CEO pay compared to worker pay is completely out of whack

Peter Drucker (1909-2005) was one of the world’s best known business consultants, educator and author.   Drucker worked with many major corporations such as GE, Coca-Cola, IBM, Citicorp, Intel and Toyota and served as a consultant for various non profit organizations, often pro bono, such as the Salvation Army, the Girl Scouts, the American Red Cross and C.A.R.E.

Drucker was appalled when the pay of the Fortune 500 CEO’S ballooned to hundreds of times that of the average worker.  In 1984 Drucker wrote that CEO compensation should be no more than 20 times what the rank and file makes and said this was especially true at companies where thousands of employees are being laid off.  “This is morally and socially unforgivable,” Drucker wrote, “and we will pay a heavy price for it.”    Drucker believed excessive CEO pay was bad for business because it undermined teamwork and was poison to a company’s long term health.

According to Bloomberg Businessweek corporations with the highest CEO to worker pay ratio in 2012  were:

J.C. Penny—Ronald Johnson --$53.3 million—CEO/worker pay ratio-- 1,795

Abercrombie & Fitch –Michael Jeffries----$48.1 million--CEO/worker pay ratio-- 1,640

Oracle—Larry Ellison--$96.2million—CEO/worker pay ratio-- 1,287

Starbucks—Howard Schultz--$28.9 million—CEO/worker pay ratio—1,135

The top three highest paid CEO’s in 2012 were Larry Ellison, Oracle-- $96.2 million, Richard Brachen, HCA--$38.6 million, Bob Iger, Disney--$37.1 million.

The top three corporations on the  list of low-wage employers are Wal-Mart one million 400 thousand employees, Yum Brands (Taco Bell, Pizza Hut, KFC) with 880,330 employees, and McDonald’s with 859,978 employees.

Currently there is a bill before congress to raise the federal minimum wage from $7.25 an hour ($290.00 a week, $15,080.00 a year)  to $9.80 an hour by 2014  ($392.00 a week, $20,384.00 a year). 

58% of Republicans and the U.S Chamber of Commerce oppose increasing minimum wages from $7.25 an hour to $9.80 an hour.

Mitch McConnell the Republican Senate Leader since 2007 whose net worth increased from $2- $4.5 million in 2004 to $9-$44 million in 2010 is opposed to increasing the minimum wages from $7.25 an hour to $9.80 an hour.

John Boehner the Republican House leader since 2006 with a net worth of $1,787,113.00 to $5,455,000.00 is opposed to increasing the minimum wages from $7.25 an hour to $9.80 an hour

Voting on the minimum wage bill with McConnell and Boehner will be 257 other members of Congress with a net worth of more than a million dollars.

In 1978 CEO compensation was 26.5 times the average worker pay.

From 1978 to 2011 CEO pay increased 725% while worker pay increased 5.7%.  During that time worker productivity increased 93% according to the Federal Reserve Bank of St. Louis.

Polls show that 73% of Americans support increasing minimum wages from $7.25 an hour to $9.80 an hour.

Do you agree with Peter Drucker that it is “morally and socially unforgivable” for corporations like J.C. Penny, Oracle, Starbucks etc to pay their CEO more than $7,250.00 for an hour’s work while paying their workers $7.25 for an hour’s work? (CEO/worker pay ratio 1,000 plus)

Are you concerned that for the past 35 years America’s largest corporations increased their worker’s pay 5.7% while increasing their CEO’S pay 725%?


Are you concerned enough about the disparity in workers and CEO’S pay to contact your Congressman and urge him/her to support and vote for the bill raising minimum wages from $7.25 to $9.80 an hour?

(Paul Rawlings of Heber Springs contributes monthly to the editorial pages of The Sun-Times)