Former Labor Secretary Robert Reich is currently a professor of public policy at the University of California-Berkeley and he was paid $242,613 in 2013 according to this University of California database. According to this link provided in an article by the Daily Caller, Professor Reich is scheduled to teach only one undergraduate class this fall semester – Public Policy 260 – that meets only one day a week (Monday) for two hours (12 – 2 p.m.). That works out to about $2,500 for each hour of lecture time that Professor Reich will spend with UC-Berkeley students this semester, or about the same amount as the average adjunct college professor gets paid for teaching an entire one-semester 15-week class ($2,700 according to this AAUP report)!
As the Daily Caller reported yesterday, Professor Reich took time off from his hectic one-course, two-hour a week teaching schedule to berate and excoriate American CEOs and Harvard Business School in a post on the Harvard Business Review blog for allowing “a pay gap between CEOs and ordinary workers that’s gone from 20-to-1 fifty years ago to almost 300-to-1 today.”
As I reported earlier this year on CD in a post about the never-ending claims of “excessive CEO pay” and the alleged 300-to-1 pay gap between CEOs and ordinary workers (modified and updated slightly):
We can get a more accurate and complete picture of CEO compensation in the US by looking at wage data released recently by the Bureau of Labor Statistics in its annual report on Occupational Employment and Wages for 2013. The BLS report provides “employment and wage estimates by area and by industry for wage and salary workers in 22 major occupational groups, 94 minor occupational groups, 458 broad occupations, and 821 detailed occupations,” including the occupational category “chief executives.” In 2013, the BLS reports that the average pay for America’s 248,760 chief executives was only $178,400. The multi-million dollar salaries of the CEOs of the 200-350 S&P500 firms reported recently represent only one out of about every 1,000 firms in the country (or 1/10 of 1%) that have a CEO at the head. The larger sample of almost a quarter-million CEOs reported by the BLS gives us a much better understanding of “average CEO compensation.”
For the larger sample of CEOs reported by the BLS, their average pay of $178,400 last year was an increase of only 0.88% from the average CEO pay of $176,840 in 2012. In contrast, the BLS reports that the average pay of all workers increased by 1.42% last year to $46,440 from $45,790 in 2012. That’s right, the average worker last year saw an increase in their pay that was more than 60% greater than the increase in pay for the average US CEO. And the “CEO-to-worker pay ratio” for the average CEO compared to the average worker is only about 5-to-1, nowhere close to the pay ratio of 331-to-1 ratio reported by the AFL-CIO using the 350 highest-paid CEOs in the country or the 300-to-1 ratio that Robert Reich claims.
So at the same time that Reich complains about the excessive compensation of a small group of a few hundred highly paid CEOs, he actually makes 36% more than the average CEO in the US for lecturing a few hours a week (see chart above). Even considering additional work preparing lectures and grading papers or exams, it’s probably safe to assume that Professor Reich is putting in 50-60 hours per week like the majority of America’s CEOs for his very generous pay of more than a quarter-of-a-million dollars per year.
In addition to his annual CU-Berkeley salary of $242,613, Professor Reich is also a popular speaker on the nation’s lecture circuit, and he commands a handsome speaking fee of $40,000 for a one-hour talk (including Q&A) plus first class travel for one or two people from California, hotel accommodations for up to two nights, ground transportation, meals and incidentals. That’s the quote I got today from one of Professor Reich’s speaking bureaus for his fee to give a presentation as part of a “university program” — it’s possible that he charges even more for corporate events. So we have the former labor secretary complaining about a pay gap between CEOs and average workers, when he gets almost as much in compensation for a one-hour talk as the average American worker earns working full-time for an entire year (see chart above)! If he gives only six speeches a year, his annual income approaches half-a-million dollars a year, putting him solidly in America’s “top 1%” by income – a group the “class warrior” frequently criticizes (see examples here and here). .
As I said in a previous post, I think it’s actually great that Robert Reich gets a market-based fee for his speeches, and I applaud him for commanding $40,000 per one-hour speech that allows him to enjoy a very comfortable life in the “top 1%.” But it then seems deeply hypocritical when he complains that airlines are “deeply exploitative” when they use market-based, surge pricing (see post at the link above) or when he complains that the pay for several hundred CEOs relative to the average worker’s pay is excessive. In all cases – Robert Reich’s $242,613 UC-Berkeley salary, his $40,000 speaking fees, CEO pay, airline pricing, and the average worker pay – those salaries, prices and fees are not determined independent of the market, but in each case primarily determined by market forces. Therefore, it seems deeply inconsistent for Reich to complain about the market forces that determine CEO pay, airline surge pricing and average worker pay, but then take advantage of those same market forces to earn a $242,613 salary for teaching one class per semester and charge $40,000 for a one-hour talk and enjoy life in the “top 1%.” And in any discussion of CEO pay we should remember that the average CEO in America earned only $176,400 last year (not multi-millions of dollars), received an increase in salary less than the average worker, and earned only about 5 times more than the average worker (not 300X more).
HT: Steve Bartin, see his post today about Robert Reich here.