For Years the following question has popped up:
Are Chief Executive Officers (CEOs) making too much money?
With CEO pay doubling in only 10 years, more and more people are starting to question our country’s Income Disparity. If a CEO bankrupts his company, why is he/she rewarded? Even if a man like Larry Ellison (CEO of Oracle) leads his company to success, can anything justify his 56.8 million dollar compensation in 2009? With 56.8 million dollars worth in compensation, Larry effectively makes 1395 times the average American.
Math: $56,800,000 divided by $40,711.61 = 1395.17941 (40,711.61 was the average American income in 2009)
The Average CEO’s Salary
Despite America suffering one of the worst recessions in U.S history, super-rich CEO’s continue to grow more wealthy. Today in 2011, the average CEO makes about $11,358,445 annually. Now if you do the math with that salary, the average CEO still makes 279 times more then the average American worker. Now you have to ask yourself, does the average CEO contribute 279 times more to American society?
Math: $11,358,445 divided by $40,711.61= 278.997686
The Answer AND the Solution
While it is difficult to determine a CEO’s positive impacts on society, one thing is certain, CEO salary’s are actually hurting the rest of society. American companies have been outsourcing jobs for many years now, harming America’s middle and lower class. While much of the country lost jobs, CEO’s began to rake in extremely high salaries. These “excessive” salaries drain company funds, which makes hiring those oversea’s the only option to keep the company profitable.
This System will eventually collapse on itself. To fix the rising income disparity, and job outsourcing issues, the U.S government should begin to “Cap off” CEO and executive wages. However instead of using an unfair “set limit” (Like 500,000 a year), a income comparison “Cap” would be most successful.
An Income Comparison Cap
To balance out excessive CEO wages, CEO’s should not be allowed to earn more then 100 times the average American. After a certain amount of time, this could be scaled down even further. With such a system in place CEO’s would be forced to focus on increasing wages to existing positions within their business, so that they themselves may earn more. While this plan may upset some “hardcore” Republicans, hopefully some type of compromise could be met. Right now, it simply does not make sense to allow one tiny sect of society to grow more powerful, while 98% of the rest suffers from decreased wages.