successful, I would tend to disagree.)
Enough money? From where you and I sit, I think that our version of “enough” money is probably different than Warren Buffet or Bill Gates. If I won the $500million MegaMillions, I would have no idea what to do with that amount. I can’t even fathom it. But if Bill Gates fortune was cut to $500million, he might no longer have the ability to cope with that small amount of money…. I just don’t know.
Well said, Bob.