We’ve heard the moaning and groaning about income inequality for years. Yet the American disposition to pay leaders obscenely well while paying everyone else obscenely less well continues apace.
CEOs are the most obvious beneficiaries of this obnoxiously skewed system. In the last year the average wage of American workers finally grew, by 4 percent to an average annual income of $47,000. (All figures are rounded.) But, the average wage of their bosses (of S&P 500 companies) also grew, by 7 percent to a median income of more than $12 million. This despite executive performances overall that were disappointing.* This despite multiple efforts to rein in executive pay. This despite having the wind anyway at executive backs – in 2018 a strong economy, a favorable tax cut, and a large increase in stock buybacks that lifted share prices.
There’s no logic to any of this. Rich leaders are getting inordinately richer not because they deserve to. Or because they perform tricks that no one else can. Or because they are indispensable to successful corporate performance while everyone else is dispensable.
Rather rich leaders are getting inordinately richer first because of a herd mentality – the idea that leaders are all-important has become deeply entrenched in America’s collective consciousness. And second because executive compensation is a train that’s left the station – and no one’s been able to stop it. In 2018, Robert Iger, the exceedingly capable CEO of Disney, earned about $140 million. Abigail Disney, niece of one of the founders, publicly objected to the size of Iger’s compensation package not because she thought him less than excellent. To the contrary, she made a point of saying, “he deserves a lot of money.” Rather she objected because his earnings were already outsized, “How far,” she asked, “are we going to go?
Among the leaders most lavishly compensated, many if not most give back. At the highest level is the Giving Pledge, which urges the nation’s wealthiest individuals to donate at least half their assets to charitable or otherwise good causes. At lesser levels are countless other philanthropies, all of them intended to redistribute wealth or at least some of the benefits that money can buy.
Still, invariably, Big Money is controlled by the few not the many. Which raises this question: Why do executives accept the extravagant sums of money their boards are willing to pay? Why don’t they just say no? Why don’t they just tell it like it is – which is that no single individual deserves to earn so exponentially much more money than does virtually everyone else.
Anyone ever heard the term role model? Anyone ever heard the idea that a leader should be a role model? Anyone ever heard of history? Anyone ever heard what history teaches? Which is that a leadership class that gets too big for its britches will one day or another, one way or another be taken down a notch. Or two.
Just yesterday Representative Alexandria Ocasio-Cortez, a self-described democratic socialist, created pandemonium in a restaurant in Queens when she made an appearance to support tipped workers. Why did she feel the need? Because the federal minimum wage for tipped workers is $2.13 an hour.
* Median shareholder returns for these companies was minus 6 percent, “the worst showing,” the Wall Street Journal reports, “since the financial crisis.”)