Wednesday, December 23, 2009

In recent months as I have followed the news, politics, economics, and even observed my own peers, I have noticed class envy as I have never seen it before. Pursuit of wealth is one of the building blocks of a capitalistic society, but there is a growing sentiment that a certain amount of wealth can be too much.

How much is too much? One blogger I read wanted to tax 100% of earnings above $75,000. Politicians throw around ideas of higher taxes for the "wealthiest" which they quantify as people making over $200 - $250 thousand a year. Other news talks about capping CEO salaries and benefits at $500,000 a year. Is there such a thing as making too much money?

Well, first of all, before someone on the outside can sit and declare a salary as "too high" they need to determine the circumstances. While I would LOVE to be paid $75,000 a year, if I lived in New York City or California, I would be pretty upset about that wage and might even find myself barely scraping by, due to the high cost of living. In addition, what if you are a father of several children with a stay at home wife? Would $75,000 cut it?

Many people make it on less, and I applaud them. I am a huge proponent of living within your means, whatever those are. But I am not against bettering your situation either. Sure, making $250 grand a year would allow pretty much anyone anywhere to live comfortably. But does that justify capping salaries and taxing high earners?

I'd like to look at two points. First of all, why are these people paid so much? And secondly, why does it bother the rest of us that they make so much? The answer to the second question will help explain why we justify out attitudes against these people.

I have seen the business world. I have seen the "fast track." And I got off of it. Having seen the fast track, I can tell you exactly why people who make so much are paid so well. It is because they have worked hard for it. Imagine for a minute the jobs that would pay six figures. What do you think about? Doctors, lawyers, CEO's, accountants and wall street financiers, small (but successful) small business owners.

What do these people have in common? They have all worked hard to be where they are. Doctors go through years and years of medical school and come out the other side with high debts. In addition, many work long hours and are often on call. The same is true for lawyers and businessmen. Small business owners often work seven days a week and work years before they start to see a payoff, and many fail.

I have seen how you can jump on the "fast track" to the top. I was in public accounting for a few years. If you are willing to work 60-100 hours a week for five or six years, you, too, can make six figures. If you are willing to work them for 15, you can be a partner and make LOTS of six figures. You can be a millionaire by the time you are 40, if you are smart.

But then what? Well, you continue to make your huge salary as a partner in a large firm, or you become an officer at a corporation. Either way, you work long hours and weekends and holidays. You rarely see your family. You have a huge house you rarely enjoy. You can hire a nanny and a cook and a maid because you have no time to do household chores yourself.

Further, in these careers, putting hours in at work is not the least of your sacrifices. You are a face - an important money making machine for your company. You are expected to stay fit, to look good, to dress nice, to drive a great car, and to attend banquets and parties. You donate your money to charity and you donate your time (or find people who work for you who will donate theirs).

And you go through a wife or two or three, as each one tires of waiting up at night. Unable to commit time to work on a relationship which was not built solidly to begin with, you are one of the lucky few if you never experience a divorce. And these days, if you marry before you are in your forties, you are also one of the lucky few.

And that is why these people make so much money. If the anticipated reward was not so high, they would not sacrifice so much. Companies need someone to run them, and these people need to be experienced and well trained. How much more experience can they get other than putting in 80 hour weeks for 20 years?

And now to why people are so envious. I admit, I sometimes wish I had the "easy" life. I, too, look at large houses and dream about what it would be like to come home to them. It would be nice to do something without budgeting for it. It would be great to travel on a private jet to exotic locations and attend balls. But I walked away from that life, because ultimately I can be happier with simple things.

So why are we so envious? Well I think in a way we are hard on ourselves. We all made a decision to give up that life in one way or another. We decided the hours were too long. We decided we weren't interested in being a doctor. We decided not to go to college. We didn't want to take a risk of opening our own business.

Being envious of high-earners is similar to being envious to someone who found a great sweater 80% off. We both had the potential to get the bargain, but only one of us went out hunting for it.

True, money is necessary for survival, but there are other things that are good and necessary. We all need water to drink and air to breathe, but if you throw me into a pool of fresh water, I will probably focus on getting air and not stop to take a drink. The same is true of all of us. As we go through life, we will have to make decisions based on our circumstances that often result in giving up someting else.

Many choose not to go to college - they save time and money by jumping into the workforce. There are jobs that do not require a college degree that pay enough to make a decent living, just as there are college degrees that will not get you a decent job anywhere.

Is that why we are envious? Because we know that we are ultimately the ones to blame for our economic state?

In addition, class envy transcends classes. Those who make $75,000 envy those who make six figures, and those who make six figures envy those who make seven. I think the reason we envy them is because it is easier. We all know how hard it is to make that kind of money. Someone who says that "no one deserves" to make more than $75,000 would jump at the chance to have an $80,000 job. However, if I said they had to work 75 hours a week for it, they might not be so quick to jump.

One final point - although you sometimes hear it with sports figures, I almost never hear people complain about the salaries that celebrities make. Being a movie or rock star is a hard life, too - it also requires long hours, lots of hours, and the paparazzi hounding you day in and day out. And yet, I almost never hear someone say, "They paid him $22 million to be in that movie?! No one should ever make that much!"

Why is it that the hard working Americans who make millions are hated while the Americans who bring home a load of dough from making one movie are idolized? I often see celebrities as getting paid oodles to do something they love, but a lawyer working late nights all alone is probably working hard to desperately hold on to his dream. What is the difference?

Many, I think, believe that if a lawyer's pay were cut in half, they might see a raise somehow. They see a company go through layoffs while the executives still make six figures or more. However, put things in perspective. Depending on the number of layoffs, a company could probably pay their CEO nothing and still not make up for the money they are trying to save by laying off their workforce. In addition, as mentioned before, the CEO makes such a high salary because he has to make the hard choices. Does anyone think the President laughs with glee when he sends troops out to a war zone? So do they really think CEO's enjoy announcing layoffs? No, they look at all the options and try to do what is best for the company.

Like it or not, money motivates people. If you had invested a large amount of money in a company, and the board came to you and said, "We have to hire a new CEO. We can hire a young man who just graduated from community college with a liberal arts degree and pay him $50,000 a year or we can hire the man who took Big Company X from the bring of bankruptcy and turned it into a profitable company in just five years, but he wants us to pay him $5 million a year." What would you say? (Believe me, if you split that $5 million among all the shareholders, you'd probably get back less than a dime). That salary is an investment - and it's an investment being made for you. This is what happens with companies all the time.

Class envy is completely out of place in America today. While we all have the potential to realize our dreams, many choose not to because they look for an easier route. I do not envy high earners, but I do respect them. And I know that this country could not run without these people - and that these people would not be motivated to go out and run the country if there were not a high motivation attached.

I'm not saying to go out and hug your doctor or send a thank you note to a local CEO. But we should all be more aware of what America would be like without these people. Because a country where there are no high earners - well, that's Communist Russia, and is that what we really want?

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