A “successful” CEO will try to limit her lowest level employees to less-than-inflation wage increases. After all these employees should have gotten better education and skills. It’s their fault that no one at the top speaks for them.
Then the math goes something like this. A CEO will have to make the tough decision of giving herself a million dollar raise for the year, or give her lowest employees a dollar an hour wage increase. That’s $2000 a year for each of the lowest ranked employees. Big corporations will have a thousand or more hourly wage serfs. That means at least a 2 million dollar increase in expenditures for the company. Suddenly that million dollar increase for the CEO sounds cheap.
So the CEO will have saved the company a million dollars by giving herself that exorbitant raise yet not permitting a significant increase to the hourly wage serf. Now she can report how she made the difficult decision that saved the company at least a million dollars. Now she can put in to the board of directors that maybe she deserves a bonus as well.
Shenanigans like this are easy to do if you have the power. This is of course a simple mock up of the real situation. But I don’t think the real thing is too far off from this. Why else would corporations cry with such hurt and anger every time a minimum wage increase is upcoming?
So how do CEOs rationalize this behaviour to themselves? I think they like to compare themselves with DJs.
Rare is the club that has live bands anymore. Most of them have DJs these days. With today’s equipment, a DJ can make her music sound almost as good as a live band.
Let’s say a live band has four members. A DJ can make as much money as two of the musicians and still be seen as a bargain. The DJ is happy and so is the club. Maybe the club is like the shareholders.
This isn’t that good of an analogy because the musicians have joined the unemployment line. But let’s say the DJ and musicians have a normal job as well. Anything they make at the club is just an increase in their pay.
Like a DJ the CEO makes people dance.
But wait a second, musicians can make people dance and some clubs still hire musicians, too.
Well some businesses absolutely require skilled employees, even at the lowest rungs of their corporate hierarchy. These businesses would be the clubs that still hire musicians. And some companies are partly controlled by unions of their employees who can also make the people dance.
Don’t forget that CEOs think they know what’s best for their customers. So, too, DJs think they speak for all their audience. Neither does, so perhaps the analogy holds even further.
I know I wouldn’t mind a musician or four in more clubs. Perhaps, too, more corporations with an eye for what the lowest rungs of their hierarchy are doing and need, would be better. Maybe DJ/CEO culture has reached its highest popularity.