On my desk at work sits a stand-up page-per-day "Dilbert" calendar with daily cartoons by the creator of Dilbert, Scott Adams. You remove each page of the calendar every day for a new comic. I've had one of these calendars each year for about three years now. This year, apparently either the publisher or Adams himself find this novelty to be a bit ecologically wasteful because you just throw away the comic day after day. Apparently to assuage their "green guilt" they've added little bits to the back of each day's page, things like a word scramble, crossword puzzle, fun fact, or helpful tip. Today I got a "fun fact". It reads:

"In 1960, the ratio of the average Fortune 500 CEO's pay to the U.S. president's salary was 2-to-1. Today, this ratio is around 30-to-1."

Well now that just speaks for itself does it not? CEO's these days are just grossly overpaid. And the assumption is that we should be disgusted and outraged by this "Fun Fact" are we not? Well let's have some fun of our own shall we?

According to Wikipedia the Office of the President has received five pay raises since the office was established after the adoption of the United States Constitution in 1789. In that year the President was compensated $25,000 per year. Most inflation calculators online only go back to 1913, however one goes back to 1800 (http://www.westegg.com/inflation/) so let's look at the raises and the equivalent amounts in 2009 dollars buying power by adjusting for inflation:

Raise 1: 03-MAR-1873: $50,000/yr = $884,884.60
Raise 2: 04-MAR-1909: $75,000/yr = $1,768,511.37
Raise 3: 19-JAN-1949: $100,000/yr = $890,333.58
Raise 4: 20-JAN-1969: $200,000/yr = $1,157,257.77
Raise 5: 20-JAN-2001: $400,000/yr = <irrelevant, POTUS gets this regardless of inflation>

Now isn't that interesting, the Presidents have certainly all had different degrees of relative compensation over the years haven't they? President Taft in 1909 had the 2009 buying power of almost two million dollars on his salary, whereas President Obama in 2009 only has the buying power of less than a quarter of President Taft's.

So what does our fun fact really mean. So in 1960, President Eisenhower was compensated $100,000 that year. In 1960 that amount of money would be the equivalent of $716,345.65 dollars in 2009. And if Fortune 500 CEO's were on average making twice that then they earned on average $200,000 per year, or about $1.4 million dollars in 2009.

Now let us look at the other side, in 2009 President Obama was compensated only $400,000, which in 1960 would only be equvalent to $54,739.77. Now, apparently the average Fortune 500 CEO makes 30 times what the president makes in 2009 so that would be $12,000,000 per year. Really a huge sum of money. Let's see how much a CEO in 1960 would need to earn to have the buying power of a CEO in 2009. Twelve million dollars in 2009 is the equvalent of $1,675,168.97 in 1960, or about 1.7 million dollars - about 8 times as much as an equivalent CEO of that era.

So Class, does anyone see the fallacy here? Bueller? Bueller? No? How about this it's not a linear ratio, in fact it's very much non-linear. Still don't get it? If President Obama were to travel back in time to 1960 and earn a salary with the same buying power as $400,000 in 2009 he would need to be paid $54,739.77 in 1960 dollars. This means he is grossly underpaid in comparison to his 1960 counterpart. At the same time if a Fortune 500 CEO were to travel back in time to 1960 and earn a salary with the same buying power as $12,000,000 in 2009, they would need to be paid $1,675,168.97 in 1960 dollars. This means they would be paid about 8 times as much as their 1960 counterpart. That is a pretty big difference. Which means a CEO today makes about 16 times as much as the relative value of the president's salary in 1960.

So what this means is that yes the average CEO in 1960 only made twice as much as the president, but they were both on much more equal footing. The President in 2009 is grossly underpaid for his position with respect to the economics of 1960, which without the lens of inflation makes the difference in salary today look almost twice as bad as some would like you to believe. So while the ratios are correct, the relative value of the salaries is really what's important not the raw dollar amount ratio between the two eras, if you're to make a valid comparison.

This comparison is nonsense anyway, and proceeds from a false premise that a CEO's salary should be arbitrarily pegged to that of the President for some reason. Why is that even important. To me what is important is that, sure the President of the United States should get paid but that office is in existence to do the People's business. A citizen should be interested in serving as President not for financial gain but to serve the country. Indeed George Washington refused the Presidential salary. Therefore the Presidential salary has never been a weather gauge for what someone should earn. However I reject that there is some kind theoretical upper limit to what someone should earn. CEO's might make gross amounts of money but who is it to say it is too much? I guarantee you that the same people that gripe and moan about how much CEO's make would gladly take that same paycheck if they were in the same position as those hated CEO's. In other words Envy does not cancel out Greed...although both make you green (at least in the US!).

How about this; don't worry about what the President makes, don't worry about what CEO's make. Why invent caps on profits when that only limits us all? Who is the arbiter of the cap? Who decides how much is too much. To some any is too much, to others there is never enough. Just worry about you. Worry about how to live your life to the best of your ability. Revel in your freedom to achieve whatever you can set your mind to in our great country. Measure yourself by yourself and not your neighbor and you and your neighbor will be more the happy for it.