Tag Archives: Chief executive officer

Equal Pay & Freedom

Posted by on October 10, 2012 14 comments
Pictures from Equal Pay Day actions in Leuven.

Pictures from Equal Pay Day actions in Leuven. (Photo credit: Wikipedia)

While there have been considerable improvements in the gender gap, women still lag behind men in regards to pay even in Western countries such as the United States. In the United States, the median income for women workers is 80% of that of the median for men. This is an improvement from the 75% figure of 1989, but is still a matter of concern. At the CEO level the disparity, oddly enough, increases: women CEOs make about 72% of what their male colleagues earn.

While there have been repeated failed efforts to get an equal rights amendment, the Lily Ledbetter Fair Pay Act of 2009 has provided women with legal grounds in regards to addressing the matter of unequal pay.

On the face of it, it would seem that women are morally entitled to the same pay as men, provided that the relevant factors are the same. This is, of course, based on the principle of relevant difference: a difference in treatment is only morally justified when it is grounded by a relevant difference. For example, if Mike is paid more than Sally because Mike is a full professor and Sally is an assistant professor, then that difference would be relevant and the pay disparity could be thus justified. However, if Mike and Sally were both full professors and Sally was paid less solely because she was a woman, then that would certainly not be a relevant difference and hence would be unfair.

This view can, of course, be countered. One option is to argue that a person’s biological sex is a relevant difference such that even if all other factors were identical, a woman could be justly paid less solely because she is a woman. This seems rather difficult to justify. To use an analogy, it would be somewhat like saying that if a man and a woman raced and they ran identical times (that is, crossed the finish line at the same moment), then the woman would lose because she was a woman, even though everything else was the same. This seems rather absurd as does the idea that a woman would justly deserve less just because she is a woman.

Another option is to argue that women have properties as women that actually are relevant to being paid less. Roughly put, the idea is that women will generally perform at a level that is inferior to men because of the qualities they have because they are women. To go with another sports analogy, on average men are considerably faster than women in running. For example, the world record for men in the marathon is 2:03 and for women 2:15 (my best is 2:45). This is not due to any injustice but to the physical differences between the sexes.

This line of reasoning does have considerable appeal. After all, if the work performance of women is inferior to that of men, then they would justly be paid less and this disparity would show up in the overall statistics. If it is countered that some women are superior to some men, the obvious reply is that this is still consistent with the general disparity. After all, Paula Radcliffe’s best marathon time crushes mine by 30 minutes, but she is still about 12 minutes behind Patrick Makau Musyoki and the average women’s time in the marathon is slower than that of the men.  Likewise, while Sally might be superior to Sam, male workers might be superior to female workers, thus justifying the disparity.

This line of reasoning can, of course, be countered by showing that the actual performance of women is at least comparable to that of men and thus the pay disparity is unjust. Also, if it can be shown that individual men and women have comparable performances, then individual salary disparities that are gender based would be unjust. That is, if Sally and Sam have the same work performance and so on, then they should have roughly the same pay.

As might be imagined, I think that men and women do have comparable job performances and that a person’s biological sex does not warrant pay disparities. That is, being a woman does not entail that the person is an inferior worker. This is, of course, an empirical matter and subject to proper investigation. Naturally, if an objective and adequate assessment shows that one sex is inferior to another in relevant ways, then the disparity would be warranted.

Another approach, argued for by Representative Todd Akin (the same person who claimed that the female reproductive system has defense mechanisms against being impregnated by legitimate rape) is that employers should have the right to pay women less than men. Akin said, “I believe in free enterprise. I don’t think the government should be telling people what you pay and what you don’t pay. I think it’s about freedom.  If somebody wants to hire somebody and they agree on a salary, that’s fine, however it wants to work. So, the government sticking its nose into all kinds of things has gotten us into huge trouble.”

On the one hand, this does have some appeal. After all, for the state to impose salary rules on employers would certainly seem to interfere with their freedom to create employment contracts specifying pay. People do, of course, argue that in a free market people can always decide to not accept a salary and go elsewhere to earn a more desirable salary. As such, if an employer wants to pay women less than men, then women can go work for an employer that pays women better. A woman could even start her own business and pay women as well as (or better than) men. Naturally, the same freedom would seem to apply broadly so that an employer should not be forced to pay a minimum wage or provide any benefits that could be considered part of the compensation.

On the other hand, there are some serious points of concern. First, the typical employee operates from a position of weakness relative to the employer, thus the market is not free but operating in favor of the employer. This fact can be used to argue that employees can justly turn to unions or the state to help ensure that the wage market is actually free and that one side does not have an unjust advantage. Part of ensuring the free market could thus involve minimum wage and equal pay for equal work laws. History show quite clearly what happens when employers are able to set their pay with complete freedom. Second, the idea that women workers can always go elsewhere and receive better pay or start their own business is rather unrealistic. After all, if most employers pay women less than men, this would leave women with few options. Also, the odds of a new business succeeding tend to be rather low so this option is hardly one that most women can use. Third, there is also the matter of ethics. While some might hold that employers should have the freedom (or right) to pay workers as they please without the interference of the state, this same logic would seem to grant individuals the freedom to steal from employers (or anyone). After all, if an employer should have the freedom to pay workers less than the value of their work, then they are stealing for the workers. If this theft is morally acceptable, then so too would be theft from the employers. After all, if the employer has the freedom to engage in unjust acts, then it would seem to follow that the same freedom could be claimed by everyone, thus allowing people the freedom to rob employers.

It might be countered that the workers agree to the pay and hence they are not being robbed. This would be true if the workers freely entered into the agreement and there were no elements of coercion. However, if the workers are coerced into these agreements (as can occur when there is a disparity in power) then this is theft. After all, if a person “agrees” to hand me some of his property because he knows I have a gun, then I am still stealing. Likewise, if people have to work to survive and face a coercive economic system, then they can be robbed even when they “agree” to accept what they are offered.

Interestingly, an analogy can also be drawn to rape. If a woman “agrees” to have sex with a man because he has the power to push her into that “agreement”, then it might not be “forcible rape” but it would certainly seem to be rape. To argue that the man should have the freedom to use his superior power in this manner would certainly be morally horrific.

In light of the above discussion it seems reasonable to conclude that employers should not have the “freedom” to pay women less for equal work.

My Amazon author page.

Enhanced by Zemanta

CEO Compensation

Posted by on June 4, 2012 13 comments

One side effect of the economic meltdown was the creation of the loose Occupy Wall Street movement. This had the interesting effect of getting some attention paid to economic issues, such as income disparity and class issues. This attention revealed that there is significant disparity between (to use the terminology of the occupy movement) the 1% and the 99%.

As I noted in a previous essay, there has been considerable disparity between the income increases of the various classes in the United States. The after-tax income of the top 1% in the United States increased 275% from 1979 to 2007. In contrast,  the top 20% (excluding the top 1%) had a 65% increase in earnings. Those in the bottom 20% also saw an increase, but this was only 18%. As might be imagined, this has created some concern.

The disparity becomes even more extreme if one examines the income of CEOs relative to the workers. One well paid CEO, David Simon, received a pay package worth over $137 million in 2011. The national median salary is $39,312. Doing the math, that means that a person earning the media salary would need to work 3,489 years to earn what Simon received. Someone who is earning the current minimum wage of $7.25 per hour would need to work 9,095 years and 11 months to earn what Simon earned last year. Of course, Simon’s pay is above average, so it would be fairer to compare the median CEO salary with the national median salary.

The median CEO salary as of May, 2012 is $9.587 million per year. A minimum wage worker would only need to work 636 years to earn that much while a person making the national average salary would need a mere 244 to match the one year income of the average CEO. Interestingly, while many workers are facing salary cuts, the average compensation for CEOs increased by 6% from 2011 (and there had been an increase from 2010 to 2011). While there is considerable debate over how to determine the value of a person’s work, accepting that this disparity is just would require accepting that the average CEO is equivalent in productivity to 636 minimum wage workers and to 244 average workers. As anyone who has every worked knows, people do vary in productivity because of skills, talents, motivation and so on. For example, one roofer might put in a roof faster and better than another and thus she would be more productive. It is even easy to imagine one worker being equivalent to many workers in terms of productivity (and this is sometimes demonstrated when people are fired and other people are forced to do these jobs as well as their own original jobs). However it seems unlikely that CEOs are the economic equivalent of superheroes and thus can produce 244 times what an average worker can produce. As such, this would seem to indicate a clear injustice in regards to the pay of those who work for the companies with well paid CEOs.

One obvious reply is that while it would be absurd to claim that one CEO can do the work of 244 average workers, it could be argued that they actually generate value equal to (or greater than) 244 workers. After all, the value of what is produced can vary greatly. To use an obvious example, when I painted houses for money, I was paid much less than I am paid as a professor. However, this is because the service I offer as a professor has more value than that of the services I offered as a painter. In part this is due to the economics of scarcity: almost anyone can work a paintbrush, but few people can teach critical thinking or ethics at the college level. In part the difference is due to the fact that when I painted, the result was just a painted house. When I teach, the result is often a person with a college degree who goes on to get a job (or create them) and contribute to society. As such, by creating more value as a professor, I thus justly earn better pay than I did as a painter. Provided that the value I produce as a professor is proportional to the pay, then the disparity between the pay of Mike the painter and Dr. LaBossiere the professor would be just.

Turning back to the CEOs, if the average CEO is able to produce 244 times the value of the average worker, then the pay disparity would be justified. While this might strike some as unlikely, it does not seem impossible. After all, the writer Suzanne Collins has made vastly more than I ever will as a writer because her book outsell mine to some absurd degree. My books in turn outsell some other authors’ books. However, the disparity does (in general) seem fair. After all, if I could write like Collins and was able to make the right connections, then I could also be a very successful author instead of a low-end scribe. As another example, the author and speaker Sarah Palin vastly out earns me. This is because many people want to buy her books and want to hear her speak. While I do sell a few books, people generally only come to hear me speak because their grades depend on it. And sometimes not even then. As such, the income disparity between myself and Palin could be regarded as just. After all, if I could only write and speak as well as she, then I surely could earn a comparable income.

In the case of the CEOs it could be thus argued that they are like the better authors-what they produce is vastly more valuable than what other workers produce and hence they justly earn their vast incomes. As such, all a defender of disparity would need to do is make a reasonable case that CEOs do generate value proportional to their compensation and that the same is true of the average workers (and minimum wage workers).

Of course, it might be countered that the ability to create such  great value depends on an economic and political system that is rife with injustice. To use an analogy, a skilled thief might “earn” much more than an unskilled thief, however it would be odd to say that the better thief has justly “earned” her wealth. The obvious counter to defend the disparity is to show that the economic and political system is just and, as such, the disparity in compensation is warranted rather than being based on exploiting an unjust system.

My Amazon author page.

Enhanced by Zemanta

Are Professors Laborers?

Posted by on December 19, 2011 15 comments
Sombrero y diploma de graduación

Product?

Members of many professions like to hold to a certain image of their profession. In some cases this is a mere illusion or even a delusion. In the case of professors, we often like to think of ourselves as more than just paid laborers but rather as important members of a learning community.  Administrators and others often like to cultivate this view (or delusion). After all, members of a learning community will do unpaid work for “the good of the community” while a smart laborer never works for free.

On one hand, a professor is clearly a paid worker. Professors get a salary and benefits (if they are lucky) in return for doing work for the school. While professors typically do not punch the clock or record the hours (or minutes) of their work, they are still expected to earn their pay. As such, professors can be seen as any other worker or laborer.

On the other hand, professors (as noted above) are also often seen as being members of a learning community. While they are paid for the work, they are also expected by tradition (and often by assignment of responsibilities) to engage in various unpaid endeavors such as publishing articles, doing community service, doing professional service, assisting student clubs, and so on. These activities are seen as being valuable, but they also generate value for the professor in that s/he is adding to the community-a contributor to the general good.

Like many professors, I was very much of the “good of the community” sort of professor in the days of my youth. I made my work on fallacies freely available, accepted all invitations to speak (for free), helped students prepare for graduate school, wrote letters for students who had graduated long ago, and did a multitude of other extra (and unpaid) things. While none of this was required or had any impact on my pay, I regarded all of it as part of the “good of the community” duties of a professor.

In recent years I noticed the increasing tendency to look at the academy as a business and to approach it using certain business models. While I am all for greater efficiency and a smooth running business aspect of the university, I did look upon the expansion of this model with some concern.

One effect of this view is what seems to be an obsession with assessment and metrics. Professors are finding that they need to quantify their activities in ways set by administrators or the state. While I do agree that professors should be accountable, one unfortunate aspect of this approach is that often  little (or no) value is placed on the unpaid “community good” work of professors (or the unpaid work is simply rolled into the paid work but the pay is not increased).

Also, casting professors as workers to be carefully monitored can have a negative impact on the “community good” aspects of being a professor. One reason for this lies in the difference between the reasonable attitude of a paid laborer and a member of a community.

If I am a member of a learning community, then I have a stake in the general good of that community and part of my compensation and motivation can be that I am contributing to that good.  After all, as a member of the community, I have a stake in the good of that community and thus it is worth my while to contribute to that good. The analogy to a family or group of friends is obvious. As such, this view can incline professors to do unpaid work for the “good of the community.” Of course, for professors to justly believe they are a part of a community, there must actually be such a community-rather than a mere business.

However, if I am simply a worker in the education business  and the quality and extent of  my efforts are disconnected from reward (at many schools, merit pay is a thing of the distant past and bonuses apparently only go to top administrators), then it would seem I have little economic incentive to do more than what is required to keep my job.

Even if my efforts did yield economic rewards, I would only have an incentive to go above and beyond the basic level in regards to things that would yield economic results for me. Obviously, merely being good for the community would hardly provide a suitable motivation to do anything extra.

After all, if the goal of a business is to get maximum revenue for minimum expenditure , the goal of a worker would seem to be a comparable sort of thing: to get the maximum pay for the minimal effort. If doing the job with greater quality or doing more work yields no economic benefit, then there would seem to be no incentive to work beyond what is required to simply stay employed  (unless, of course, one is looking to move to a better job with another job creator.

Employers can, of course, counter this by compelling workers to work more or do higher quality work through the threat of unemployment. The worse the economy, the bigger the stick that employers wield and these days, employers can swing a rather big stick. However, compelled employees tend to be demoralized employees and threatening people in order to achieve excellence generally does not have a great level of success.  Also, CEOs and their supporters argue that quality work must be duly compensated, but perhaps that only applies to the top executives and not mere workers.

It can be argued that professors have had it too easy over the years and that it is time that they be locked into the same sort of business reality that almost everyone else is compelled to endure. While this might make some gray haired folks cry out as their ivory towers are stripped and sold on the free market, this is the new economic reality: universities are not learning communities-they are businesses that deal in the commodity of education (and sports, merchandise, etc.). Professors will need to awaken from their delusional dreams and accept that they are workers in this education factory. True, some of these education workers might deserve some additional compensation for improving the product, offering quality customer service or otherwise aiding the business. Naturally, they cannot expect too much-as always, the lion’s share of compensation belongs not to the mere employees, but to the top executives.

Enhanced by Zemanta

I’m Not John Galt

Posted by on April 15, 2011 125 comments
Protester seen at Chicago Tax Day Tea Party pr...

Image via Wikipedia

Since Ayn Rand fan Rick Santelli got the party started, it is hardly surprising that the Tea Party contains many elements of Rand’s philosophical views. Quotes from her works have been popular at Tea Party events and some Tea Party leaders, such as Paul Ryan, make it clear that they have been strongly influenced by her works.

Aside from the actual bible, Atlas Shrugged could be regarded as the Tea Party bible.  In this book, John Galt goes on “strike” against those he regards as parasites and this soon inspires the leaders of industry and invention. Following him, they leave the rest of society to fend on its own. Society does not fare well: deprived of the true elite, the masses are unable to keep things going and the world falls to pieces. This work, of course, is largely a fictional assault on the doctrines of Marxism (at least Marxism as Rand saw it).

As far as why the masses cannot survive without these elite and why the elite should abandon them, Galt says:

The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains.

This is, clearly enough, a reversal of the classic Marxist view. Rather than having a few capitalists deriving their vast wealth by exploiting masses of workers, Rand envisions the masses deriving their very survival by exploiting the competent and intelligent few. All the unfortunate elites receive is mere “material payment”, which is presumably not enough compensation for their efforts. The idea of a small elite toiling to keep the moronic masses alive was also put forth in Cyril Kornbluth’s 1951 short story “The Marching Morons”, which predates Atlas Shrugged.

This view does have a certain appeal. First, innovations and inventions are developed by relatively few people and then used by the many who generally have little understanding of the technology, science or theories involved. For example, dumb people have smart phones that they use without any meaningful knowledge of logic, programming, or technology. As another example, the philosophical ideas of capitalism and democracy were developed by a few thinkers, yet benefit the uncomprehending masses. Second, leadership is always provided by the few and they lead the many who would generally be lost without such leadership. An army without leadership is just an armed mob. A business without leadership is not a business at all. Third, numerous philosophers, such as Aristotle,  have argued that the masses lead a bovine existence and are interested only in pleasure rather than higher pursuits or fine ideals. As such, a plausible case can be made to support the claim that the many need the competent few more than the competent few need the many.

Of course, a pragmatic case can  be made as to why the few also need the many, even it is assumed that the masses are as lacking as Rand seems to hold. First, business would seem to require the many in their roles as workers and consumers. After all, no matter how amazing a CEO might be, they cannot single handedly produce, distribute, sell (and then buy) the products or services  that provide their great wealth. Obviously enough, the sort of massive wealth that the top people have is only possible with the contributions of the masses. Second, civilization and all its trappings (such as buildings) also seems to require the contributions of the masses. While Kufu might have called for a pyramid to be made, he would still be working on it if he had to do it by himself. Third, in order for the great leaders to have anyone to lead, there must be other people who are followers. As Will Rogers said, “We can’t all be heroes because somebody has to sit on the curb and clap as they go by.”

The above points do, of course, rest on the assumption that Galt is right about the many. However, the claim that “the man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains” certainly can be questioned.

This matter is, of course, an empirical one. Taken at face value, the “bottom men” are so inept that they could not even acquire food for themselves and so useless that they contribute nothing (at least nothing to those above them). While there are some people who are like this, they seem to be rather few in number. First, average intelligence (or less) would seem to suffice to be able to sort out how to acquire food (if only after a rough period of trial and error). There is also the obvious point that the elites would probably also have a rough time of it without farmers and other providers of food. Put crudely, it is not the CEO who is out in the field raising the crops or tending the cows.  Second, while there are some people who do contribute nothing, most people do work and contribute. As just noted, the food that appears on the CEO’s plate does not arrive there by magic. The roads, universities, dams, power plants and so on also do not appear and run themselves. As D’Alembert said, “but while justly respecting great geniuses for their enlightenment, society ought not to degrade the hands by which it is served.” That seems sound advice.

I will, of course, concede that there are some people who are “bottom men.” In some cases, they would be classified as such because of mental or physical impairments. In other cases ,they would be on the bottom because of age: too old or too young to fend for themselves or to contribute to those “above” them.  While some would clearly approve of abandoning the handicapped, children and the elderly, this would seem to be a morally wicked thing to do. At the very least, anyone who was a child or plans on living to old age should probably oppose such a view if only on purely pragmatic grounds. Then again, perhaps some can honestly claim that they should have been abandoned as useless parasites when they were children and that they should also left to fend for themselves when they are too old to gather their own food and contribute to those “above” them. If so, I would praise their consistency while condemning their ethical failings.

As a final point, while some Tea Party folks and others might praise Rand and idolize Galt, the vast majority of them would seem to fall into Galt’s category of “bottom men.” If Galt were real, they would not be joining him in Atlantis but rather be left behind to perish. The very idea of a popular and broad movement based on these views is beautifully ironic. After all, the many are to be abandoned by the very few elites. Naturally, everyone who buys into these ideas sees themselves as an elite. But, of course, by their own ideology most (if not all) of them must be wrong.

Enhanced by Zemanta