Income: reasons for large range, or small

[oscar111]

I am trying to get an overview of all arguments for and against the current hi incomes of CEO's and the like,... and also those arguments dealing with the other end ... such as a higher minimum wage.

So far, i have 4 reasons for incomes:

1. brains {not just logical ability, but also creativity as in inventors}

2. effort

3. in-crowd {"married the boss' daughter" : "I got into Elite U. because they favor admitting kids of alumni" : Cartels, Monopolies and Old Boy crowds {as in medical boards protecting bad apples and protecting obscene incomes}: etc}

4. protect all good people from suffering {this argument is for a very hi minimum income.. to keep them from any suffering}

Any left out?

[Mist]

1. A favorite Rethug/RW argument is that rich people getting more money

is good for the economy (but poor people having more money would WRECK the economy). I didn't say it made sense, just that it seems a popular argument for RWers.

[Crazy Dave]

2. I don't know how to work this in but...

...CEO's still believe in good retirement pensions...for themselves.

[rosesaylavee]

3. Influence peddling.

You get someone from your good ol' boys network in a plumb position, and they will definitely grease your wheels. You don't hear about upstarts from the mail room getting these posts do you? That doesn't happen anymore. They recycle their own from one corporation to the next. And there ain't a lot of women in those posts either - hence good ol' boys term is still apropos.

Doesn't create a lot of efficiency in the corporation if these people continue to be recycled from one post to the next because they have very little idea of what the little people are doing to run the corporation.

Personally, I think promoting a capable administrative assistant to CEO every once in a while would do the economy overall a great deal of good. Companies can not run without admins and they are the most under-appreciated class of worker there is - in my not so humble opinion! Been there and don't want to go back.

[Warpy]

4. Inheritance

Don't kid yourself, all those old boys started out life in fat city. You don't get to be a CEO by working hard at Podunk College and then getting your MBA at a state school, then starting out your life in a low level PR or Human Resources job and working your way to the top.

Most of these guys started there, will remain there, because their family legacy demands such a position. The top is incredibly inbred, with the same names appearing over and over again on boards of directors and upper management. In many ways, they're all like Stupid, offered exalted positions because of family connections.

Even if heirs never inheritied a dime, what they do inherit is entitlement that stretches to all areas of life. If they tend to float to the top, it's because they started there.

[Coyote_Bandit]

5. Why do CEO's have large incomes relative

to the average worker?

Greed. Plain and simple. Managers largely determine what they are paid, what kinds of benefits they get and what kind of retirement plan they have.

Conflict of interest. The duty of management may be to maximize shareholder value but you can be sure that the guy making the recommendations is going to consider his own well-being.

Concentration of business power in corporate managers. The ability of shareholders to bring shareholder derivative suits or mount proxy fights has been significantly diminished. As has the power of organized labor to demand better pay, benefits, and working conditions for the average worker.

Brains? Assuming average intelligence and a willingness to apply oneself then intelligence is mostly irrelevant to career success (as measured in financial terms). Yes, there are exceptions. If you have to be credentialed then educational achievement may be important. But educational achievement does not necessarily reflect intelligence or creativity. Some are wildly successful because they are the first to capitalize on a particular idea or to make a new product. They represent a fairly small percentage of traditional CEO's. Their achievement can only be explained by considering both creativity and the ability and willingness to undertake high risk ventures.

Effort? There are a lot of nasty jobs in this country that require effort. For the most part they are not well compensated. Anybody who thinks CEO's are appropriately compensated based on their effort needs to spend a day picking blackberries, a day mucking out pig pens, a day mining coal, a day working as a nurses aide, and a day working in a call center.

In-crowd? You bet. Absolutely. Who you know is far more important than what you know or what you have done. Assuming, of course, that the folks you know are willing to act on your behalf. Personal relationships can take you places you are not otherwise qualified to go.

Protect all good people from suffering? Ah, isn't that nice. But, perhaps, a bit too warm and fuzzy touchy feely. Value in the business world is measured in dollars.

So, tell me I'm cynical.....

[Sammy Pepys]

6. A few that I have personal experience with....

or that I wish I had personal experience with :D But these are the reasons I see lots of people hired at high wages.

1) Connections: Knowing the right person can get you more $$$. Though it hasn't worked for me in my adult working life, when I was a teenager I always got my jobs through references from other friends and they usually advocated a good starting wage for me. I was making $10/hour working at a dry cleaner in high school because of that...that was a lot more than any of my other friends. You can imagine how this plays out in the corporate world.

2) Hyperunique skill set: I see this all the time at work. I see people hired at close to six figures because they know all about things like liquified natural gas port safety hiring practices in Texas (not the Gulf of Mexico...just Texas).

[dcfirefighter]

7. Because they can.

due to a lack of competition.

Companies make a profit when they have a competitive advantage. The larger the profit, the larger the advantage. Sometimes this profit is earned, by finding new markets, or by differentiating your product from others. Part of all profits are unearned, due to barriers to entry for competitive firms. Patents, Corporate Liability Shield, and 'ownership' of irreproduceable natural resources (oil rights, brodcast rights, land titles, etc.) can be held idly or less than best use, making int more expensive for new firms to enter and compete.

These profits are the fat on which extraordinary CEO pay lives on.

The other factor allowing this to occur is a lack of interest and/or ability on the part of general stockholders to contain costs. Very very rarely does a particular CEO bring that much more than the next best guy. IOW, does a $10M/y CEO improve the company's performance $9M more than a $1My CEO?

[Greyhound]

8. No legitimate reason whatsoever, that's why ours is the only country

to accept this travesty.

In my personal experience with them, I have never seen reason #1, in fact, the opposite is more commonly true. (I laughed out loud when I first saw the title "The Smartest Guys in the Room" about the shitheads that "ran" Enron, believe me, these guys were only the smartest guys in their own, inbred circle)

#2 is debatable, Law firms are a good example, the Partners typically put in 14+ hours a day, six and even seven days a week, for decades. OTOH, Don Rumsfeld rarely even showed up when he was CEO of Searle, a position he attained strictly through his connections to the government, especially the FDA.

#3 is, by far, the most common, almost universal.

I'm not sure I understand what you are saying in #4, so no comment.