I’m genuinely curious, is there actual hard evidence that executive pay is a significant factor in employee wages?
Just to examine Lowe’s, since there’s decent data available, the article shows the CEO making 17.5 million. If you vaporized the CEO and instead distributed all that money to their 300,000 employees at-large, each employee would get an annual raise of 58.3 dollars, or an hourly increase of 0.02 cents per hour. I’d hazard to guess that the main factor affecting employee payment is how hard or easy it is to find a replacement. While there are obviously more execs than the CEO, the total pay pool is roughly 9 billion dollars. A handful of executives making several millions could all be eliminated without meaningfully reducing that very much.
No, the focus on CEO pay without talking about how much value the company as a whole has generated doesn’t make much sense. I couldn’t see it in the linked article, but this article claims Lowe’s had a net income of $97.05 billion in 2022. Splitting that equally amoung all employees means everyone makes $323,500. That’s a huge raise!
The massive profits generated by the company aren’t split equally. The vast majority of those billions earned is given to executives and shareholders or used to buy stock or just held in a vault so the company has a huge surplus of cash on hand. Except who was responsible for generating all those billions? The workers most responsible get compensated the least. That’s the issue. Executives at least work for the company, they deserve compensation from the value generated, but why do shareholders get so much when they never clocked in a single hour? This is where the real discussion lies.
I don’t think anyone serious is claiming that the only reason these firms underpay their people is because of high CEO wages.
The place where we should really be seeking out evidence is whether having a high-paid CEO actually directly increases profitability/revenue. There’s at least some evidence this is not true: 12. A similar question is whether workers earning low wages perform as well as workers paid prevailing or better wages.
What this kind of reporting highlights is just how wasteful and immoral it is for the executives to be cutting themselves such obscenely huge paychecks while operating a low-wage firm. It’s evil. And on top of being evil, it’s probably bad for business. Even if the “bad for business” part is purely that the executive high wages themselves are a waste of money.
I’m genuinely curious, is there actual hard evidence that executive pay is a significant factor in employee wages?
Just to examine Lowe’s, since there’s decent data available, the article shows the CEO making 17.5 million. If you vaporized the CEO and instead distributed all that money to their 300,000 employees at-large, each employee would get an annual raise of 58.3 dollars, or an hourly increase of 0.02 cents per hour. I’d hazard to guess that the main factor affecting employee payment is how hard or easy it is to find a replacement. While there are obviously more execs than the CEO, the total pay pool is roughly 9 billion dollars. A handful of executives making several millions could all be eliminated without meaningfully reducing that very much.
Edit: Was off by a factor of 10
No, the focus on CEO pay without talking about how much value the company as a whole has generated doesn’t make much sense. I couldn’t see it in the linked article, but this article claims Lowe’s had a net income of $97.05 billion in 2022. Splitting that equally amoung all employees means everyone makes $323,500. That’s a huge raise!
The massive profits generated by the company aren’t split equally. The vast majority of those billions earned is given to executives and shareholders or used to buy stock or just held in a vault so the company has a huge surplus of cash on hand. Except who was responsible for generating all those billions? The workers most responsible get compensated the least. That’s the issue. Executives at least work for the company, they deserve compensation from the value generated, but why do shareholders get so much when they never clocked in a single hour? This is where the real discussion lies.
I don’t think anyone serious is claiming that the only reason these firms underpay their people is because of high CEO wages.
The place where we should really be seeking out evidence is whether having a high-paid CEO actually directly increases profitability/revenue. There’s at least some evidence this is not true: 1 2. A similar question is whether workers earning low wages perform as well as workers paid prevailing or better wages.
What this kind of reporting highlights is just how wasteful and immoral it is for the executives to be cutting themselves such obscenely huge paychecks while operating a low-wage firm. It’s evil. And on top of being evil, it’s probably bad for business. Even if the “bad for business” part is purely that the executive high wages themselves are a waste of money.