S&P 500 CEO Pay by Pay Ratio

Same reason why it’s not accurate to include a worker who work 1 month and quit as having made $10k/year on an annual salary of $120k.

It needs to be PPP adjusted, like any global comparison.

Don't know about outsourced, but part-time isn't a fair comparison since their hourly wage could be comparatively high but their total wage low. It would be fair if salaries were given per-hour, but I'm pretty sure that top executives don't have the same concept of working hours as low level employees

If it’s not normalized for time worked, then it’s not really pay ratio that represents the value a company sees in an employee, or the economic comfort of that employee. So, what’s it really trying to show?

Some jobs don’t require full time work, like consultation or janitorial services, and these jobs are structured around this, by having multiple clients. Trying to take any direct meaning from these ratios isn’t really possible since another dimension is required for these numbers to have any real use.

Because it must include labor in other countries where the pay scale is very different. A barista at Starbucks in NYC is going to have a different income than one in Vietnam. By making these all US companies, you are comparing the CEO pay of an American against an average of global norms which are far lower.

It would be useful (to me) to include another column that's just the median pay of US-based employees.

Another interesting tact would be to show what a Vietnamese CEO makes versus their company's median pay, or what this looked like in the US in 1950, for example.

Are they employees or contractors?

I would say that the overwhelming thing that separates Jack Dorsey from Twitter employees financially is that he is massively wealthy, not that he earns more for working there. If he founded a new small startup today, valued at a nominal amount, and paid all employees including himself $75k/year, wouldn't there be the same inequality? You'd hardly argue that he should need to light on fire $100mm/year for the privilege of working at the new startup, in order to make his compensation somehow the same as the other employees.

I didn't realize Sundar makes so much at Google. It's pretty mind boggling.

The minimum wage hasn't increased since the 80s (when you take the inflation adjusted numbers). The lower the median wage, the higher likelihood of tax payers subsidizes for the lower "half" at the direct benefit of upper "half."

Not saying this is the only point just that outsourcing isn't the only issue here.

Correct, and that's the entire point.

I think what you're missing is that this particular metric doesn't care about performance of the company or if the CEO "deserves" that much money or not, and that's by design. When people compare the pay of a CEO to the pay of their employees it's typically because the entire point of the comparison is to to draw judgement on the CEO's business model.

For example, a common example where this metric is used is to cast judgement on the owners of Walmart for being multi-billionaires while their employees make near minimum wage. The point is not to say anything about the specific performance of those owners or of the employees (and often intentionally ignores it as a factor), but rather to specifically call attention to the disparity in distribution of wealth within the company and to cast judgement on the business model where one person gets rich while depending on the work of people who remain poor.

Again, I don't agree with the use of this tactic to measure anything. I'm just explaining why its done.

And how does the CEO salary hurt the standard employee? Most of the S&P 500 companies employ around 100k of people. dividing $20M salary equally between them would give each of them $16.6 per month.

A CEO gets paid in stock, which the company later buys back with cash. Ergo, the CEO getting stock compensation reduced the amount of money available to pay workers.

GAAP requires companies to report stock compensation as an expense because it does actually move wealth around in a zero-sum fashion. It’s not a magic free money tree.

Get this, I just found out Google hires for a role called "Application Engineer" which is a role where you program but are lower class and lowered paid than regular "software engineers."

Google might not agree with the "lower class" part but the fact that for an application engineer to switch roles to software engineering within google requires them to go through a harder interview process indicates a deliberate caste based ranking structure that limits growth based off of your ability to pass an algorithm interview.

I actually believe it's 100% within google's rights to do something like this, but I think it's very bad that they disguise this ranking with the role name. I know people who didn't realize what they were getting into until they joined google.

Seriously, just name the role for what it is: High IQ Software Engineers vs. Average IQ Software Engineers because that's essentially what they're interviewing for.