The Staggering Income of America’s 10 Richest CEOs
October 25, 2015
In America, chief executive pay is now 300 times more than the average worker's. That’s a high enough ratio that presidential candidates are taking note on both sides of the aisle. Senator Bernie Sanders listed the statistic in a statement supporting mandated CEO disclosure of salaries, and CEO Trump himself declared that the numbers were “disgraceful."
<p>However, even on a topic where a democratic socialist and a real estate mogul agree, it turns out that there’s always a devil’s advocate. JPMorgan CEO Jamie Dimon proposed an interesting hypothesis on a recent <a href="http://www.vanityfair.com/news/2015/09/jamie-dimon-ceo-pay?mbid=nl_0921_Daily&CNDID=11760518&spMailingID=8087473&spUserID=MTA3MTg2NDQwNTAxS0&spJobID=762307389&spReportId=NzYyMzA3Mzg5S0">Meet the Press</a>: lowering executive pay won’t fix our nation’s staggering income inequality. <span style="font-size: 12px;">“If you took all the compensation of all the CEOs of the top 500 companies in America, it wouldn’t make a dent in the problem,” he said.</span></p><p>Like two ships passing each other in the night, this neatly parallels another recent CEO wage moment. In April, Dan Price of Gravity Payments <a href="http://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html" style="font-size: 12px;">announced</a><span style="font-size: 12px;"> that everyone in his 120-person company, from the lowest-paid clerk on up, would receive a minimum salary of $70,000. In part, he achieved this by cutting his own $1 million salary to $70,000.</span></p><p>Arguably, this made a pretty large dent in the problem for the 119 other people who work at Gravity Payments.</p><div><p>So, the impact of redistributing CEO salaries on the entirety of the American economy? Difficult to analyze, to say the least. <span style="font-size: 12px;">But what about the impact of redistributing CEO salaries to their employees?</span></p><p>I took the top <a href="http://www.aflcio.org/Corporate-Watch/Paywatch-2014/100-Highest-Paid-CEOs">10 CEO salaries</a> <span style="font-size: 12px;">in the country in 20</span><span style="font-size: 12px;">14 </span><span style="font-size: 12px;">and the most recently reported number of employees in each CEO’s company. Being the head of a company is doubtless hard work and should be rewarded accordingly, so I set the CEOs' new salaries at a cool million a year. I took the rest of the average $73-million-per-year earnings and divided it up among their workers.</span></p><p>If this happened—if these CEOs only made a paltry seven figures a year—their employees would see an $1,419 increase in salary.</p><p>For context, depending on <a href="http://www.mybudget360.com/how-much-do-americans-earn-in-2015-household-income-wages-real-income-gdp/">where you look</a>, the average American makes somewhere between $28,031 and $34,823. That makes this salary bump equivalent to a 4-5% raise.</p><p>In other words, redistributing the salaries of 10 men instantaneously gives half a million employees an annual raise—and a generous one, at that—in an economy that hasn’t seen a real hourly wage increase in <a href="http://www.epi.org/blog/average-real-hourly-wage-growth-in-2014-was-no-better-than-2013/" style="font-size: 12px;">over five years</a><span style="font-size: 12px;">.</span></p><p>That’s a pretty big dent.</p></div>
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