Here is Tom’s Top Twelve Tall Tale Number Five – Public sector workers are making too much money when compared with private sector workers.
That’s how the company execs and those who commune of the corporate Kool-Aid would like you to see it. Actually, just the opposite is true – private sector workers are making too LITTLE money when compared to public sector workers. We can see the gaping disparity is by comparing two ratios:
- the ratio between a private sector CEO and a worker in that company to
- the ratio between a public sector CEO and a worker in the public sector.
1. In 1965, CEOs in major U.S. companies earned 24 times more than the average worker. In the 1978 the ratio rose to 35 times more than the average worker. In 1989, the ratio grew to 79 times more than the average worker. Beginning in the 1990s, the ratio grew even more steeply, hitting 300 at the end of the recovery in 2000. In 2003, the fall in stock market prices reduced CEO stock related pay, but by 2009, the average CEO was paid $10,982,000 a year; the average worker, $41,861. Thus, a CEO in the private sector earns 262 times the salary of the average worker.
2. Again, Graham Spanier, the fired president of Penn State University is the highest paid public CEO in Pennsylvania. He made $620,000 per year. We compare it to two other public school bench marks – the beginning public school teacher’s average salary, $34,976, and the average public school teacher’s salary, which is $54,027. The sharp-eyed reader will have noticed that the beginning teacher’s average salary is $6,885 LESS than the average worker in the private sector, but that is another story for another day. The ratio for public sector CEO to teacher is 620,000/34,976 or 17.7 to 1. The even sharper-eyed reader will note this is well below even the 1965 ratio of CEO to worker. The ratio for public sector CEO to average teacher salary is 620,000/54,027 or 11.4 to 1. Even if every teacher, custodian, and secretary in the public sector made minimum wage, the CEO ratio would be 620,000/15080 or 41 to 1, roughly the ratio for private sector CEOs to workers 33 years ago.
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