Important Announcement from the Quixotic Deacon: Since I began thinking of writing this blog, I have leaned on a lifelong friend, Fitz McAden, for guidance. Fitz and I grew up together. In fact, our mothers did as well. And our grandfathers and great grandfathers worked together. Fitz was born to be a journalist and has had a long career in that field. You can Google him for the details. My announcement is that Fitz is now joining me as my editor. So what you read in this blog and subsequent ones will be the product of our two minds trying to act as one.
If you’re not familiar with the work of Peter Gomes, the title of his book, The Scandalous Gospel of Jesus, might whet your appetite: Where else will you hear the words “scandalous” and “Jesus” in the same breath? You’ll understand the title if you read the book, which I heartily recommend. More importantly, Gomes will challenge you to think hard about some pressing moral issues confronting us individually and societally.
Gomes had sterling credentials: Pusey Minister in the Memorial Church at Harvard, Plummer Professor of Christian Morals at the same university, participant at the inaugurations of Ronald Reagan and George H.W. Bush, named one of Time magazine’s “seven most distinguished preachers in America,” recipient of 29 honorary degrees. Clearly Gomes was a thinker and preacher worth listening to.
In The Scandalous Gospel of Jesus, published in 2007, and his other books, Gomes confronts vexing moral questions and states plainly and convincingly where he — and we — should come down on them. In Chapter 8, for example, he trains his sights on the inequities bred by capitalism run amok. Paraphrasing a former professor of his at Harvard, Gomes writes that his colleague understood “that the Christian faith, and Jesus in particular, had more than a little relevance to problems such as social justice, poverty, and the living conditions of those who suffered at the hands of an unrestrained capitalism.”
Those inclined to dismiss Gomes as a wild-eyed liberal because he questioned some aspects of capitalism should know that he was a registered Republican for most if his life and a self-described “cultural conservative,” according to The Harvard Gazette.
Like Gomes, I worry a lot about “the living conditions of those who suffered at the hands of an unrestrained capitalism,” which I translate to mean “those who suffer from income inequality.” (I’m purposely repeating Gomes’ words and bolding them. Almost everything I’ll deal with in future blogs on income inequality will involve people suffering at the hands of unrestrained capitalism.)
Now, an example to illustrate the point.
Consider Walmart, our nation’s biggest employer. It has about 1.4 million people on its payroll in the U.S. alone and another 800,000 abroad. The company employs about 1 percent of the U.S. working population. Clearly, Walmart can profoundly and positively impact the lives of its employees if it chooses to.
Walmart’s impact also is felt far beyond its own work force:
- It is the nation’s largest retailer of guns and ammunition.
- Its policies have caused entire industries to shut down their U.S. operations due to price pressure (Think textiles).
- Its sheer scale has contributed to the collapse of countless mom-and-pop retail stores in much of the country.
These things, of course, are all collateral damage resulting from Walmart’s success — and it has been hugely successful in terms of the usual benchmarks of capitalism.
Hourly workers make up the large majority of Walmart’s workers. Walmart’s own news release of January 20, 2016 put the number at 1.2 million workers. Half of those hourly employees are part-time according to a February 2015 New York Times article, (“Next Goal for Walmart Workers: More Hours”). The average full-time employee earns $13.38 per hour while the average part time employee earns $10.58 per hour. If full-time employees work 40 hours per week for 50 weeks and receive 2 weeks additional vacation pay, then the annual income for a full-time employee would be $27,830. For the part-time employee working 25 hours per week for 50 weeks, the number is $13,225. Part-time employees have no health care benefits. In both cases, those are gross pay numbers before deductions for things like social security, Medicare and any employee contributions toward the costs of medical or dental insurance for full-time employees.
I have enough respect for you, dear reader, to assume that you can look at the numbers above and conclude that the average Walmart hourly worker is either living in poverty or knocking on its door. Feeding and housing a family or even 2 or 3 is nearly impossible on these wages. Now let’s look at the compensation for the top executives and board members.
The CEO, Douglas McMillon made $22,352,143 in fiscal year 2017. His three executive Vice Presidents earned an average of $10,171,333. If one converts these earnings to hourly pay and assumes that each top executive put in 60 hours per week for 50 weeks, the hourly pay rates are as follow:
- McMillon – $7,450 per hour
- His VP’s – $3,390 per hour
Therefore, the CEO earned 556 times the hourly rate of the full-time hourly employee and the VP’s earned 253 times the hourly rate of the full-time employee. The corresponding #’s for part time employees are as follows: CEO – 704 times and VP’s 320 times.
Walmart’s 11 outside board members earned an average of $319,131 in compensation in fiscal 2017. If one assumes that they worked for 50 hours for full board meetings (5 meetings times 10 hrs per meeting) and 25 additional hours for committee meetings, then their average pay is $4,255 per hour. So, board members are compensated at 318 times the rate of a full-time employee and 402 times the rate of a part-time employee.
The individuals listed above earned $56,377,000 in fiscal 2017. Therefore those fifteen people earned as much as 2,025 full-time hourly employees.
SOME HISTORICAL PERSPECTIVE
In his book, The CEO Pay Machine, Steven Clifford, noted expert on executive compensation, includes a paragraph that has some interesting historical measuring points about ratios between top pay rates and bottom pay rates. Plato, yes, that Plato, recommended that the top pay rate not exceed the poorest rate by more than 5:1. J.P. Morgan, in the late 1890s set the ratio of 20:1. Prime Minister David Cameron in the 2000s recommended the same 20:1 ratio for the public sector in Britain. Finally, the revered management guru, Peter Drucker, recommended 25:1 in 1977 and, then, reduced his recommendation to 20:1 in 1984.
Peter Gomes, the minister from Harvard, was not a revolutionary. He was a thoughtful Christian writer, thinker, and preacher. And he thought over 10 years ago that unrestrained capitalism was causing people to suffer poor living conditions. He also thought that the gospel of Jesus Christ – that scandalous gospel – had something to say about this issue. I wonder what he would have to say to the 15 men and women who, collectively, earn $56,377,000 while they employ 1.2 million workers who live below or near the poverty line. I shall try to tackle that question in my next post – Walmart Part II.