This time, it is Michael Brush at MSN Money asking, “Is a CEO worth 364 times the average Joe?”
Of course, the answer is no. Brush writes:
In recognition of the just-completed Labor Day weekend, I’d like to offer a salute to American workers, who the United Nations just reported are second only to Norway’s laborers when it comes to productivity. And now, a bit of bad news for those same workers: You’re not getting credit for that productivity. Instead, top executives at your companies are reaping the rewards in the form of increasingly fat paydays.
The pay gap in the US is larger than in Europe, even though European companies are larger than US companies. Moreover, it has grown spectacularly:
CEO pay in the U.S. has grown to become 364 times the average worker’s pay. It was just 40 times the average pay in 1980. It’s hard to imagine that top leadership skills have grown so much scarcer in the past 37 years.
Ultimately Brush blames cozy relationships between CEOs, “board compensation committees,” and consultants. He leaves essentially unchallenged however a fundamental mythology that success in this economy is tied to merit. Yes, he attacks cronyism, but that cronyism derives from a myth that associates financial success with “merit.”
Merit, sociologists can tell you, has little to do with it. If a large portion of wealth is inherited, so too is access to Ivy League schools, social networks, and health care. These rich kids bear little relation to Horatio Alger’s heroes, even if they have Andrew Carnegie’s attitude.