Five top American International Group executives threatened to quit recently in the latest spat over compensation at the government-owned insurer, the Wall Street Journal reported Monday 12/8/09. The executives are also trying to preserve their ability to collect severance payments if they leave, the Wall Street Journal added, citing unidentified people familiar with the matter.
I almost just left the whole post at that. I mean, what’s to say in response? How about: “You’re kidding, right?” Or, “chutzpah just took on a whole new dimension.” Oh, the options are endless. And yet . . . we do live in a capitalist, market-driven society. Prices for various goods and services are set by supply and demand (or so we tell ourselves when not thinking about agricultural subsidies, various tariff processes, etc.). So, the theory goes, if these executives can command large salaries and the market is willing to allow severance to people who quit in a huff because they’ll have to make fewer millions of dollars this year, then maybe that’s how it should be.
After all, it’s a brutal world out there: A chief executive officer of a Standard & Poor's 500 company was paid, on average, only $10.9 million in total compensation in 2008, so losing some of that could cause a drastic shift in lifestyle. And I have no doubt that they work very hard and are very good at their jobs. (really.)
Then again, amid the outrage that “Main Street” is now unleashing on Wall Street, let’s also consider this: the non-profit sector accounts for 10% of all jobs, 8% of the economy’s wages, and 5% of the Gross National Product. In 2006, the non-profit sector contributed $666.1 billion to the US economy. That’s quite apart from the social good the sector contributes to our country and everyone in it.
And the average salary for a non-profit executive in our community? Just over $90,000.
Now, I am not saying that the director of a non-profit should necessarily be paid the same as the CEO of a multi-national corporation. As the mantra goes, we’re not in it for the money. And $90,00 is a good living, even in this high-cost region.
But this disparity highlights a fundamental problem in our national economy: we (at least in Washington) refuse to pay enough in taxes to fund essential services; we (across the nation) demand that the non-profit sector pick up the slack because we want to slash government spending even further; and yet we look askance at the salaries of non-profit execs and employees. That’s so even for employees of non-profits that really are large companies, like the YWCA or Asian Counseling and Referral Service. These are organizations with hundreds of employees and multiple sites. They just don’t distribute money to shareholders. Instead they ‘produce’ social good and reinvest any money they make into that social good. And for that, we think their employees should be satisfied with satisfaction -- never mind if they can’t pay their mortgage.
Somehow, society assumes that because charity employees are not in it for the money, it’s okay to pay them much less than their counterparts in the private sector. This stems from a couple of sources, I believe. Women are over-represented in non-profit jobs, and the continuing embedded sexism in our society reinforces the willingness to pay charity employees less. Also, because it’s ‘do-gooder’ work that might in the past (or in the near-future, come to that) have been done by a volunteer, it’s acceptable – even preferable – to assume that do-gooders will be content with less money than they would make working for a for-profit company.
And that’s been true in the past. But it’s not sustainable in the long-term. As a society, we will have to decide what we truly value, and at some point we will have to recalibrate our economic scales.