BCT Editorial – 2/11/07

This page was last updated on February 11, 2007.

Wage gap; Editorial; Beaver County Times; February 11, 2007.

Below is a detailed critique of the subject editorial.

“It wasn’t quite a Nixon-to-China moment, but President Bush’s Wall Street critique of excessive executive pay and bonuses was an attention grabber.

“But don’t look for much more than rhetoric from the president on this issue. He didn’t say the federal government would intervene if the corporate world didn’t address this matter. Instead, he’s trying to use moral suasion to get companies to change their ways.”

[RWC] Assuming we’re not yet a socialist country, what right does the government have to tell business owners the maximum they can pay their employees? It may come as a shock to the editorial author, but the free market determines employee pay.

“At one time, the wages of workers and executives were much closer than they are today. Back in the 1970s, an executive might make 30, 40 or 50 times the average of what his workers made.”

[RWC] How much do you want to bet the class envy guys were complaining back then as well?

“Today, the multiplier is off the charts.

“For instance, The Associated Press reported former Home Depot CEO Bob Nardelli was earning an average of $25.7 million a year, and that excluded stock options. When he left the company, he got a severance package worth about $210 million.”

[RWC] Did you notice the very same people who whine about executive pay always seem to ignore the “wage gap” in the entertainment industry? Why didn’t the editorial mention the “wage gap” between the top actors/actresses and stagehands? What about the “wage gap” between top professional athletes and team trainers?

Here’s the bottom line. It’s none of the government’s business how much business owners pay their employees.

By the way, I’m not saying any or all of the executives used as poster boys for the “wage gap” non-issue are or are not worth their compensation. All I’m saying is company owners have the right to choose how much they pay their employees. If they pay their employees too much, it comes out of the pockets of the owners, no one else.

“Even socially aware companies have hefty differences between top and bottom wage. In the book ‘AWOL: The Unexcused Absence of America’s Upper Classes from Military Service - and How It Hurts Our Country,’ Kathy Roth-Douquet and Frank Schaeffer report that the CEO of Ben and Jerry’s ice cream makes hundreds of times what the lowest paid staff members get.”

[RWC] By “socially aware,” the editorial means companies either scared of the left or run at least partially according to socialist principles. You see, providing quality products at competitive prices and paying employees market-driven compensation isn’t being “socially aware.”

“(By the way, if you want or need another reason to admire the U.S. military, Roth-Douquet and Schaeffer report it is ‘more egalitarian than corporate, media and academic America. The top general in the military makes eleven times in pay what the lowest ranking private earns.’ The lowest recruit has the same health-care benefits as a general.)”

[RWC] The two I worked at provided the same level of healthcare benefits for everyone. Who knew Texaco and a software startup were “egalitarian?” <g>

“The United States is fast becoming two nations, one rich and one poor. Do we make adjustments, especially in regard to education, health care and pensions, to ease the burden on low-wage and middle-income Americans, or do we blithely continue on the path we are on?”

[RWC] Talk about a broken record. In “Bottom line,” the Times wrote, “The United States fast is approaching the point of becoming two nations, one rich and one poor.”

Not to be outdone, I’ll repeat myself as well. “Is this the Times endorsing former Sen. John Edwards for president? As a reminder, Mr. Edwards’ 2004 campaign theme was a “two Americas” theme. As another reminder, Mr. Edwards is a multi-millionaire trial (personal injury) lawyer.”

What socialists want us to believe is highly paid executives are taking money from rank-and-file employees. That’s untrue. Company owners pay all employees, including CEOs, so if CEOs are taking money from anyone it’s shareholders. If shareholders cut executive pay, the money wouldn’t go to minute raises for employees; it would go to shareholders in the form of a minute dividend increase or to business investments.

For the sake of argument, let’s say Mr. Nardelli’s $25.6 million/year had been spread among Home Depot’s 355,000 employees. That’s about $72/year per employee. Yep, that’ll have a big impact on “education, health care and pensions.”

“How we respond will determine what kind of America our children and grandchildren will grow up in.”

[RWC] This whole “wage gap” nonsense is fueled by nothing but envy. You’ll note the editorial never told us why the “wage gap” was a bad thing.