A Just Wage and Executive Salaries

I found this interesting article regarding the moral aspect of executive pay levels. It addresses the issue of what should be considered just compensation for top level executives.

A Just Wage and Executive Salaries

ROME, APR. 25, 2010 (Zenit.org).- As accusations over the responsibility for the global financial crisis continue apace, the subject of salary levels for executives remains a contested issue.

The British government announced a supertax on bonuses for banking executives, but a Jan. 8 report by the Financial Times said most London bankers will suffer little or no impact as banks will absorb all or part of the cost of the tax.

On March 20, the Financial Times reported that Richard Lambert, director-general of the Confederation of British Industry, the U.K.'s largest business organization, warned that top executives "risk being treated as aliens" by politicians and the public because their pay is so out of step with that of the population at large.


Read more: Zenit

In my opinion, even a ratio of 75 to 1 is way to high for most execs. Companies seem to always forget that is is the people in the trenches who do all of the grunt work who really produce all of the money for their companies.

Those high salaries create a huge gap between the execs and the workers such that the execs cannot comprehend issues important to the common worker. Executive bonus policies make the execs more prone to taking dangerous risks in order to fatten their compensation package and make it more likely that they will look out for their own financial gain before looking out for the good of the company.


You could have the best paid and most talented team of executives in the world running your company but, without the workers actually making the product or providing the services, the company wouldn't make a dime.

If companies would pay their bottom level workers at least a living wage, it would increase the morale and productivity of the workforce who wouldn't have to spend much of their energy on griping about working conditions and worrying about how they are going to make ends meet.

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[edit on 26/4/2010 by Mirthful Me]

The very poorest should be no more than three times worse off than the very richest

I guess this is a philosophical point. It would have to be worked out on a global scale, so no country could offer higher wages. Surely an improvement to how things are now.

This opinion has had me flamed before, but i still stand by it.

I tend to agree. It's a ridiculous notion to gather all the money at the top and treat your workers at the bottom like crap.

Are people aware how big businesses operate.
Most big business have a board of directors, and positions are open to anyone, which are voted in by shareholders.
The more shares a person or group holds the more votes it has, so the directors that are voted in, their intrests lies not with the workers and not with the company but with the investors and in most cases the directors award themselves large blocks of stocks which makes them big investors.
It's business as usual, cheating the employees and robbing the company
for profit for the investors, the big investors, and before the company colapses the big investors sell out their investment and the small investors are left holding the bag, of worthless shares.
Why do you think they create golden parachutes? It's because they know what's going to happen.

reply to post by woodwardjnr


Yeah 10 to 1 is still too much but 500 to 1 is completely bonkers.

This is class warfare -- nothing less.

I agree 3 to 1 is a good ratio.

I think the problem isn't that they make to much, but as noted, that the executives can escape their own faults easily.

They need to be held more responsible socially and ethically if they are in such positions of power.

I am not angry at how much money they have, but the lack of care for their company which ultimately effects society.

Also, given that they follow well ethics, pay should not be restricted anymore than the tax system in hand. Success needs to be rewarded, and while it may have its downfalls, the motivation and hope that anyone can possibly become their own CEO given the skills and determination is my sole reason to be against wage caps.

[edit on 25-4-2010 by FritosBBQTwist]

Always refreshing to see the socialist attitude of restricting the wealth of the rich to close the gap between them and the poor rather than telling the poor to pull up their boots and do better.

Regardless of how many people deny it, the simple truth still remains that you get out of life what you put into it. If you hate your job bagging groceries, haul your ass to college for something a bit more beneficial than a "hospitality sciences" degree and make something of yourself. If you lack the intelect to do so, then *shrug* it isn't really anybody's fault but your own (with a nod of acknowledgement towards genetics).

You do not want to have a governing body tell private business what to do. Period.

If you were to tax a bonus at a rate of 10%, then a $1,000,000 bonus would result in $900,000 to the executive and $100,000 to the government that taxed it.

If you were to tax a bonus at a rate of 50%, then an executive would pay himself a bonus of $1,800,000 resulting in $900,000 to the executive, $900,000 to the government. The executive would get the same no matter what. The government would get MORE and that is what they want. The government would be crying ''unfair'' in public and taking a bigger cut in private. The people who buy the goods and services of the executive's company would end up paying more as the increased tax expense was added into the price of the goods and services that the consumer had to pay. So the end result is the people pay more as the government rapes them.

Government is not supposed to control private business. That is what we capitalists call communism or extreme socialism or just plain out of control dictatorship which takes away all incentive to work.

reply to post by woodwardjnr


I won't flame your idea, but why 3:1? With 6 billion people on the planet that would mean a impossible transfer of wealth, residents of developed nations, would be impoverished. 3:1 on a global scale, would mean everyone would be poor? I don't think thats what you imply when you say 3:1.

I think 50:1 is fair, the ultra-wealthy create most of the jobs outside of the companies they own. Think service industry, high end resturants, aviation, yachts and so on.

If average wage is 50,000, then the top would be 2.5 million, hopefully that would keep most service companies alive.

Is the 3:1 ration arbitrary, or is there a economically sound idea behind it. If you already had this conversation, please link and I will read it there

reply to post by Cabaret Voltaire


I agree with the philosophy, if buisnesses and the people in them have a strong moral and ethical compass. They don't. I can already see the "buyer beware" counter arguement that will follow this next statement.

People get taken advantage of. Madoff and other Ponnzi schemes, S&L failure of the '80's, Enron, the list of corporate and personal malfeasence goes on as far back as the historical record does.

We need to head off these calamaties. Period. The damage created is to harmful to individuals as well as nations.

we need to regulate, watch and hold responsible those that endanger the system everyone relies on

reply to post by burdman30ott6



reply to post by Cabaret Voltaire


Ok guys, I just wanted to make one thing clear about the article, it was written for a Christian investors group to diccuss the morality of executive pay levels. There was no call in the article for government action against overpaid executives.

The guide was a designed to aid Christian investors in choosing where to invest their money. This particular article discusses the moral aspect of executive pay, how it affects executive business decisions and the overall health of the company involved.

Some of the principals discussed in the article have more to do with a little known economic system called distributism. It is a 3rd way economic system alternative to capatilism and/ or socialism/communism.

Distributism is based upon Catholic moral teachings and seeks to create a society where all men have property sufficient to provide for their own needs without having to be dependent on the government of others.

Distributism, also known as distributionism and distributivism, is a third-way economic philosophy formulated by such Roman Catholic thinkers as G. K. Chesterton and Hilaire Belloc to apply the principles of Catholic Social Teaching articulated by the Catholic Church, especially in Pope Leo XIII's encyclical Rerum Novarum and more expansively explained by Pope Pius XI's encyclical Quadragesimo Anno. According to distributism, the ownership of the means of production should be spread as widely as possible among the general populace, rather than being centralized under the control of the state (state socialism) or a few large businesses or wealthy private individuals (plutarchic capitalism). A summary of distributism is found in Chesterton's statement: "Too much capitalism does not mean too many capitalists, but too few capitalists."

Essentially, distributism distinguishes itself by its distribution of property (not to be confused with redistribution of capital that would be carried out by most socialist plans of governance). While socialism allows no individuals to own productive property (it all being under state, community, or workers' control), and capitalism allows only a few to own it, distributism itself seeks to ensure that most people will become owners of productive property. As Hilaire Belloc stated, the distributive state (that is, the state which has implemented distributism) contains "an agglomeration of families of varying wealth, but by far the greater number of owners of the means of production." This broader distribution does not extend to all property, but only to productive property; that is, that property which produces wealth, namely, the things needed for man to survive. It includes land, tools, etc.

Distributism has often been described as a third way of economic order opposing both socialism and capitalism. Thomas Stork argues that "both socialism and capitalism are products of the European Enlightenment and are thus modernizing and anti-traditional forces. In contrast, distributism seeks to subordinate economic activity to human life as a whole, to our spiritual life, our intellectual life, our family life".

Wickipedia

Distributism should not be enforced through government interference but rather through custom, tradition and a strong sense of morality and ethics.



[edit on 4/26/10 by FortAnthem]

You're still talking about a method of giving to those who do not deserve. With capitalism the deserving rise while the bums die. If you have money and want to help the ''less fortunate'' then by all means go ahead and do it. Just don't come around asking for my money. I don't need you managing my money. I think you will find that most people looking to use Christianity as a justification of their own attempt to administer other people's money are just using a sad ruse to fleece Christians.

This is not a dog help dog world. This is a very competitive world that is getting even more competitive. Mothers send sons to die defending the right to get and keep what one works for.

What is needed is a free market. A job will pay what the market will bear. If there is profit, the leadership and investors should be compensated. Laborers have a different agreement...they agree to provide an hours worth or work for a certain rate of pay. If the pay were too low, the jobs would go unfulfilled. If the pay were to high the company would lose money and fail.

This is very simple and makes perfect sense...no one has a right to come an take away through excessive taxation profit people make. Profit is a very good thing. It fuels innovation, investment, creativity and civilization. Anyone can grow up to be the owner or CEO...he or she just has to study and work very hard. Hard work begets profit. This is the American Dream.

Originally posted by Cabaret Voltaire
This is not a dog help dog world. This is a very competitive world that is getting even more competitive. Mothers send sons to die defending the right to get and keep what one works for.

Your idea of capatilism sounds more like anarchy to me, where the strong oppress or even kill the weak, just because they can.

If that is what capitalism is leading us to, we would all be better served seeking a another way. I wouldn't want to live in the world of "Mad Max".


I don't think socialism is the answer either. People need to think outside the box. The current situation is unsustainable.

reply to post by FortAnthem




I wanted/needed to do a little more research on this topic and found this. I will need some time to digest.

I wonder if a nation not mindful of what are called the "seven deadly sins" (as I remember it), pride, avarice, gluttony, lust, sloth, envy, anger, creates economic (and resulting social) conditions as we currently have. When we are not mindful of these sins, we have neither our best interest nor the best interest of others in mind.

"Blessed are they that hunger and thirst after justice: for they shall have their fill."

reply to post by Missing Blue Sky


sociology.ucsc.edu...

How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few.

motherjones.com...

By the height of the credit bubble between 2000 and 2007, the financial industry earned a staggering 40 percent of all corporate profits recorded in the United States, four times what they earned in 1980. Over the same period, average pay on Wall Street doubled, while bonuses at the top sextupled.

sociology.ucsc.edu...

As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%.

In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.

According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). Thus, the attempt by ultra-conservatives to eliminate inheritance taxes -- which they always call "death taxes" for P.R. reasons -- would take a huge bite out of government revenues for the benefit of less than 1% of the population.

Here are some dramatic facts that sum up how the wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts for the wealthy and the defeat of labor unions: Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s (Wolff, 2007).

Most amazing of all, the top 0.1% -- that's one-tenth of one percent -- had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).

[edit on 26-4-2010 by drew hempel]