Class Warfare Blog

February 1, 2013

It Applies for Them But Not For Us (The Law of Supply and Demand)

CEO’s around the country use a scam to ratchet up their salaries. One is surveys done of CEO salaries, which means every time a CEO gets a raise, the average for their subcategory goes up and all of the other CEO’s point to it and say “We need a raise, too.”

The other aspect is based on the law of supply and demand. They say that people with their unique skills are very rare, so you should have to pay more for them. Low supply couple with high demand means high salaries.

Segue to the much ballyhooed “skills gap.” Employers are crying that they can’t hire skilled workers and jobs that are advertized go wanting. They use this “fact” as part of an argument for allowing more “green-card,” that is foreign, workers into the country.

You will also notice that the wages for these jobs have not been raised as they would be in a true “low supply—high demand” situation. In fact it appears that the wages being offered for these positions are quite a bit on the low side, which explains why no one is applying for them. Realistically, if you were used to make $30-35 per hour, would you apply for a $16 per hour job? Would it leave you time to look for a good job? How would that look on your résumé?

And one must ask—are the skills of a CEO all that rare? Where did those CEO’s come from? Were they not in some lower level positions before they became CEO? Here’s an idea? Ask the Vice-CEO or Vice-president if he is interested in the job. Then offer him half of what the current CEO makes and see if he will take the job. My guess is that he would. If the current CEO were making $50 million, you could add $25 million to the bottom line with a single personnel move. If your current CEO is such a star, I am sure he will catch on with another company.

But then that would be treating CEO’s like they were mere highly-skilled workers.

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6 Comments »

  1. A CEO job definitely requires some skills. For example, I don’t think I could be a successful CEO because I am horrible at golf.

    Comment by List of X — February 2, 2013 @ 1:02 am | Reply

    • And there is all that scotch drinking and secretary chasing . . . I don’t mind having a smile at their expense, because they are gaming the system to satisfy their own greed and as such are objects of scorn.

      Comment by stephenpruis — February 2, 2013 @ 8:44 am | Reply

  2. From what i understand its only really in the US where CEO salaries have become categorically obscene. In Australia (at least) they’re high, but nowhere near offensive. It wouldn’t be tolerated. I like your idea, though. Crafty! 😉

    Comment by john zande — February 2, 2013 @ 3:16 am | Reply

  3. The idea that CEOs wages are based on supply and demand is a myth. Its only high because they set it themselves (or easily pressure the board to do so). Its not supply or demand, but rather the amount of economic power they have. Likewise, low wage workers are paid little because of market forces (if this was the case their wages would have risen with productivity) but rather because they lack market power. They have a weak bargaining position due to their large number and lack of organisation.

    Comment by Robert Nielsen — February 2, 2013 @ 4:15 pm | Reply

    • As you will see if you read the post carefully, I claim that they use the argument of supply and demand as if it applied to them, when they can be replaced very easily by the next in line. Myths contain some truth, these jokers can’t even spell the word. And the reason workers have so little power over their jobs is because of a concerted political attack undermining rights they once had and they haven’t effectively fought back.

      So, we agree, but not as to the “causes” as if they were just some symptons of some disease, they are the result of political machinations.

      I have been enjoying your blog of late, keep up the good work!

      Comment by stephenpruis — February 2, 2013 @ 8:59 pm | Reply

  4. […] It Applies for Them But Not For Us (The Law of Supply and Demand) […]

    Pingback by The Disproportionate Salaries of Corporate CEOs | Crippled Politics — February 9, 2013 @ 12:17 am | Reply


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