Life Is Simple

Let’s say a given CEO gets paid a lousy $20 million per year. That’s not much, some people get that for just three weeks being on the job. Let’s say a given average worker was being paid a $40K per year to start. By progressing throughout a career he retires earning $120K per year. He works full time all the time and his overall work term is 45 years – give or take. We discount time between jobs, unpaid vacations, leaves and so on. Let’s just say this guy (or gal) started working at 20 by making $40K and retired exactly 45 years later making three times as much. Not bad for some people, if you ask me.

Now, let’s do some math here. The median salary for this average worker is somewhere at $80K/year. Let’s pretend that he was making about that amount throughout all his 45 year of being on a work force. In real life you spend longer time earning less so you can earn more later in your career, but that would be out of the scope of 101 course.

So $80K / year times 45 years yields measly $3.6 million per entire work life of single individual. Let’s throw in some bonuses, some paid for and some non-monetary benefits (like training). Just so we can drag this number to at least $5 million. Which isn’t bad if you divide $5 million by 50 years of work – it’s $100K/year median. A salary of a well-placed manager, as far as I know.

You probably already know what I am getting at. You whole entire life you will be working for 4 times less than someone else is making per year (or per month – depending how lucky you can get).

Okay, that’s enough for today. The homework for next class – write a three page explanation why golden parachutes for CEOs benefit shareholders and workers of their respective corporations.

Class dismissed.