Selective Liberal Outrage

The news of oil company profits and the salaries of their CEO's raised the ire of liberals recently. President Bush even joined in on the topic in his State of the Union speech. According to this web site the average CEO pay for 2005 was just under $11,000,000. That is a pretty good sized paycheck, and some CEOs make much more than that. Much is made at how these salaries are way above what the average worker makes.

If Boeing's CEO sticks around until the end of his contract, he could earn about $72 million over his five years. Is this an outrageous amount of money for him to make? A look at what other people make, and what kind of impact their jobs have on society would put it in perspective.

I'll begin with a middle aged, blue collarish, working class hero. While these vilified CEOs are trashed for making 262 times what an average earner made, Bruce Springsteen made an eye-popping 1,314 times what the average worker made during 2005. The lesson learned from this example, make bold, public pronouncements about how Republicans suck, then the liberals won't complain when you earn more than the average greedy CEO.

The Boss made quite a bit, but he is on the lower end of who I will be looking at. Next up is Scientologist's favorite cheerleader, Tom Cruise. When he wasn't acting like a jackass on Oprah, Cruise amassed $67 million in the 12 months ending on June 30, 2006. So Tom Cruise makes 1,600 times the average worker. One might ask maybe Cruise had a better year than the CEO of Boeing, so he deserves more. Boeing's CEO made less than half of what Cruise took in, and during 2006, he ran a company that has 153,000 employees, is America's largest exporter, and overtook Airbus as the largest manufacturer of aircraft. I think it is safe to say he had a better year than the man who jumped up and down on a couch and gave out unsolicited, and dangerous medical advice to a clinically depressed woman.

Springsteen and Cruise are relative paupers compared to the Hollywood royalty that really pull in the obscene money. Steven Spielberg had quite a good take in the period Forbes examined. He hauled in $332 million, no wonder we have growing income inequality with all these highly paid entertainment people. It would take the average worker 7,931 years to equal Spielberg's one year earnings. As one of the partners in Dreamworks, he oversees production of many movies, he has created a lot of jobs and wealth for the American economy. Yet so have many other CEOs that regularly get slammed for their pay, which on average, is 1/30th of Steven Spielberg's. His company, like many in Hollywood, has outsourced filming to other countries, including Canada, to save a few bucks at the expense of the American worker. Steven might need every bit of that $332 million, so he apparently can't afford to pay inflated American wages.


So why does Spielberg seem to escape the barbs that are heaped upon others? It could have something to do with who receives most of his political contributions. If you are going to be a greedy, outsourcing fat cat, remember to drop a little to the Democratic National Party. Giving to liberal causes is a great way to evade criticism for your pretatory capitalism and avarice, just look at George Soros. Afterall, giving to Democrats is the best way to fight the power, except that the CEO to worker pay ratio was worse in 2000 than it was in 2005.

Minimum Wage

Both houses of Congress have passed slightly differing minimum wage increases, so shortly, the wage will be increased to $7.25 an hour for some people on minimum wage. There are equity reasons for having a minimum wage, eventhough it is a heavy-handed intrusion of big government into our business. This is being hailed as a great accomplisment by some hacks in the Democratic Party, yet there are many reasons why this isn't quite so significant.

First of all, many states have enacted minimums in excess of the federal rate, so they will get little ( if their state wages is between $5.15 and $7.25) or no (if their state has $7.25 or higher wage) increase. The stagnation of the real minimum wage in many labor markets has pushed prevailing wages above $5.15. Even 21 years ago, as a high school kid, I made more than $7.25 an hour as a busboy on most nights.

Secondly, this isn't quite the blow to poverty that some sell it as. As of 2005, there were less than 2 million workers who made minimum wage or less. Workers in some industries can make less for various reason, most are tipped employees who are considered minimum wage earners. Yet when tips are included, most make more than minimum wage. Half of minimum wager earners are young, less than 25 years old, so they are more than likely just starting out their work experience, have summer jobs, or maybe they work for some liberal non-profit group that doesn't even want to pay their employees that much.

When one looks even deeper into the numbers, most of these workers are in the hospitality industry. Out of the 1.9 million workers, slightly over 1 million are classified as workers in the leisure and hospitality industry AND make less than minimum wage. This means most are probably tipped, and make more than minimum wage when tips are included. (and I am not even counting the fact that these people are notorious tax cheats). Also, the increase in the wage is not going to hit workers making sub minimum wage, since they are not getting the full $2.10 increase.

Of course, when you raise the minimum wage, someone has to pay the price. Many employers can afford it, or can simply pass the price of the increased cost of labor onto the rest of us. But it will hit some small businesses in their bottom line. If you are a small pizza shop and have to add $2.10 an hour to your delivery guys paycheck (people who are tipped, so they aren't really making just $5.!5), it might put a dent into your profit. The corporate pizza chains can handle the increase, they can afford to pay more and they can more easily raise prices.

Finally, if politicians want to make these wages more fair, they should provide an automatic COLA increase for minimum wage. Social Security, tax brackets, tax exemptions, and many other items are adjusted for inflation every year, so this could be easily done. In Chris Matthew's book "Hardball", he describes his first job working for a Congressman. He came up with this great idea to help the working poor by doing exactly this. Then his boss, a Democrat, tells Matthews that he isn't the first one to think of this. He was told this won't work because the politicians need to vote on wage increases, or they won't get credit from the voters for it if the wage increases automatically every year. So the perception of caring for the poor is more important than actually helping them.