When it Comes to Finding Workers, CEOs Suddenly Forget ‘Free Market’ Principles
Written by Adele Stan, AFL-CIO
Examining the complaints of some CEOs that they just can’t find qualified workers, economist Dean Baker lays waste to that argument on several fronts, most notably the CEOs’ apparent inability to apply the laws of supply and demand to fulfilling their stated workforce goals.
Baker, who co-directs the Center for Economic and Policy Research (CEPR), first crunches some data to show that, in fact, the ratio of unfilled jobs to employment is “down by almost a third from its pre-recession level,” Baker reports in a column titled, “A Generation of CEOs Who Don’t Know How to Raise Wages.” He writes:
According to standard economics, when businesses can’t fill job openings, they are supposed to offer higher wages. If these businesses offered higher wages, then they could lure away workers from their competitors…If these CEOs raised wages high enough, then these workers would be willing to work for their companies.
Since it would be rude to imply that CEOs are not being honest when they complain about the lack of skilled workers, we should assume that they don’t know how to raise wages. This is a problem that could be easily remedied. The government could offer short courses to CEOs and other top executives that would teach them how to raise wages and why this would be beneficial to their firms.
Of course, CEOs aren’t total strangers to methods of upping compensation packages — when it comes to their own, that is. The AFL-CIO annual PayWatch data shows that in 2010, CEOs of the largest companies received, on average, $11.4 million in total compensation last year. Overall, CEOs of the 299 companies in the AFL-CIO Executive PayWatch database received a combined total of $3.4 billion in pay in 2010, enough to support 102,325 jobs paying the median wages for all workers.
In 1964, the apex of performance of the economy, CEO pay relative to average wage-earners was 24 to 1. Now it is 340-1.
This post was originally published on the AFL-CIO blog.
Photo from ToGa Wanderings via flickr