How much more do CEOs make than their employees?

Remember when you were a kid in school and your teacher adamantly told you that it was necessary to learn this excruciating process called mathematics because you would eventually apply it to your adult life?  Fast forward to you sitting in your boss’s office receiving your annual smack-in-the-face wage increase.  Here we are in the middle of a minimum wage debate with presidential campaigners talking about the earnings of CEO’s and hedge fund managers, and you get to go home and tell your spouse about the so-called generosity of your employer.  It's time to dust off the old abacus.

"Kugleramme". Licensed under Public Domain via Wikimedia Commons
http://commons.wikimedia.org/wiki/File:Kugleramme.jpg#/media/File:Kugleramme.jpg

I work a 9ish to 5ish for a large U.S. corporation.  The CEO of that corporation makes (let’s round it out to) 18.5 million dollars a year.  I, like most people, earn remarkably less.  This got me thinking…  How much more does the average CEO make than the average American worker?  Others have done the math, but like teacher always said, you have to show your work.  I hope you’ve been stretching because we’re about to crunch some numbers!

Let’s say the CEO is an overachiever and works 60 hours a week, while the average employee works 40 hours a week.  I’m being generous, because my company ‘encourages’ full-time workers to work 39 hours a week with a one hour buffer for early arrivals or late departures.  In other words, they schedule us for 39 hours and expect us to only work 39 hours a week, robbing us of four hours of pay per month.  Arg!  Let’s also assume that everyone gets the benefit of a full-time position, and enjoys the added perk of paid vacation, receiving pay for all 52 weeks of the year.  Finally, let’s enter a world where all the employees of the company earn $15 per hour for an annual salary of $31,200.  What a wonderful company this must be!

If our CEO is also paid for all 52 weeks in a year, he earns approximately $5900 an hour.  That's right, $15 vs $5900.  Whoa.  But okay, that’s not greed, that’s just healthy stock market returns, proving that shareholders approve of what a great job the CEO is doing.  That seems fair?

The average worker in my scenario at $15 an hour is earning 25¢ a minute, while the CEO is making $98 a minute.  Sixty seconds of work for a worker might buy a phone call, while one second of work for the CEO could buy a fairly substantial sandwich from any dollar menu in town.

Now let’s really blow our minds.  The state of Washington currently has the highest minimum wage at $9.47 an hour.  This translates to 16¢ a minute.  The CEO makes $98 a minute, while the average worker earns 16¢ in the same amount of time.  My mind is blown.  How ‘bout yours?  Another thing I noticed is that when you break down the numbers, it doesn’t seem like it would be all that painful to increase your workers’ wages from 16¢ to 25¢ a minute.  Depending on the number of employees working for the corporation and the number of locations, branches or offices, the additional cost per item or service could be almost negligible.  Additionally, the CEO could take a smaller earning, still live well, and reduce the cost increase incurred by paying workers a living wage.  Dan Price has done it. 

Some may read this and reply with a ‘Trickle up Poverty’ remark, or some other such nonsense about lazy people who want something for nothing.  The truth is that the average American needs a bit more, while the kind folks in charge could do with a bit less.  Hillary Clinton can indeed be wealthy and fight for the financially struggling.  Saying she can’t is like saying I can’t march for Ferguson because I’m white.  Puh-lease!  Besides, doesn’t a rising tide lift all boats?  I’m asking…

More fun with numbers:

Gravity Payments CEO takes 90% pay cut to give workers huge raise

A Wal-Mart worker making $9 an hour would have to work 2.8 million hours to match the CEO’s pay

Hillary Bashes the Rich, But How Many Millions Does She Have?

Would Walmart’s Prices Spike if They Paid Their Employees More?