business news in context, analysis with attitude

On the subject of relative ages between senior executives and front line workers, MNB reader Craig Espelien wrote:

I wanted to weigh in on the minimum wage/essential worker debate. I was talking with a friend last week and we were on different sides of the mandatory minimum wage issue. After digging into the real issue, we began discussing the disparities between front line worker pay and executive pay. For some reason, this always becomes a thing - especially in retail. Jim Sinegal probably had the best approach at Costco where his comp was limited to some number multiplied by the average wage. This would seem like a great place to start - until you add the following twist…

Athletes in professional sports are paid pretty large sums of money - and there is never (or rarely) any mention of why they get so much relative to the ticket taker at the arena they play at (or the difference between a high paid actor and the person holding the microphone on set). Likewise with performers (actors, musicians, etc.) - the Talent (individuals like Taylor Swift or a band or whatever) get the vast majority of the funds while the folks on the front lines of concert venues are paid much smaller sums.

My questioning mind went to why we always seem to hammer on “business” and “CEO’s” but rarely, if ever, include these entertainment focused folks who usually make even more than the highest paid CEO’s.

I get the “talent” piece but this applies to CEO’s as well. Yes, some do not perform as well as the best but the disparity piece seems to be the rub - not the absolute number paid to the front line folks.  As we have seen from the COVID lockdowns, life kept going without access to new movies or concerts.

If you want to make the argument that relatively speaking, ballplayers and actors are overpaid, I'm not going to fight with you.

Except for Jacob deGrom.  He deserves everything the News York Mets can afford to pay him, and more.

But let's put him aside for a moment.

I actually have no idea what a lot of performers pay the people who work for them.  I would point out that in most of the cases you cite, the people who are doing things like holding the microphone or taking tickets don't actually work for the performer … not that this is an excuse for not paying people a decent wage.

The difference, I think, is that part of a CEO's job is to lead … to set the tone for a company … to establish a sense of culture … to create an environment in which people feel invested in the company and essential to its mission and  goals.  As a friend of mine likes to say, "Today’s workers don’t want to be just part of a head count; rather they want their heads to count."  A CEO's job is to facilitate this.  Some of it has to do with wages, but actually there is a lot more involved, as well.

Athletes and performers often are employees.  Really, really well-paid employees.  Sometimes they are management, too.  But it is a different business construct.

I get that the high average compensation increases paid to CEOs last year, especially when compared to front line workers, have to be seen in context - some of this stuff has been contracted years in advance.  But the optics aren't great.

But, as I said, if you want to make the argument that relatively speaking, ballplayers and actors are overpaid, I'm not going to fight with you.

Except for Jacob deGrom.