CEO vs Worker Pay, as Seen on the Lefty Internet

Posted: May 1, 2012 by ShortTimer in Economics, Leftists, Unions


I thought this seemed bogus, and with a quick google search for “ceo vs average worker pay chart”, I found that the Tampa Bay Times PolitiFact looked at it and ruled it false.  As I went back to the lefty site, a commenter had bothered to do a 5-second search and find the same thing.

Hell, even the filthy lazy plundering looters at the corrupt mob AFL-CIO don’t say 475:1.


Meanwhile, Think Progress (clearly a reich-wing rethugliKKKan site), has this:

Companies listed on Japan’s stock exchanges paid their chief executives an average of $580,000 in salary and other compensation last fiscal year, PWC estimates, about 16 times more than the typical Japanese worker. Average CEO pay at the 3,000 largest U.S. companies is $3.5 million, including stock options and bonuses, according to the Corporate Library, a research group.

So average CEO pay in the US is $3.5 million with bonuses.  Of course, the AFL-CIO says it’s over $12 million.  Sure, there’s a year difference between the numbers, but the AFL-CIO says this, too:

The ratio of CEO-to-worker pay between CEOs of the S&P 500 Index companies and U.S. workers widened to 380 times in 2011 from 343 times in 2010.

Oh, so it didn’t really go from $3.5 to $12 million, because that would be going to something over 1200 times “average worker” pay.  More numbers at Warren “Tax My Competitors And Use Government As A Barrier To Competition So I Stay Rich” Buffet’s Heritage Institute site say that average pay is less, but the multiple is more, and so on.

The Ratio of Average CEO and Worker Pay in the US

2004: 431-to-1 (Av CEO-$11.8 million/Worker-$27,460)
2003: 301-to-1
1990: 107-to-1
Source: United for a Fair Economy and Institute for Policy Studies

Their “source” sounds sketchy, but even that doesn’t jive with other numbers.

Meanwhile, here’s another stat worth looking at:

• Average NFL player salary: $1.9 million

• Median NFL player salary: $770,000

• Average NFL career length: 3.5 years

Unfair, huh?  How about this:

That title belongs to Lady Gaga, who led the pack with a staggering $90 million total boosted by strong album sales, endorsements and an extremely lucrative world tour.

Oh, sure, she employs a lot of people who make her records, record her songs, run her concerts and concert venues, who distribute her merchandise, mix, record, and produce her albums, promote, advertise, and publicize her media, but just because she employs a bunch of people and keeps food on their tables and helps them out like an evil CEO of LadyGagaInc., of course she’s okay.  It’s just those evil CEOs with their greed and their business suits.

What about this guy, who earned $63 million in 2010, more than five times the “average” CEO pay of $12 million, and oppresses the workers below him who slave away in his slave factories to produce crap to force on the masses.  He’s evil, right?

Look at that evil rich oppressor of the working people who made $63 million dollars.  He’s like 5 times worse than any other CEO.

Meanwhile, at the arch-reich-wing rethugliKKKan World Socialist Web Site:

In 2010, the salaries of the members of the boards of the 30 biggest German companies rose by 18 percent. On average, the members of the boards of these companies listed in the DAX share index earned €2.7 million a year.

So by the 12:1 chart, is the average German worker earning €225,000?

And from the Wall Street Journal, a bigger number:

Chief executives of Germany’s largest companies took home 14% more direct pay in 2011 than the year earlier, but still earn less on average than their European and U.S. peers, according to a report by Towers Watson released Tuesday.

The chief executives studied earned €5.5 million ($7.2 million) on average in 2011, slightly below the average €5.8 million of a Stoxx Europe 50 chief executive, and far behind what managers across the Atlantic are earning. The report examined direct pay rather than total compensation.

So if it’s 12:1, then the average German worker makes €458,333 per year?  Oh, and note this was CEO pay in Germany without compensation, while the US figures from AFL-CIO included compensation, stock options, and a host of other benefits as “income”.

Though the World Socialists have a very interesting story to tell about why German CEO pay is so high:

The main responsibility for this development lies with the trade unions, which helped to organise these attacks on the working class and have suppressed any systematic resistance against them.

In Germany, wage agreements were kept low with the active support of the unions. With extended periods of tenure, many wage settlements fell under the inflation level. The same union officials who demanded wage sacrifices and restraint on the part of workers voted on the supervisory boards in favour of gigantic increases in income for board members—i.e., including themselves.

They’re all morons who view the economy as zero-sum, but it’s interesting to see they blame their own socialist appendages.

And finally, to curb this huge load of BS, a story from USA Today:

Despite the rapid rise in average CEO pay in Europe, 2005 figures from Washington, D.C.-based Economic Policy Institute indicate that top executives remain somewhat closer in pay to ordinary workers than do their U.S. counterparts. The ratio of average CEO pay to that of factory workers in various countries:
Ratio of CEO to factory worker pay

  • Belgium———-18-to-1
  • France————23-to-1
  • Germany———20-to-1
  • Italy—————26-to-1
  • Netherlands——18-to-1
  • Spain————-17-to-1
  • Sweden———–19-to-1
  • Switzerland——-19-to-1
  • U.K.—————32-to-1
  • USA—————39-to-1

Well, going back to those first numbers, if US CEO pay is 475 times what the average salary is, and the average CEO makes $12.5 million (accordin to AFL CIO), the average worker makes about $26,000.  Sounds right, when you consider minimum wage workers, teenagers, entry level workers, part-time workers, etc.

Except here the EPI says CEO pay was 262 times what the factory worker makes, and the average worker made $41K.  And the average CEO made about $11 million.  So CEO pay went up a million, while the average working wage went down… because it was calculated differently and is no longer full-time factory workers.

And the numbers for other nations were purely fabricated to make US businesses look bad, evil, and unfair.

So what do we ultimately learn?  Figures lie, liars figure, propaganda is as convincing as a bullshit chart.  CEOs like Jay-Z, Lady Gaga, and some NFL players with their own businesses – end up employing more people in their business.  They make money for other people, and for themselves.  They’re not taking from anyone.  No one can force you to buy a Jay-Z album or a Seattle Seahawks jersey.  They’re providing goods and services.  They’re keeping themselves profitable, keeping their business, themselves, and their employees afloat.  CEOs do the same thing.

CEOs get stupid perks like “golden parachutes” and $1 paychecks, but $10,000,000 bonuses for performance as incentives, and as ways to dodge increasingly higher taxes on them.  When wealth is targeted for confiscation, people try to keep from having it taken away.  Works if it’s the IRS agent or the Sheriff of Nottingham.  Now, on the other hand, CEOs and certain favored businesses with pull also get favors and money straight from government just to keep them afloat – like GM in order to placate unions, Solyndra to make magic energy, and AIG to spin straw into gold.  When it’s given to them by the government, it’s good or bad depending if it’s a Republican (corporate welfare) or Democrat (investing in the future) doing it.  It’s never just plain old cronyism and buying votes with taxpayer money.

But anyhow, tables with no attribution posted on the internet in an effort to stir up crap are often worth investigating.  Sometimes the internet posts its source material and doesn’t lie, though.

  1. rrquaid says:

    This is a real problem no matter how you look at it. We need to reform the Republican party to represent main street and not just wall street. You need protections for the middle class because without them, all of the pressure is to squeeze the worker to reap more profit. Workers are expenses and executives are ever looking for ways to lower expenses and increase profits and the easiest way is to squeeze more and more out of your workers — make workers take on more and more of their healthcare costs, make workers pay more and more of their own retirement costs, lay off workers and make existing workers work harder and harder, make workers work harder and harder for the same pay etc. The problem is that the middle class is the economic engine of our country and you can’t keep taking the middle class money spent on goods and services and redistributing it into the hands of the few at the top and the shareholders and keep a stable economy.

    At some point the middle class spending engine is going to run out of gas and the economy is going to stall. You can’t keep replacing wages with easy credit for the middle class to keep spending because at some point the middle class debt gets too high and they can no longer spend and start defaulting and the economy crashes. Workers need to reap their fair share of their labor and stop being squeezed for more and more corporate profit. Corporate profits, shareholder profits, and executive compensation is at all time high while worker salaries have stagnated and were replaced with easy credit.

    For a strong stable America, we need a strong stable middle class and not one where the CEO like Walmart’s makes $717 to every Walmart worker’s $1. That is out of balance. Whole Foods has it built into the corporate charter that the CEO can only make $19 to every worker $1 so that the profits are shared fairly among the workers. In the 1950’s, executives only made $12 to every worker $1 and we had a strong middle class because of it. So, don’t so easily dismiss this as some liberal propaganda. The Republicans need to focus less on benefitting Wall Street and start focusing on main street or our economy is going to collapse.;;

    • ShortTimer says:

      It’s not a problem. If the company owner makes more than the employee, that’s fine. If the employee doesn’t want to work there and his labor is worth more elsewhere, he’s free to leave, and free to find a better employer (or start his own business). Other employers are free to offer more for his skills. The company owner, manager, and operating officers are deemed more important to the company’s well-being than the check-out clerk, and are paid more for their specialized skills.

      The economy has been stalled for the last four years, but that’s another topic.

      As an example, Walmart is the biggest retailer in the world. I sure hope that their CEO, who is ultimately responsible for a business that’s incredibly powerful and brings products at very low prices across the whole planet, does in fact have a sizeable salary to ensure that he or she does the best possible job for the company’s continued prosperity. Note that the company’s prosperity also means it will hire more workers, employ more subcontractors to build more stores, employ more third parties by directly purchasing goods and services, and will increase consumer standard of living by lowering costs for the purchasers of those products, goods, and services. A successful business contributes to everyone’s well-being.

      Wall Street is Main Street, and Main Street is Wall Street. If you have a pension, a retirement plan, an investment, or use a bank, financial service, credit card, or even credit union, your money is on Wall Street. You’re investing your capital in someone else’s businesses and ideas in order to expand your own personal wealth – even if your bank does it for you. Likewise, investors put money into ventures they think will succeed, and they back stocks that show companies do well.

      A company that pays its CEOs an amount that the market cannot bear will dissolve. There will be job loss by those across the company’s spectrum of employees, but those with skills will adapt. Those who fail (including overpaid useless CEOs), will go away.

      Walmart made $114.3 billion dollars in just the second quarter of 2012. Whole Foods did $2.9 billion in the fourth quarter of 2012. Walmart is roughly 40 times bigger than Whole Foods. Walmart exec pay is roughly that much larger.

      The market can solve the problem itself. Inefficient companies (when not bailed out by government) fail. Efficient companies prosper. Efficient companies don’t “squeeze the worker”, they offer labor rates the market will accomodate. If your skills are poor, you work hard and acquire skills and move up because your labor is worth more. If you don’t, you don’t. If the executive making high rates isn’t producing, the company’s board of directors can remove him. If the board makes stupid moves, that’s their problem, not government’s.

      The market can self-correct problems.

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