conversation is an engine

This simple ratio can help shareholders see more clearly

Jack Neff at Ad Age reports on the growing divide between the rich who just keep getting richer and everyone else—and how that fact may reshape marketing efforts. That marketers see the divide and are changing strategies is a telling detail to this economy.

Meanwhile, the Washington Post reports on the lobbying efforts to repeal the requirement that public companies disclose comparing executive pay with that of the average worker in the company. According to research conducted by MIT and the Federal Reserve, average executive pay was 28 times that of the average worker income in 1970. “By 2005, executive pay had jumped to 158 times that of the average worker.”

Nobody wants more rules for companies to follow, especially when those rules require budgeting for more government agencies to enforce them. But I would like to see the tone of our national economic conversation move toward simple, understandable terms that can help us see what is going on. Comparing executive pay to average worker pay can help the average person get a grasp on the crazy pay packages many executives receive.

What if shareholders demanded more than that companies “go green”? What if they demanded that companies “pay fair”? I’m not against executives who have agreed to the corporate tattoo receiving more—even much more. But today’s ridiculous executive pay packages remind of feudal economics.

The simple ratio of executive pay to average worker pay could make things clearer. Why aren’t shareholders asking for that?

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Image Credit: Ruby Anemic