The median CEO in the United States earns 354 times the median income of the median worker.
Is this a problem?
A year ago I would have told you no.
Lately, however, with legislation passing in various countries throughout Europe giving shareholders binding say on executive pay and non-binding say on pay legislation passing throughout the U.S. I’m starting to change my mind.
1. Further, as someone who is a huge believer in the individual finding a way to maximize his earnings if he feels he is worth more, I typically get a little annoyed when I hear someone complaining about the earnings of others (CEO or otherwise). Companies should do their best to maintain pay equity within jobs (for both legal and employee engagement reasons), but the market is generally getting pretty efficient at paying for talent. The growth of social media has made it easy for recruiters to find even the most passive candidates. As such, if an employee is underpaid it isn’t difficult for him to go out into the market and get a more competitive job offer… and as the economy improves it will get easier still.I don’t care about what others make. 1 Many people do, though. And there is a lot of evidence that when income inequality reaches a certain point it can lead to social and political unrest.
I’ve talked before about why executive compensation packages are as large as they are (and why the ratio is growing). The market for executive talent is fundamentally different than the market for talent in the rest of the workforce (in the same way that the real estate market in NY City is fundamentally different than the real estate market in rural Illinois). This won’t change anytime soon for a variety of reasons, but lately I’m wondering if those reasons will be good enough for the general public.
What do you think? Are executive pay practices in the United States going to be forced to change due to social, political and cultural pressure, or will the improving economy and rising employment numbers cause this issue to fade away?
Please share your thoughts in the comments section below.
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