Earlier this month the employment numbers were reported by the Department of Labor and at first blush they looked very good. The best in years. Yet there was a shadow cast in that the number of individuals who “gave up” looking for jobs has continued to increase, and the ugly fact that earning power for the majority of wage earners is still stagnant and is becoming a bigger and bigger issue. This news is not positive for those of us in the business world since it creates more and more pressure for increasing the minimum wage (another argument for another time). Yet, the topic that is coming more and more to the forefront with this type of news, and the one that drives me crazy, is the issue of wage equality.
The idea that there is some magic ratio that creates “fairness/equality” between the risk takers and the non-risk takers drives me nuts. Over my forty years in business, I have held a variety of positions and worked with hundreds of individuals. The folks who I have met who are “top” earners (the 1%) are driven individuals – and the vast majority are risk takers. They’re willing to be paid on commission. They are willing to cash in their 401K and start their own businesses. They will work for several years taking home very little to build equity in their businesses. And success is not guaranteed. That’s the risk they knowingly take.
Yet, the idea that we should limit (through taxation or some magic formula) the compensation of those who succeed and do “make it,” is foolishness. Take away the “reward” to be a risk taker and your unintended consequences will be to reduce the lifeblood of what has made our country great.
It’s that type of drive which is the backbone of this country. Yes, the numbers tell us that over the past 20 years we are seeing more and more wealth being transferred to the top earners – OK, maybe there is a disparity, and there may be a need for some changes in taxation – but let’s not react punitively so that we can be more “equal.” Let’s remember that this creation of wealth comes when technology and society are being transformed by invention and creativity. It’s a cycle that we’ve seen before (read “A Splendid Exchange: How Trade Shaped the World” by Bernstein). In the long run this type of transformation provides the dynamic growth necessary for a country like ours to succeed AND provide wealth (the ability to live life as we see fit) for the vast majority (I did NOT say all of us).