RUNAWAY EXECUTIVE
COMPENSATION
This statistic raises two issues.
First, the minimum wage: owners argue that raising the minimum wage
deprives a company of profits, and costs jobs in the long run. This position
becomes indefensible upon discovery that executives have increased their
take of the corporate profits from 22 to 61 percent. In the end, CEOs are
compensated workers just like everyone else, so raising their pay should
have the same effects as raising the minimum wage of employees. Reducing
the executive take to normal levels would free up the funds necessary for
raising the minimum wage. Perhaps the most enlightened approach to this
issue is the one adopted by Ben and Jerry's, Inc. There, executives who
seek to raise their own salaries are contractually obligated to raise everyone's
pay in the company by the same percentage. The wave of the future?
Second, this statistic refutes one of the claims of supply-side theory.
The supply-siders claimed that reducing taxes would give entrepreneurs
more to invest, which would create jobs and raise productivity, allowing
them to pay more taxes even at lower rates. However, this statistic shows
that executives over the decades have chosen simply to pocket the money
rather than invest it. If they were true supply-siders, they would cut
the percentage of their own compensation, which would create jobs and raise
productivity, allowing them to receive more compensation even at lower
rates, etc. The fact that executives fail to do this proves that they really
do not believe in the supply-side idea, or at least do not respond to liberated
profits in the way that supply-siders imagine. One thing is virtually certain.
If the government had increased its take of corporate profits from
22 to 61 percent, executives would decry this raid on the corporate till
as "anti-business." Apparently, however, the practice is acceptable
when it is executives who are doing the raiding.
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