Eb,
Your warehouse example explains why an Amazon warehouse worker doesn't automatically make more than a warehouse worker at a locally owned business.
But it doesn't explain why CEO compensation went from around 40 times worker pay to more than 300 times worker pay.
You are right. Companies became larger. The economy became more global. Consolidation created some enormous corporations.
But none of that explains why a CEO suddenly became worth hundreds of times more than the typical worker.
Think big picture.
The article is talking about the overall change in CEO compensation compared to the workforce over a span of decades.
And something else changed about the same time CEOs were only paid about 40 times the labor force worker.
The top marginal income tax rate fell dramatically. It had been around 70 percent and by the late 1980s it had fallen to 28 percent. That greatly increased the after-tax benefit of ever-larger compensation packages.
Society was changing too.
There used to be considerably more shame attached to being blatantly greedy and openly flaunting wealth. During the late 1980s and 1990s, attitudes toward money, wealth and what was considered acceptable behavior changed. Society as a whole was changing what it considered "right" and "wrong" in a lot of areas.
I lived through it and watched it happen.
I even saw it in the large conservative evangelical church I attended for about 20 years.
At one Sunday school get-together at someone's house, the host herded the entire class into a room and gave us an Amway presentation. He had a captive audience.
And increasingly you heard religious messages that wealth itself was evidence of being blessed and that God wanted people to prosper financially. You were "blessed" with wealth, naturally in conjunction with giving to the church.
That may seem unrelated to CEO compensation, but it was part of a much larger cultural change. What people considered excessive, embarrassing or simply greedy was changing.
CEOs aren't simply paid for what their position is worth. CEOs are also paid based on how much power they have and how much they can negotiate. As attitudes toward wealth changed, CEOs became more willing to use that power aggressively and push for larger compensation packages.
And corporate size certainly doesn't explain everything.
Companies could perform poorly, lose money or lay off thousands of workers while executives still received enormous and ever-expanding compensation packages.
Bigger corporations are part of the story, but are not the whole story.
Why did CEO compensation grow so enormously compared with the compensation of the ordinary worker?
That's the issue the article is illustrating.
I am suggesting greed, tax incentives and a major cultural change in attitudes toward wealth played major roles in the changes we've seen over the past several decades.
