I recently interacted with someone on Google+ related to a post showing “average CEO pay in the US” compared to other nations. It stated flatly that the pay was 475 times the pay of the average worker. So I questioned the source.
There are three kinds of lies: lies, damned lies, and statistics. – Mark Twain (among others)
The most recent of these articles were based on the 2011 release by the AFL-CIO. A number of websites simply repeated and linked to the AFL-CIO page without challenging a single assumption. For example, two important points need to be considered:
- The compensation considered was only that of the CEO’s of 299 of the largest US corporations;
- The median worker compensation was not adjusted in any way by education, experience or any other factor;
I’m curious why no other questions were asked. For example:
- What is the average pay of all CEO’s? If we’re going to compare the average pay of all workers, we should compare it to the average pay of all CEO’s.
- Is “CEO” the only chief executive title in use in the US? For example, I’m self-employed and my title isn’t CEO. Would my seemingly meager compensation be included in the all-CEO numbers? (No.)
- What is the average pay of the employees of those 299 companies? If we’re only going to compare the top 299 CEO’s maybe their employees are in the top 299 also. I’m curious how their pay compares to the median income for all US workers regardless of region or education.
The AFL-CIO and most of the people linking to their article didn’t bother to take 5 minutes to perform any relevant comparisons. I went to Salary.com and searched for the average total compensation for CEO’s. It came back at over $1.2 million in my zip code which still seemed surprising. So then I searched for “President” and found this chart which shows the average annual base salary for the top administrative executive to be just over $300,000. Well, $300,000 is less than 10 times the median employee salary! Had the number been 10×1 instead of 475×1, I’m sure the AFL-CIO, Payscale.com, ABC News, USA Today and others would have had to write about something else.
Two key observations
First of all, there are more self-employed people than ever before. And that number will continue to increase. All of those people will continue to be excluded from any salary study used by the AFL-CIO because in a society dominated by the self-employed, unions are useless. In their own self-interest, unions rapidly becoming extinct just like traditional media, record companies, and snail-mail.
Second and more importantly, this demonstrates that many in our society continue to think that someone other than themselves is treating them unfairly or holding them down. CEO’s, like politicians, are easy targets.
If we fall in the trap of thinking someone or something has disadvantaged us we become victims. As victims, we are entitled to restitution for the unfair treatment. We start to think that others should regulate the behavior of “those people” who are holding us down.
There is no defense for those CEO’s who make hundreds of times what their average employees make. Greed is pervasive. (More on this in a future post.)
But self-employment will continue to increase. Many have reported that our economic recovery will be jobless, meaning that self-employment will produce the income of more and more people in our culture for quite some time. Self-employment teaches you quickly that the victim-mindset is baggage. It slows you down and makes you less effective. Self-employed people understand better than anyone the power of determination, persistence, belief and hope.
No one is holding you back. You can find exceptions to every class bias and every limiting circumstance. The only factor keeping you from overcoming limitations is you. Spend all your time blaming someone else for your situation and it will NEVER improve. In fact, it will deteriorate further. A victim mindset is prison with no hope of parole. The first step to freedom is to choose your future. What do you have to lose?
* Note: The AFL-CIO article only shows the compensation to be 342 times the average worker pay. They compare that to a study done in 1980 but I couldn’t find any note on how many CEO’s were included in the 1980 study.