Kids say that all the time… well not all the time. They typically point out unfairness when someone gets something desirable that they don’t get and they are upset. They rarely point out unfairness when they are getting something desirable that others don’t get. Adults aren’t much different.
What is the exact number that is fair when it comes to how much more a CEO makes than an entry level worker? Is a 10% gap fair? How about 100% gap? How about a 1000% gap? Pick a number that is fair…. then justify that number. Give us, say three good reasons that the number you picked is better than one slightly higher or slightly lower. I will wait.
You see, most people arguing for a smaller gap have no real good reasons for a number so typically don’t give one. It is much safer for them to argue if they don’t. Without a number, you are left with arguing something else… like the necessity of providing a living wage. How much does someone need to live on?
That seems like an easier number to find. We did that one semester in Business Ethics class one fall at Creighton. The students in that class had to research the basic needs of a person (food, clothing, shelter [in a fairly safe neighborhood], transportation, utilities, toiletries, medicine, dishes and silverware, end etc. Basic needs. Then, I had them find out what budget one would need to support those items. After coming up with the budgetary needs, they then figured out how much money a person would have to make to buy all that – that is, how much take home pay they would need.
Every person in the class was shocked. They discovered that a single person could live on minimum wage in Omaha. If they took the bus and didn’t spend money on non-necessities, they could make a living. So then some chimed in – what if the person is married or has a kid, so they have higher expenses. Well, of course they would need more money. Duh. After discussing this, it became clear that if it were two adults, both would have to make money. If it were an adult and a child, they would have to seek assistance. I suggested that people seriously consider doing everything in their power not to have kids until they advanced beyond minimum wage. You see, entry level wages are designed for younger single people just coming into the work force. If one wants more money, they will have to work hard and demonstrate to their superiors that they can be trusted with a higher level job.
The thing is, the person in HR hiring for entry level positions don’t ask applicants what their budget is and how many mouths do they have to feed. They don’t ask how much their monthly phone bill is and how much they spend on entertainment. They don’t care about that. They just want to know if the person can do the job. A young single girl living with her parents still with very few expenses gets paid the same as the single dad with three kids.
This is fair.
They are paid for the work they do, right?
Yes and no. They are paid for the work they do, but their pay scale also reflects their overall comparative value to the company. If the entry level employee messes up, what are the consequences? Some but not much. If the CEO messes up, what are the consequences? Maybe small, but also maybe huge. A big mistake could cause the company to shut down and result in everyone losing their jobs. It is only just and right that the CEO make more money because the CEO shoulders much more responsibility.
This is also fair.
I have encouraged many business owners to be generous to their employees. I have encouraged them to graciously share in the wealth accrued by the company with every person in the company. I have owned and operated many businesses over the years. I never paid minimum wage. I often had profit sharing plans with people who worked for me. I did all this however not out of guilt or pressure from others. I didn’t do it because it was fair. I did it because we are supposed to love and care for one another.
This is what is the most fair.
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For His Glory,
Jim