The Argument of CEO Salary

By Brenda Barbour February 18, 2016

The saying of "the rich get richer, the poor get

poorer" is a great place to start in examining
whether or not CEO's continue to have higher
salaries while middle-class and even the lowerclass have stayed flat. The headlines are endless
about CEO's being greedy, taking millions or
even billions while burying their company in the
ground, needing to be "bailed out" in the recent
financial crisis. But does that stand true for all
CEO's? Most people can read between the lines
and see that there is a half- truth in those claims.
CEO's do make more money than their
employees, naturally, and the claim that they do
not pay their employees enough is typically the
case, however, most reports are about the
S&P500 companies. "Nowhere in the AFLCIOs report is the disclosure that the CEOs in
question are CEOs of an S&P 500 Index
company (Matt Palumbo, The Myth of CEO
Pay and "Greed"). These are huge corporations.
According to StatisticBrain.com, there are over
400,000 CEO's in America, 43% make between
$100,000 and $250,000 per year while only 6%
make over 1 million. As compared to the
national average salary in 2014 of $53,657
(cencus.gov) that has not changed much since
previous years, it is obvious that there is a large
difference in pay. That being said, the greed
spoken of in reports is regarding fortune 500
companies, not your average CEO, and there are
plenty of them. As far as them being highly
compensated for being the "job creators", in an
average CEO's case, my opinion is that it is fair.

I do not believe workers should be paid so low

or that they should not have pay raises regularly,
though. In an article titled A Wealthy
Capitalist on Why Money Doesn't Trickle
Down by Nick Hanauer, he talks about who
the real job creators are: the workers. "The
fundamental law of capitalism is: When
workers have more money, businesses have
more customers. Which makes middle-class
consumers not rich businesspeople the
true job creators." (Hanauer) He explain that
higher paid workers create more jobs. When
people have more money, they are able to go
shopping, out to eat, and spend more however
they choose. This creates the need for more jobs,
and it also increases profit for businesses. He
further explains that CEO's can afford to pay
their workers higher, even though they claim
they cannot afford it. Comparing McDonalds in
Washington with higher minimum wage to one
in Montana with lower wages, both are thriving,
which says the company is adjusting to higher
costs just fine. So, whether or not I agree or
disagree, I would say both. It depends on the
CEO and the company they work for as well as
the workers.

Resources

*Palumbo, M. (2015, June 06). The Myth of CEO Pay and "Greed"
Retrieved February 09, 2016, from https://mises.org/library/mythceo-pay-and-greed

*Statistic Brain. (n.d.). Retrieved February 09, 2016, from

http://www.statisticbrain.com/ceo-statistics/

*Income. (n.d.). Retrieved February 09, 2016,

fromhttps://www.census.gov/hhes/www/income/data/statistics/

*A Wealthy Capitalist on Why Money Doesn't Trickle Down |

BillMoyers.com. (2014). Retrieved February 09, 2016, from

http://billmoyers.com/2014/09/11/a-wealthy-capitalist-on-whymoney-doesnt-trickle-down/

*Perry, M. J. (2015, May 01). When we consider all US 'chief

executives,' the 'CEO-to-worker pay ratio' falls from 331:1 to
below 4:1 - AEI. Retrieved February 23, 2016, from
https://www.aei.org/publication/when-we-consider-all-us-chiefexecutives-the-ceo-to-worker-pay-ratio-falls-from-3311-to-below41/