The gap between the wages of
executives and their average employees is constantly growing, and employees are
starting to believe that the executives care more about getting richer rather
than income equality. Based on the results from a survey conducted for 25,000
people, and across 25 countries, this is found to be true. On average,
executives earn up to almost 296 times the amount their average employee make, based
on the assumption that they are better awarded for their services can have more
implications than thought. The most important one is if the average worker
feels they are not being awarded enough, they are not going to be motivated to
do a good job when they work. Employees begin to feel isolated, and there is
distrust between them and their management, which could potentially lead to a
protest. One of the solutions and possible preventions is to introduce a living
wage, which is an hourly rate that is frequently updated, and it represents the
average cost of living in an area. This would be the minimum companies pay
their average employees. Results of companies that have implemented this has
shown that there will be a better employee retention rate, engagement,
satisfaction and productivity if the living wage is present.
Within an organization, there are both positive and adverse effects of large CEO-employee wage gaps. It has been found that high CEO pay leads to higher subordinate turnover, lower job satisfaction, and lower quality products. Resentment and poor worker morale are also effects that pose a threat to an organization. On the other hand, large CEO-employee wage gaps may motivate subordinates to obtain upward mobility toward high-paying CEO positions. Furthermore, it may also attract the best job applicants to the company, due to the high wage of the CEO.
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ReplyDeleteI think that the negative impacts outweigh the positive impacts when considering large CEO-employee wage gaps. I also think while introducing a living wage is a step in the right direction, it fails to account for or solve the enormous wage gap that exists between executives and average employees.
ReplyDeleteIt is not surprising that executives are keeping more money for themselves nowadays. However, they should be reinvesting those additional dollars back into the company by increasing the wages of their employees. I agree that a living wage would be a successful way to keep employees and increase their satisfaction and productivity. It appears that this is happening all over the world and not just in the United States where it is obvious. At some point the wage gap between employees and executives will reach its limit and employees will no longer feel the need to work. However, increasing minimum wage can also raise structural unemployment because it makes trying to find jobs harder.
ReplyDeleteThe wage gap between the average employee would be lowered if an intuition of the living wage is implemented, however; this may lead to a higher rate of (structural) unemployment. On the contrary after decreasing the wage gap it would increase employee productivity in general but its hard to predict if it will even out in terms of raising the unemployment rate.
ReplyDeleteIf CEOs cared more about the company and less about themselves they wouldn't stand for such inequality in wages. Higher wages for these workers would most likely reduce turnover and could motivate workers. Also, people with extremely large salaries save a lot of their money, the workers who make much less would use the money for consumption, stimulating the economy.
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