For all the fuss about the growing wealth gap — something many people view as a problem — I think we are looking at it from a flawed perspective. Sure the wealthiest people within a given corporation earn exponentially more money than its base line workers. But the differences in salary between the top earners and those at the bottom is not what we should be comparing.
Think about the AKC dog shows. The way the dogs are judged is not in relation to the other breeds in the competition. The Beagle is not judged against the Fox Hound or Husky. The Beagle is judged against itself. As a Beagle, is it the best Beagle? Is the Fox Hound the best Fox Hound?
What we should be asking is if those on the lower rungs are in the best job paying the highest salary considering their knowledge, skills, abilities, and education. Are they in the most beneficial employment circumstance given their real options?
Comparing those at the top with those on the bottom only takes into account a bottom line figure. When we do this, we are drawing a moral conclusion. Usually that the ones at the top are making “too much” and those at the bottom are making “too little” and then coupling the two to imply (or stating explicitly) that the the ones at the bottom are making “too little” because the ones at the top are making “too much”. This isn’t true.
Take my situation. The “CEO” earns approximately 10x my base salary. That’s 1000% more than me. What does that tell you? Is that just? Is that fair? How would you be able to tell? What is the relevant information? You see, bottom line numbers and percentages are not enough.
To gain an accurate perspective of whether someone is earning what they should be, we need to look at the job at hand. Comparing it to someone else doing another job will only tell you differences in earnings, not whether that difference is justified.