A Good Time To Be CEO

I stumbled across some data on American wages when doing research for last week’s blog post.

 

Wages for college graduates have been relatively stagnant since the 90’s. There was a small rise between 1995 and 1999 but since 2000 they’ve even declined. That’s not good for college graduates.

 

wage-stagnation

 

This next graph visualizes wage stagnation since the 70’s. It shows a major boost in productivity but no matching increase in wages.

 

Measuring 'productivity' isn't an exact science (The web page states “growth of output of goods and services less depreciation per hour worked”) but the trend is clear. More is getting done but employees aren’t getting a proportionately bigger slice of the pie.

 

productivity-increased

 

Where is the extra wealth going? These graphs of CEO compensation give a rough idea. Up until 1990 CEO’s were paid about 30x their ‘typical’ employees. It has exploded to over 200x since then. (This data is from Americas ~200 largest companies)

 

ceo-compensation

 

Another graph shows the top 1% of wage earners saw large increases in pay since 1980 while the bottom 90% saw very little.

 

one-percent-wage-increases

 

These charts take their data from the largest companies in the USA and it’s skewed to show only the most profitable companies on the S&P500.

 

But even CEO’s at smaller companies are doing well. Here’s data gathered on over 1,000 of the 6 million ‘private companies with employees’ in the United States, divided into ownership type.

 

Sole proprietors, partners, family owned business CEO's and VC-backed founders are also doing very well.

 

ceo-compensation-by-ownership

 

Perhaps this divide is due to technology allowing a few people at the ‘top’ to have extreme leverage. Maybe CEO’s use cheap labor from China and India and leave less ‘good’ jobs for American employees.

 

Whatever the reason, wealth is disproportionately going to CEO’s, entrepreneurs, and founders. Their average paychecks are exploding while ‘typical’ paychecks are stagnating.

 

Is this compensation fair? I don't know. I'm sure some CEO's don't deserve the compensation. Perhaps those working 120 hour weeks to keep billion dollar companies on the right track deserve it.

 

Assuming you want to be a 'good' person, it's worth asking the question...

 

Is This The Time To Become A CEO?

 

Conversely, is this a really bad time to become an employee?

 

It's not greedy to make smart decisions and it won't help you to grumble about income inequality, so think about your own career.

 

In 2016, should you strive to become a great employee? Should you work hard to build your resume… or build your first company?

 

One career path is stagnating while the other is booming. It's not as 'crazy' to become an entrepreneur as it used to be.

 

Look at the graphs above. It’s clear where the ‘American Dream’ is today.

 

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