Question/Comment: Is it too much to ask that the top CEOs of a big corporation be paid no more than five to 10 times the wage of the lowest paid full-time employee? Radical, but the pay scale of so many at the top of these companies is obscene. And why were the heads of Freddy and Fanny allowed to walk away with such pay packages when obviously they had made a mess?
Paul Solman: The head of Freddie is not walking away with much, from what I’ve read. I don’t know about Fannie. As to a five or 10:1 ratio, that seems unrealistic. Even if a big corporation’s minimum wage were $20/hour ($40k/year), a 5:1 ratio would mean paying the CEO no more than $200,000; 10:1, $400,000. You’d lose a lot of talented people if you capped pay at those prices.
But hey, according to a chart in the Christian Science Monitor last year, the U.S. won the world disparity gold medal with a ratio of 400:1. Mexico came in a distant second at 61:1; Canada, France and South Korea all came in at 23:1 and ever-so-egalitarian Japan managed 11:1. So maybe I should take it back. Maybe 10:1 isn’t nuts. But at this point, even 100:1 would be a huge achievement.
On the other hand, there’s seems little doubt we’ll start moving in the right direction, if for no other reason than that profits are waning.