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CEO Compensation Comparison Lacks Perspective

Eliminating the salaries of all McDonald's senior management would give each worker a 1.5 cent raise

As a union tries to make CEO pay an issue, others question the comparison.

Economist Antony Davies said that if McDonald's were to not pay its CEO or all senior management and instead divide those tens of millions of dollars among the minimum wage workers, each employee would end up earning about 1.5 cents more per hour.

But some groups are using executive compensation to try and drive a public discussion. The AFL-CIO launched a website that is critical of some salaries, including the heads of some Michigan companies.

The union reports that a minimum wage employee would have to work 528 hours to equal one hour of compensation of John A. Bryant, the CEO of Kellogg Company. Bryant holds a bachelor’s degree from Australian National University and a MBA from the Wharton School of Business at the University of Pennsylvania. He lives in Kalamazoo and is a Chartered Accountant of Chartered Accountants in Australia. He serves on the board of directors of three major food organizations. 

His total compensation of $7.9 million is being compared by the union to the earnings of teenagers in high school. MLive picked up on the union website and did a story on it.

Charles Owens, state director of the National Federation of Independent Business, called the union website more class welfare from the liberal progressive front.

“Of course everyone making the minimum wage is just as qualified to run a multimillion dollar company as any CEO,” Owens said sarcastically. “In the quest to make everyone equal, the liberals must eliminate experience, education, risk and talent when comparing salaries and pay. It is highly likely that those in the position of leadership for major companies didn't sit around and wait for the government to give them a raise.”

Davies, whis is an associate professor of economics at Duquesne University, made comparisons of the McDonald's executives and its minimum wage employees.

“Don't confuse the value of functions with the values of the individual people,” Davies said. “McDonald's couldn't operate without a CEO or without people who cook burgers. The job the CEO performs is worth about $10 million annually to McDonald's. The jobs the minimum wage workers perform are worth about $35 billion. So the jobs the minimum wage workers perform are worth around 3,500 times what the job the CEO performs is worth. The kicker is that only one person can perform the CEO job at a time while 1.7 million people can perform the minimum wage jobs at a time. So, on an individual basis, the individual minimum wage workers are worth less than the individual CEO.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

Poll Shows Solid Opposition To Detroit Bailout

State Rep.: 'I am not going to bail out the City of Detroit on the backs of the families and taxpayers of Northern Michigan'

A poll conducted earlier this month revealed that, by a 55-38 percent margin, Republican voters in Michigan oppose Gov. Rick Snyder’s proposal to send $350 million in state funding to help bail Detroit out from its bankruptcy. According to the poll results the proposal is just as unpopular among Independents, who opposed it by a 54-39 percent margin.

Commissioned by the Mackinac Center for Public Policy, the poll was conducted on April 9 by Mitchell Research & Communications. Of the 1,460 respondents surveyed for the poll, 93 percent said they were “definitely” going to vote in November. The poll has a plus or minus 2.56 percent margin of error.

Rep. Greg MacMaster, R-Kewadin, and Rep. Wayne Schmidt, R-Traverse City, are vying against each other in Michigan’s 37th State Senate district Republican primary. Capitol Confidential asked both candidates how they would vote on the extra Detroit money. Both said they would oppose it.

“The voters in the City of Detroit chose the officials who got the City of Detroit into its current situation and it is the City of Detroit that needs to face up to its financial problems,” Rep. Schmidt said. “I am not going to bail out the City of Detroit on the backs of the families and taxpayers of Northern Michigan.”

Rep. MacMaster said he has made no secret of his continuing opposition to any bailout of Detroit.

“I still don't see why Michigan taxpayers should continue to financially help Detroit,” Rep. MacMaster said. “My constituents in Northern Michigan are not in favor of any bailout. I would much rather see the money put towards road repair in the state.”

Under Gov. Snyder’s plan, the state would send $350 million, or $17.5 million a year for 20 years, to Detroit. The governor’s office did not respond with a comment for this article.

Overall, of the 1,460 respondents who participated in the survey 49 percent said they were opposed to the bailout, while 44 percent said they support it.  Of those opposed, 24 percent said they were “strongly opposed” and more than one-third (35 percent) of those identified themselves as Democratic voters or said they lean Democratic.

Of the 44 percent who said they support the bailout, 56 percent identified themselves as Democrat voters.

Those surveyed identified themselves as follows: 38 percent said they were Democratic voters, 36 percent said they were Republican voters and 19 percent said they were Independents. The breakdown of respondents by geographic area was as follows: Detroit, 4 percent; Wayne County other than Detroit, 12 percent; Oakland County, 12 percent, Macomb County, 9 percent; Flint, Saginaw, Bay City and the Thumb area, 12 percent; Monroe, Washtenaw, Ingham and Jackson counties, 19 percent, West Michigan, 22 percent, Northern Michigan/U.P., 11 percent.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.