Perception vs. Reality - Recent Video Going "Viral" On Wealth Inequality


Watch the below video and then read my comments shown below it.

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This video's impact focuses partly on the "super rich" vs. the "super poor". Most everyone is in the middle of these two extremes.

So, let's look at certain CEO-level individuals who, according to the video, make 380 times the salary (and, by salary I mean "income" - because the two are different) of the average worker. And, let me assume that the figures in this video, indeed, are accurate - I have not verified this.

First, all CEOs are not equal. I am the CEO of a consulting company of one employee and I can assure you that my income is nowhere near the incomes of the CEOs of IBM, GE, ExxonMobile or any other very large corporation you can name.

As to "workers", the average income of those who work at Google is $135,754 per year. As a comparison, the average yearly income of your typical worker at McDonald's is $15,300. Not even close to parity.

So, to lump all CEOs or workers in the same category is not accurate or meaningful - especially if a "judgement" of some type is the goal.

The average worker in America earns $46,326 per year. 380 times that gives an average "major" CEO an annual income of $17.6 million. Significant income, yes? But, is this CEO really worth it - or anything close to it?

As a lead in, ExxonMobile in 2011 had a PROFIT of $41.1 billion. Its CEO made $35 million. If this CEO had an income of only 1/10 of one percent of the profit, his income would have been $41 million. Remember, ExxonMobile is one of the largest, most profitable companies going.

Back to the question of a CEO's worth. Let's take a look based on my own experience - and I was no CEO, not by a long shot.

I was (basically) a corporate "firefighter". This means that my primary job was to fix organizations that were badly broken - technically, behind schedule in their contracts, with bad customer relations, and, more importantly, losing money - lots of it. All these issues were almost always happening at the same time, not surprisingly.

So, for but one example, the major company for which I worked had purchased a smaller company that was losing $1 million per month. For emphasis, that's a negative $12 million every year. In four months I and my team were able to turn this entity around such that in the next 12 months it had a profit of $5 million. That's a net gain of $17 million. What is that worth to the stockholders of the company? (Think about it as if YOU were a stockholder!) What is that worth to the many people and their families who would have been out of a job had we not been successful? One could certainly argue that the result was worth a whole lot more than my income at the time - and believe me it certainly was. I am not complaining - that was my job!

Now, look at a major CEO whose company employs 100,000 plus people. What impact does a successful CEO play in the well-being of his/her employees, their families, the local economies of areas surrounding the business, the well-being of the countless employees of companies which offer a supply chain to the major company, the tax revenue - both local/state and federal? Think about it.

So, is $17.6 million a "reasonable" income for an average major CEO? Of course the answer is: "That depends!" Before one can reasonably answer the question one has to take a look at the company - the financial results of that company, the impact that company has on the economy, the impact that company has on all the people it employs - either directly or indirectly, as well as a dozen other things to consider. The real answer is: "Sometimes it's reasonable and sometimes it's not." It's the job of the stockholders to determine.

Doing a bit of research shows that the "scew" depicted in the video among "rich", "middle class" and "poor" has occured mainly during the last 20 years. Consider: during that time period (Clinton, Bush, and obama) Democrats (i.e., the "progressive" side of the political system) controlled the House or the Senate, and often both. Any correlation? What do you think?

And, take a look at the below two charts. They present some very interesting "artifacts" related to this entire issue. Look at the data presented. See what you can determine are relevant issues. Look especially at the second chart: a) Households with no earners, and b) Work status of households. Telling? I believe so.

Clever videos offer an excellent "perception" on things - especially when all the facts are not there and/or not considered.

So, do a few people make a whole lot more than many, many others? Yes, and maybe they actually earned it and, just maybe, they're worth it.