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Obama's CEO Math

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gziehr

Obama's CEO Math

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Posts: 1843

February 20, 2008 10:18 PM

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In recent ads, Obama uses the claim that rich CEO's make more in 10 minutes than the average worker earns in a year. Sounds great. Problem is, it is flat out wrong.

Doing the math, let's assume the "average" worker makes only $20,000 per year (more realistic is about $41,000). In order for a CEO to make this amount in 10 minutes he would have to earn $120,000 per hour. Assuming that the CEO works only a standard 2,080 hours per year that translates to $249,600,000 per year. Yeah, a lot of CEO's make that. Using the more realistic $41K per year and a 60 hour work week for a CEO (I don't know any CEO's of large companies that don't do at least this much), the number balloons to $767,520,000.

I really want to believe that Obama could be a legitimate alternative, but the more I hear and see the less I like. He is a figure that could provide an inspiring, "Presidential" leader. This would be a welcome change from W.

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WhiskeyNick

#1

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Posts: 1267

February 20, 2008 10:30 PM

I wouldn't read into it too much. I'm positive that Obama DIDN'T REALLY MEAN "10 minutes" when he said that. It was taken out of context, like what his wife said. You need to be more nuanced.

_________________________

"It's a very good deal for those close to retirement who will never see the taxes that will have to be levied to pay it (the national debt), but it's a very bad deal for people early in their careers. A 30-year old, if she understood it, should be pretty upset, because when she hits peak earnings at age 50, she will be paying for spending now through higher taxes then." -- Paul Krugman, an economist at the Massachusetts Institute of Technology, commenting on the national debt climbing to the $2 trillion mark in 1985.

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PBRmeASAP

#2

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Posts: 3840

February 21, 2008 12:24 AM

Heineken!?! Fuck that shit! PABST BLUE RIBBON!!!

FYI... Steve Jobs made $626 million in 2006.

http://www.forbes.com/lists/2007/12/lead_07ceos_CEO-Compensation_CompTotDisp.html

It's an absolute paradox. The bacon must have been finished, thus disallowing the possibility of 'leftover'. And yet, were that impossibility to occur, surely it would be good. -LeviBooth

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yanked

#3

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Posts: 17594

February 21, 2008 12:28 AM

Mr. Jobs is also the founder...

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TxBadger

#4

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Posts: 1484

February 21, 2008 8:55 AM

And CSCO's CEO made a $1.... what does a US Sen make, gross pay, for each hour "worked"?

Timster:"Drink until you like yourself" Okie Dokie
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Let's change health care of 85% of the people to give 15% of the population puts a new twist to the needs of the few outweigh the needs of the many.
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We'll add 47M people to the pool and lower costs... right now let's talk about that beachfront property just east of El Paso
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gziehr

#5

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Posts: 1843

February 21, 2008 9:02 AM

Per your link, Mr. Job's cash salary plus bonus for that year: $0.00. He only got paid because Apple's stock did well. I don't think the shareholders of Apple have too many complaints.

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Slimm21

#6

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Posts: 12953

February 21, 2008 11:21 AM

I've paid for bottle service

what does a US Sen make, gross pay, for each hour "worked

How do you define work? Does talking to Clemens and Macnamee count as work?

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blockski

#7

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Posts: 9661

February 21, 2008 11:31 AM

It's a line from a stump speech. The general characterization is correct: the compensation for CEOs now is several magnitudes of order higher than the average worker, and that gap has been increasing. Anyone can massage the numbers with examples of CEOs that only officially have a salary of $1, or show some ridiculous gains due to stock increases. You can argue hours worked versus a standard 40 hour week, even the problems of comparing annual salaried positions to those making hourly wages. That all misses the point, however, which is to say that the gap between the very rich and the majority of Americans is growing, and growing rapidly. It's a perfectly fair point, massaged with a catchy soundbite for a political speech. I'm shocked, shocked I say that a politician would do such a thing!

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Ol Badger

#8

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Posts: 23762

February 21, 2008 11:50 AM

On hiatus

I don't want to get too deeply into this debate, but perhaps a few numbers (as opposed to anecdotes) would help the participants. The latest data I could find were for 2006 (presumably 2007 data will be out soon). Forbes gives total comp for the top 500 CEOs; tops is Richard Fairbank of Capital One at nearly $250 million:

http://www.forbes.com/lists/2006/12/TotComp_1.html

The AFL-CIO, cites data from The Corporate Library (http://www.thecorporatelibrary.com/index.php?F=Std&p=solutions&s=srea) showing that:

In 2006, the average CEO of a Standard & Poor's 500 company received $15.06 million in total compensation, according to a report by The Corporate Library. This represents an 11.5 percent increase in CEO pay over 2005.

They also have this graphic on ratios of CEO to average employee compensation, based on an Institute for Policy Studies annual report on CEO compensation:

Long-Term Trends in CEO and Worker Pay

Those ratios don't support the "more in 10 minutes than in a year" statement, but essentially they suggest that CEOs of major corporations are earning each calendar day what average employees make in a full year. These ratios are much higher than in other developed countries, and much higher than they were as late as 1990. Links to the AFL-CIO and IPS sources:

http://www.aflcio.org/corporatewatch/paywatch/pay/index.cfm

http://www.ips-dc.org/getfile.php?id=130

Finally, on congressional pay, the IPS study notes:

The two highest-paid members of the U.S. Congress - the House speaker and Senate majority leader - each earned $212,100 salaries in 2006. The minority leaders in both chambers earned $183,500. All rank-and-file senators and representatives received $165,200 in paychecks last year.

These ARE the good old days!

Edited 2 times by Ol Badger February 21, 2008 11:54 AM.

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ebolainfectedmonkey

#9

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Posts: 1569

February 21, 2008 12:04 PM

Tim Krumrie's Agent

The two highest-paid members of the U.S. Congress - the House speaker and Senate majority leader - each earned $212,100 salaries in 2006. The minority leaders in both chambers earned $183,500. All rank-and-file senators and representatives received $165,200 in paychecks last year.

Yeah, but does that factor in private airplane rides, international junkets, bags of unmarked bills, cushy post-Congress jobs, and free fellatio?

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yanked

#10

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Posts: 17594

February 21, 2008 12:06 PM

$15 million is alot of cash.

Why don't we argue about college coaches making millions to oversee a staff of 5-20 people and maybe 15 -100 student athletes? These are public institutions in most cases, last I checked...not private businesses owned by shareholders. Maybe we should start a little spreadsheet with pay earned per employee/player or compensation earned compared to revenue. Its possible we could keep this argument right here on the board and demand Bo and Bret redistribute those moneys to professors, lecturers and janitors at UW. I bet based on revenue and headcount Bo makes more per each than the the CEO of Capital One....not likely I'll do that homework though. I would think public institutions facing budget crisis should be a bigger concern than what some shareholder owned corporation is doing. This is just a form of pandering by Obama. Demonize corporations and you'll get some votes from workers. It won't change anything but I can understand its a populist thing to do with Edwards being out of the race.

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WhiskeyNick

#11

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Posts: 1267

February 21, 2008 1:22 PM

Those ratios don't support the "more in 10 minutes than in a year" statement, but essentially they suggest that CEOs of major corporations are earning each calendar day what average employees make in a full year. These ratios are much higher than in other developed countries, and much higher than they were as late as 1990. Links to the AFL-CIO and IPS sources:

http://www.aflcio.org/corporatewatch/paywatch/pay/index.cfm

http://www.ips-dc.org/getfile.php?id=130

Finally, on congressional pay, the IPS study notes:

The two highest-paid members of the U.S. Congress - the House speaker and Senate majority leader - each earned $212,100 salaries in 2006. The minority leaders in both chambers earned $183,500. All rank-and-file senators and representatives received $165,200 in paychecks last year.

I would like to see the ratio of the average pay for the leadership of the AFL-CIO vs. the average american, or the average pay for a unionized worker vs. the CEO of that company's pay. As far as politicians go, they are grossly overpaid. Any member of Congress should be required to give some percentage (25%, 50%) of all of the book deals, speaking engagements, consulting businesses, expeditor gigs etc... back to the government. And any member of congress that does not make a material amount of money from said gigs was probably too stupid to earn the $165K in the first place.

Like someone else said when they were exempting Apple's CEO from the CEO-lashings, if most of the pay is tied to performance, what difference should it make what the ratio is. Why does Steve Jobs get a pass from the bashings?

Why do guys like Brad Pitt get a pass from his $25M a movie? Is it because he walks around Africa with an entourage of photographers and tries to look homeless? What about athletes?

_________________________

"It's a very good deal for those close to retirement who will never see the taxes that will have to be levied to pay it (the national debt), but it's a very bad deal for people early in their careers. A 30-year old, if she understood it, should be pretty upset, because when she hits peak earnings at age 50, she will be paying for spending now through higher taxes then." -- Paul Krugman, an economist at the Massachusetts Institute of Technology, commenting on the national debt climbing to the $2 trillion mark in 1985.

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blockski

#12

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Posts: 9661

February 21, 2008 1:49 PM

WhiskeyNick wrote:

I would like to see the ratio of the average pay for the leadership of the AFL-CIO vs. the average american, or the average pay for a unionized worker vs. the CEO of that company's pay. As far as politicians go, they are grossly overpaid. Any member of Congress should be required to give some percentage (25%, 50%) of all of the book deals, speaking engagements, consulting businesses, expeditor gigs etc... back to the government. And any member of congress that does not make a material amount of money from said gigs was probably too stupid to earn the $165K in the first place.

One of the key reasons for paying elected officials decent salaries is so that anyone (in theory) can afford to become an elected official. George Washington wanted to decline his salary as the first president as a way to lessen the fiscal pressure on the new nation, but he was convinced to take it (despite not needing the income) as to avoid setting the precedent of only allowing those with extreme wealth to hold the office.

Of course, in practice, things have been a little different - you tend to need a substantial bit of wealth to win an office of that stature, but nevertheless, you do not need it to hold the office.

Like someone else said when they were exempting Apple's CEO from the CEO-lashings, if most of the pay is tied to performance, what difference should it make what the ratio is. Why does Steve Jobs get a pass from the bashings?

Why do guys like Brad Pitt get a pass from his $25M a movie? Is it because he walks around Africa with an entourage of photographers and tries to look homeless? What about athletes?

Who gave Steve Jobs a pass? As to the point about pay being tied to performance, that's a great idea. Unfortunately, experience shows that it isn't - CEOs that do bad jobs often get swanky golden parachutes. CEOs that do great jobs often don't translate that success to the average workers within the company.

Furthermore, looking at it through the lens of the individual business isn't really the point of the argument. It's not about success in business, it's about the gap and disparity within our society. The CEO is an example of the corporate leadership being rewarded for gains in the economy, while the average worker stagnates or declines. As much as we like to promote the idea of self improvement, the reality is that that wealth stays concentrated in the upper echelon of society, and those rewards for improvement aren't available to the average worker.

Now, that line of argument doesn't apply to Brad Pitt or professional athletes because they're not the CEOs in their industry - they are the workers. It's not simply an argument based on excessive wealth, it's about how the gains of an industry or the economy at large are translated to the workers and employees.

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Ol Badger

#13

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Posts: 23762

February 21, 2008 1:55 PM

On hiatus

WhiskeyNick wrote:
I would like to see the ratio of the average pay for the leadership of the AFL-CIO vs. the average american, or the average pay for a unionized worker vs. the CEO of that company's pay. As far as politicians go, they are grossly overpaid. Any member of Congress should be required to give some percentage (25%, 50%) of all of the book deals, speaking engagements, consulting businesses, expeditor gigs etc... back to the government. And any member of congress that does not make a material amount of money from said gigs was probably too stupid to earn the $165K in the first place.

Like someone else said when they were exempting Apple's CEO from the CEO-lashings, if most of the pay is tied to performance, what difference should it make what the ratio is. Why does Steve Jobs get a pass from the bashings?

Why do guys like Brad Pitt get a pass from his $25M a movie? Is it because he walks around Africa with an entourage of photographers and tries to look homeless? What about athletes?

Union officials' salaries listed below. Not exactly up to CEO standards (over $15 million). Many members of Congress don't keep their paychecks, donating them to charity, but then those are the independently wealthy ones (mainly in the Senate, not so much in the House). Who says Brad Pitt and the Hollywoods get a free pass? There's been a lot of criticism over the incredible amounts entertainers (including professional sports stars) get paid; how have you missed that? Of course, we live in a celebrity culture, and our pay structures reflect that.

Top 10 International AFLCIO Leaders & Staff (by Salary)

Name	Title	Total Compensation
John Sweeney	President	$ 291,718
Linda Chavez-thompson	Executive Vice President	$ 241,307
Richard Trumka	Secretary-treasurer	$ 233,260
Robert Welsh	Ex Assistant To Pres	$ 184,642
Jonathan Hiatt	General Counsel	$ 179,472
Bradley Burton	Executive Asst To S/t	$ 174,505
Jerald Zellhoefer	European Representative	$ 169,846
Phillip Fishman	Assistant Director	$ 165,680
Jose Alvarez	Regional Director-ne	$ 164,081
David Watson	National Field Rep	$ 159,626
[show all officers & salaries]

Source: Department of Labor, Office of Labor Management Standards LM filings

These ARE the good old days!

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DCBadger7

#14

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Posts: 10513

February 21, 2008 2:39 PM

Blissfully Disinterested

WhiskeyNick wrote:

Any member of Congress should be required to give some percentage (25%, 50%) of all of the book deals, speaking engagements, consulting businesses, expeditor gigs etc... back to the government. And any member of congress that does not make a material amount of money from said gigs was probably too stupid to earn the $165K in the first place.

Not to get in the way of the hyperbole, but I thought I would mention that there are restrictions and prohibitions on what Members of Congress can accept. accepting speaking fees, consulting fees, book deals...all that sort of stuff is prohibited under House rules (I'm assuming similar restrictions apply to the Senate - didn't have time to look it up).

See here for details:

http://www.house.gov/ethics/Ethicforward.html

I would note the perceived problems with accepting outside perks (travel, etc) has had less to do with what the rules said and more to do with how they get interpreted and enforced. I speak from firsthand experience that the rules could be circumvented if only by disingenuous reporting and a total lack of follow up and auditing by House ethics officials.

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Slimm21

#15

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Posts: 12953

February 21, 2008 3:32 PM

I've paid for bottle service

Never liked the pro sports argument. A lot of guys on big contracts are helping bring in HUGE dollars to the owners of the teams they play for. They are getting their market value, unlike the CEO who is raking in big bucks while the stockholders lose money.

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Obama's CEO Math

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