The gap between CEOs and workers is stupidly huge and should shrink by a whole freaking lot
According to the Economic Policy Institute, in 1965, the typical CEO made around 21 times as much as the typical worker. So in those days, let’s say you were making $50k a year working at a big company like Disney. The CEO would be making just over $1 million per year. That’s a pretty big spread, but the CEO is making a lot of important, top-level decisions. I wouldn’t say it’s an absurd difference.
Fast-forward to 2020, and the typical CEO is now making 351 times as much as a typical worker. So if you’re making $50k, your CEO is making closer to $18 million, and as we’ve seen from the guys above, it can get a lot higher than that.
How did the gap between CEO pay and pay for ordinary workers in the U.S. grow so wide? It’s a long story involving the economic policies enacted under the presidency of Ronald Reagan and the innovations of corporate ghouls like Jack Welch, but the point is that it’s real, and it’s a problem.
What is the point of money? What is the point of having an economy? Answers will vary, but if you ask me, an economy exists to provide people with the means to live their lives. That means being able to do things like buy a home, go to school, raise children and maybe even take a vacation every now and then, all of which have become harder to afford as more money is concentrated at the top of the income distribution. Because make no mistake: the more money that’s hoarded at the top, the less there is to go around for everyone else.
The EPI report puts it pretty succinctly:
"Exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with. …This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or were taxed more)."
Big money, bad business
So let’s return to our central question: Is it reasonable to pay CEOs in the entertainment industry this much money? Very obviously no. Executive pay at major studios is laughably, ludicrously unjustifiable, and slashing it would free up money to pay workers who need it.
We haven’t talked about how much ordinary actors and writers are getting. It tells you a lot that of the 160,000 actors who are part of SAG-AFTRA, only 12.7% make the $26,470 per year necessary to quality for the union’s health insurance plan, according to CNN Business. The strikes aren’t about writers like Ryan Murphy or actors like the Rock, who made $270 million in 2022; the Rock is as overpaid as any of the executives above, and in a just world his intake would be vastly reduced. This is more about writers like Molly Nussbaum, who was an executive producer on the Netflix show The Umbrella Academy but still had to drive Lyft to make ends meet.
And just to be clear, I’m not saying that executives should make the same as mailroom attendants or that the Rock should be paid the same as an extra. Obviously the star of a movie should make more money than a supporting actor. Obviously CEOs should make more than their assistants. It’s more that the difference between the two extremes has gotten dramatically out of control in a way that isn’t good for the studios, the workers, or the industry in general. The only people benefiting are the CEOs.
Take the case of David Zaslav making $246 million in one year. For context, the budgets of Barbie and Oppenheimer, two huge box office hits, are $140 million and $100 million respectively. So it took $240 million to make these two movies, and they employ hundreds of people. Instead of using that kind of money to make more potential hits, Warner Bros. Discovery gave it to one guy, in one year.
Honestly, I think this is terrible business. If studios want to make money, wouldn’t it make more sense to use their resources to create things people will pay to see, rather than shower a coterie of executives with hundreds of millions of dollars? But of course, as we saw with the Netflix executives, these people basically have the power to pay themselves, and they tend to want to pay themselves as much as possible.
When people are confronted with this kind of staggering inequality, I feel like it’s easy to throw up your hands and say, “Nothing can be done about it. That’s just the way it is.” But it’s not the way it always was. There was much more economic parity in the U.S. in the 50s, 60s, and 70s, when it was easier for many people (though by no means all) to achieve acceptable levels of economic security. The situation we’re in now changed over the course of many years, and it can change again. And one of the ways to force it to change is through union activity like strikes.
Eventually, I expect the studios to cut deals with both the WGA and SAG-AFTRA. I hope they can reach agreements quickly, because I want to watch TV and movies as much as the next guy. But more than that, I hope the deals are fair. That’s better for everyone in the long run…well, better for everyone except the CEOs, but somehow I think they’ll scrape by.
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