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Pay Disparity CEO vs. Workers

The political season always gets me thinking about various issues.  Since I am not a “party” loyalist, I try and find data on the big issues.

Equal pay is a very big issue, but not how the politicians are talking about it.

I looked up various articles on pay disparity by race, gender and found one big issue.  The largest pay disparity is actually between CEO and workers.

The image below is from this site, which has a great article on the issue if you want to go into detail.

CEO Pay Difference

Credit: Economic Policy Institute

We will talk about this later, but for now let’s focus on how to combat the smaller issue of pay disparity.  Not the illegal, should be held accountable pay difference issues, but the ones occurring due to our own inexperience.

Negotiating Pay

One of the biggest learning experiences of my own career was about negotiating pay.  I was always a good soldier and took the first offer that came at me or only slightly asked for more.

Later when you learn from colleagues they are making 10, 20, or 30% more than you are for the same work it hits you!  We all need to be negotiating pay and we need to teach our daughters what they are worth also.

Do you think Marissa Mayer took what was offered to her when she joined Yahoo?  She fought for the right pay for the job she was being offered.

If you fight for what you are worth, you do need to be okay with walking away.  The hardest part of negotiations is knowing your limits.  You look up what the median salary is for a position and find it should be $55,000 per year. Your experience is more than average for that position (let’s say 8 years).

We may have an expectation that $55,000 would be the absolute lowest pay you would accept if all the other benefits and job skills align.  If they offer you $53,000, you will need to be okay with walking away (if the pay is important to you).

We all need work and we need enough money to live on, so this is not something  you may have the luxury of doing all the time.  When we have the greatest leverage is when we are already employed.  I will not leave my current job for anything less than $X in your head.

See where being debt free helps you in this?  The less debt and financial requirements around you, the more negotiating power you have.  Weird right?  The less money I need the more power I have to negotiate higher pay (yes!).  You are not trapped into taking a job for less than you are worth to cover your expenses.

The Bigger Issue

The difference in CEO pay to employer pay is now over 300 to 1.  This essentially means I could have hired 300 employees or 1 CEO.

This issue crosses party lines on both sides and speaks to the value put on a CEO.  Logically, it does not make sense that one person would be somehow able to produce more money for a company than 300.

When could this be true?  If the CEO is the person who founded the company, made all the initial investments, put in 20 hour days for the past 10 years building their dream.  The list of CEOs this would include is extremely small from Steve Jobs, Bill Gates, Micheal Dell, etc….

The rest of the CEOs are put in the position to help steer a company already functioning.

How can we address this?

Beyond fighting politically and with corporate PR pressure, we have limited options individually.  I do suggest everyone work to find a solution to this so we can get back down to the 30-40 to 1, which is much more reasonable.

Outside of PR and politics, we can work on our own pay by doing a couple things.  First is to ensure you are negotiating your pay when hired with a company.  Do your research through various sites on median pay for a profession and push the salary negotiation.  If they say yes right off, you probably left money on the table.

Think about when you negotiate the deal on a car.  If the sales person says yes to your offer right off, then you messed up.  They should have to visit their manager 3-4 times before accepting (same with jewelry or anything that is negotiable).

The next option is to start your own business.  Starting your own business is the hardest option, but can pay out very well.  Now you can set your own prices and your own pay based on earnings.  This option also means 100% accountability by you for what you make.  If your salary is low, work harder or smarter, whichever is needed.

Both of these options are easier if you are debt free.  My wife and I did not both start running our own businesses until we had zero debt and we had our emergency funds fully funded.  The reason is my fear of risk.

Everyone’s situation is different.  Starting and running a business is very difficult and means not many real days off.  Starting a business comes with a lot of risk as well.  Working for someone else many times has a ceiling of what we can make or how high up in the organization we can go.  Everyone’s decision is personal and needs to be well thought out by you and your family.

Remember we have control of our own futures.  We make the decisions, which ultimately effect our lives for better or worse.

Have a great day!


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