Forcing Equity

We like the idea of a level playing field, even though we know that it is rarely practical or even desirable.  Whose job is it to enforce equity in the workplace?  Who gets to define what that even means?

The City of Portland has taken it upon itself to define equity and enforce it by imposing a 10% surplus tax on businesses where the CEO makes more than 100 times the median pay of all their combined employees.  As many as 550 companies based in Portland could be affected by this ordinance – the first of its kind in the nation.  The tax rate would increase if the differential was greater than 100 times.

Now, I agree that executive pay seems ridiculously disproportionate.  But I also wonder about the limited nature of this kind of rule.  Certainly disproportionate compensation is not limited to the realm of business.  What about public servants, legislators and presidents?  Should their compensation – including all the special perks and privileges of security and healthcare and retirement – be linked somehow to what the average city employee gets paid?

What about celebrities?  Why should a big-name music or film star command tens of millions of dollars to make a movie?  Why shouldn’t their salary be determined in relationship to what the lowest-paid positions in the studio or on the project are paid?

Are these environments somehow excluded from the idea of equity?  Should they be?

I’d like to think that industry will be self-correcting, that at some point businesses are going to say, Look, as concerned as we are about the bottom line it’s just irresponsible to pay our top execs these wild sums of money.  Maybe consumers should be made more aware of the wage differential in the companies that they do business with.  Would I buy a different brand if I knew the cheaper price tag was because they weren’t paying their CEO $70 million a year plus stock options?  Would I choose another brand even if it wasn’t cheaper?

What about a situation where every employee gets paid $500,000 but the CEO gets $60 million.  Should the company still get dinged even though the janitor is being paid half a million dollars a year?  And why is it the city gets the benefit of this surplus tax?  Why isn’t it returned to the employees who are making less than the mean of the scale used to assess the tax?  How is that surplus tax revenue going to be used?  Not to fund raises for city employees, by any chance?  Hmm.  What a conundrum.

I get itchy when a small group of people decide that they can define and create equity.  At the heart of things it means that a small group of people outside the company have a better understanding of what is fair than those within the company, or at least those who create and control the company.  Why might that be?  What enables people on the outside to know what fair is better than other people?  How was their education and upbringing different?  Where did they get their source of values from, and how do they know they can trust them?  How well do they understand the dynamics that create this sort of inequality?  I certainly don’t profess to understand, and perhaps nobody else really does either.

I’d be far more comfortable with the idea that we teach kids from an early age that it’s good to be creative and industrious and that you ought to enjoy the benefits of your labor, but that there is a perspective to all of this as well.  You should get a bigger return for taking the risks and pushing the envelope, but at some point, it just seems silly to keep increasing that return while not including others in the benefits.  Life isn’t fair, not by a long shot.  Trying to force it to be fair – and arbitrarily drawing a line that says this is fair and this is not – is often a flawed approach, even if the goal is admirable.

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