Overcoming Executive and Worker Pay Issues

Everyone from President Obama to think tanks to union leaders to feminist icons is advancing this cluster of issues, and business chiefs now must count on dealing with its implications on a more proactive basis than before. And somewhere, CEOs and entrepreneurs may find ways to leverage these concerns to their advantage.

Each issue represents slightly different constituencies, but there are huge overlaps among the interests behind them. Here’s a brief look at the issues:

• “Equal pay” for women: Obama has been hitting this concern hard. He began mentioning it in his State of the Union address and has continued with the refrain that American women “still make 77 cents for every dollar a man earns”—even though the White House staff itself illustrates this disparity. Business chiefs and conservative pundits have been noting the long list of factors that qualify this difference, including the desire of many women to leave the workforce to raise families.

• CEO-to-worker pay disparities: The idea that top executives are compensated in an unjustly disproportional way compared with rank-and-file workers of their companies keeps popping up. Most recently, Democratic legislators in California proposed a law that would raise state taxes on publicly traded companies that pay their top-earning employee 100 times as much or more as the company’s average workers.

• “Living-wage” agitation: Even more current than a revisiting of the previous two issues is the effort to force companies to pay “living wages” to their low-wage workers—or get states or the U.S. government to intervene to that end, at least raising the minimum wage. The left has latched on to the frustration of the legions of American “underemployed” by arguing that greedy CEOs, business owners and their companies are to blame for stagnant personal income in this country, not the failed economic policies of the federal government.

CEOs need to focus on generating both short-term profitability and long-term growth. As long as compensation for everyone is fair, competitive and can be justified, these issues should not get in a CEO’s way.

Additional reading:

CEOs slashing jobs get big raises

California’s bid to tax companies who don’t share the wealth

Bill proposes higher taxes on CEOs with high wage disparity

For Women in Tech, Pay Gap Is Unusually Small

In Equal-Pay Debate, Disparity Is in the Details

The ’77 Cents on the Dollar’ Myth About Women’s Pay