Re: [sixties-l] Wealth today

From: Mark Bunster (
Date: Mon Jun 19 2000 - 13:39:51 CUT

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    monkerud wrote:

    > A long post, but worth reading. How did we let things get this bad?

    > Gap between executives and rank-and-file grows wider
    > In 1996, the typical chief executive of a large corporation in the United States earned 24 times what a manufacturing worker made, according to annual salary data collected by New York-based consultants Towers Perrin. By last year, the CEO was taking home 34 times what a factory worker collected. That spread is far larger and growing faster than ratios in European countries. The U.S. gap would probably be even larger if the survey measured service workers such as janitors or cafeteria cooks.
    > Compensation among the 767 Silicon Valley executives in the Mercury News survey of large companies shot up 70 percent in 1999 after a 21 percent jump the year before. By contrast, the average annual wage around San Jose crept up a mere 5.87 percent to $51,509 from 1997 to 1998, the latest date available from the Bureau of Labor Statistics.
    > It would take about 11,845 years for someone making the federal minimum wage of $5.15 to earn the $121.7 million that Cisco Systems Chief Executive John Chambers collected last year.

    While no sensible person would discount the income disparity (whereby 20% of the people are holding 80% of the assets), these comparisons are odd. Why would you compare Silicon Valley executive pay to manufacturing rank and file pay? Why would you compare it to average wage? The point that's being made is that executives are earning more than their employees, but the stats used don't compare the two, if you'll notice. What's the ratio for Silicon Valley execs compared to Silicon Valley rank and file?

    The tech industry is a special case, currently fed by billions of speculative dollars. Money is flowing from top to bottom. Don't believe me? I can put you in touch with a friend of mine who started at AOL out of college, as a sales rep/customer service person. She retired last year (she's 33), cashing in millions in stock options given to her when AOL stock was in the single digits. To castigate people for having the good fortune to get involved in a company whose value soars seems out of line. The range of
    positions eligible for options is ever broadening, and when you compare them to straight salary, to me they represent a more "democratic" form of compensation. Your stock value is predicated entirely on the performance of the whole company, which means you as VP of marketing are at least partially reliant on Joe Customer Service Rep, who attracts or repels potential customers with far more impact than you do.

    I cannot dispute the fact that top executives are being compensated way out of proportion to their tangible value. On the other hand, why is it their fault if they signed on with a company at $30/share, and leave it at $100/share?

    My point with this note was really to skewer the manipulated comparison from the original article. At least compare apples to apples!

    Mark Bunster       **It's a different kind of feeling
    Survey Research Lab**you might not have felt at all
    VA. Commonwealth U **makes me jump and touch the ceiling
    Richmond, VA 23284 **if I fall well then I fall.   ****          --Chisel

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