Promoting Workplace Envy at USA Today

In today's USA Today the front page story (above the Fort Hood shootings!) is "CEOs Get Richer; Workers Left Behind." At one point they quote Eleanor Bloxham (a "governance expert") as saying that "CEOs are scoring big and we still haven't left the land of layoffs."

I'm going to give USA Today the benefit of the doubt and assume that they are trying to support the Democrat's talking points. Otherwise I would have to conclude that they are just woefully ignorant.

First, the purpose of a company is not to provide jobs and income to its employees. It is to provide a return on the investment the owners have made in the company. Second, the pay of the CEO has nothing to do with the pay of others that work at the company. Each has a value to the company, and if Howard Schultz is paid less, that does not mean his barristas will be paid more. Let's turn this imagined linkage around. If there were a labor shortage and Starbucks had to pay more to attract barristas, would that mean Mr. Schultz should be paid more?

In a well-functioning economy pay is a function of market conditions. In poorly functioning economies (like France, for example) pay is something determined by entities like USA Today that have absolutely no ownership interest in the companies they try to bully by promoting envy among its readers.

Monday Update

Excellent timing from the Wall Street Journal and the Labor Department that offers some less sensational perspective on compensation. 

Among the interesting insights:

• On average orthodontists earn more than CEOs (I anxiously await USA Today's expose on orthodontists)
• While there are 250,000 CEOs, there are only 5600 Orthodontists. 
• One of every 17 works in retail stores. 

So essentially what USA Today is all worked up about are the outliers. The people at the very ends of the distribution. It's a bit like trying to hold up the Wichita Herald as evidence that USA Today's circulation is outrageous.