Is your boss worth 500 times more than you?

Source: United for a Fair Economy, Executive Excess 2005, based on annual CEO pay studies conducted by Business Week (1990-2004) and the Wall Street Journal (2005).

This chart shows how many times more CEOs at large companies earn than their employees. Some fairly bright folks believe that this out-of-balance pay scale is yet another reason for the current economic collapse. It is also believed that the lack of jobs and layoffs are somewhat due to greed at the top of these companies.

When you consider the numbers in the chart above, it's easy to see why we are potentially heading for class warfare. There have always been rich and poor people. But the middle class has almost always been dominant in numbers and gotten its fair slice of the pie. Now, however, the middle class is being shut out with greater frequency by modern-day corporate kings. Jobs that could be generated simply by the elite being a little less greedy are nowhere to be found.

Capitalism works best when everyone shares in the riches. Everyone does not need to be paid the same amount of money. I am not a proponent of socialism. Those who work the hardest and are the smartest should have salaries that reflect their worth to a company. But at the same time, does anyone believe a typical CEO, regardless of his or her competency level, is worth 500 times more than your average middle manager or hourly worker? Does anyone with any sense of fairness support a company laying off 100 viable employees while dishing out million-dollar bonuses to top managers who drive their businesses into the ground? Why do certain board of directors keep rewarding failure?

I am certain there are very smart people in this world who can manage companies far better and for far less than some current business leaders. One of the keys to solving the unemployment problem is in getting these intelligent, fair-minded visionaries into leaderships positions. They will create efficiencies and level the playing field so that businesses operate in a more productive and honorable manner. They will help generate new products and new jobs. Simply sticking with the greed-laden, "business as usual" model, where failure and mediocrity are rewarded, will not get us out of this economic mess. We need innovation from our CEOs, not more vacations homes in Palm Springs. Throwing endless streams of money at these guys will not make them better managers or elevate them as human beings.

The big question being debated is whether government should have any oversight of CEO pay. It appears in cases where taxpayer money was used for large corporate bailouts, the Obama administration is going to try to limit the greed at the top. Good luck with that. The worst corporate offenders are experts at finding loopholes in everything from tax laws to zoning regulations. Until they start going to jail, nothing is likely to change.

Twenty years ago I would have been against any sort of government meddling in the salaries of any business. Of course, 20 years ago, CEOs were only making 100 times more than the average worker. Prior to that, the gap was even more narrow. Maybe if CEOs and board of directors can't restrain themselves, some government regulation is necessary. It's either that or watch millions of more Americans lose their jobs, homes and dignity.