Tuesday, June 21, 2011

Wage Gap - Rich Men, Poor Men

There is an increasing wage gap between the top executives of companies and other workers. Top executives in some large companies live a life of luxury with private jets at their disposal. What caused this view that only those at the top really matter?

An article titled “Executive pay drives increasing wage gap by Peter Whoriskey June 20, 2011 and published in the Seattle Times looks into the pay gap using one company as an example. The pay and perks of the CEO of this company have increased exponentially since 1970 while in real terms the pay of rank and file workers have decreased.

There may be one factor helping to drive the view of increasing value of executives versus less value of other workers, automation. The increased use of automated systems in everything from manufacturing to sales helps create a view that workers are simply attached or enable the automation. The workers monitor the automated systems or fill in gaps of processes that the technology can’t perform. Customer relationship management systems in sales capture vital customer data and give alerts on follow up dates that sales representatives carries out. Although the system does a lot, it can’t actually make the calls. The automated manufacturing systems need skilled individuals to keep them operating at top levels. Simply put, the skill, concern and dedication of individual employees determine the quality of the final product and services a company delivers.

We have entered the era of no-lose situations for many CEOs. Golden parachutes contain payouts so large that they are disconnected to the success or failure of the firm or performance of the executives. Some of those same executives have instituted policies during this recession that restrict hiring permanent employees in favor of bringing on contract workers. Many firms are creating jobs in foreign markets instead of the United States.

The bottom line is the excessive levels of pay and perks for top executives totally disconnect them from other workers in their companies. This situation creates an environment of class warfare instead of unity.

No comments:

Post a Comment