- - Monday, May 15, 2017


Some myths never die. Like Bigfoot and the Loch Ness Monster, the executive and gender pay gaps continue to deceive.

Last week the AFL-CIO made headlines with the release of its annual Executive Paywatch report. The union claims the pay gap between executives and the average worker is 347 to 1.

Like many dramatic claims, the press parroted the gap uncritically. But it falls apart under further examination. The report only uses the compensation from the CEOs in the S&P 500. We all know Bill Gates makes a lot of money. We don’t need another report — no matter how slickly packaged — to tell us that.

Cherry-picking a razor-thin slice of nontypical industry execs hardly tells us anything about societal pay disparity. Fortunately, the U.S. Census Bureau reports CEO pay as well. It reveals that the average salary of the country’s 223,000 chief executives is $194,000. Not chump change, but hardly eye-popping. When using this more honest measure of comparing all employees to all CEOs, the pay gap falls to 5 to 1. Less Grand Canyon, and more crack in the sidewalk.

When you consider that top earners are paying a substantially greater portion of their gross income in taxes, this gap shrinks even further.

Following the union report’s solution to have more redistribution from the superrich CEOs to their employees would have little impact. CEOs generally employ so many people that when distributed, their earnings would be spread as thin as a diet wafer.

Consider Wal-Mart, chief villain of the activist left. Its CEO, Douglas McMillon, was paid more than $21 million in salary, bonuses and stock options in fiscal year 2017. He employs 1.4 million people in the United States. Redistributing all of his earnings to his employees would increase wages by roughly 30 cents a week.

But despite the bad math and data, the unions are guilty of much worse. Can you say hypocrisy? More than 150 union bosses earn higher salaries than the average CEO. Many are in the top 1 percent. Richard Trumka, head of the AFL-CIO, made $272,000 last year in gross salary. John Niccolai of the United Food and Commercial Workers Local 464, Timothy Canoll of the Air Line Pilots Association, and Terrence O’Sullivan of the Laborers’ International Union all made over a half-million dollars in salary last year. Thirty-four more took home more than $300,000 in salary last year. (Including generous benefits packages, total compensation was even higher.) Where’s the talk of the union pay gap and their members who are paying the bill?

The credibility gap with the pay gap is even larger when it comes to the so-called gender pay gap. This gap is being promoted by Facebook COO Sheryl Sandberg, who calls for new laws to address the issue. Ms. Sandberg ended up with egg on her face after a longtime female Facebook engineer leaked evidence suggesting her company discriminates against female engineers. Oops.

Like its executive pay gap cousin, the gender pay gap falls apart under further examination. When you factor in four variables — time in the workforce, qualifications, job title and profession — the pay gap essentially vanishes. According to June O’Neill, former Director of the Congressional Budget Office and now a City University economist, the pay gap arises from women’s choices regarding “the amount of time and energy devoted to her career, as reflected in years of work, experience, utilization of part-time work, and other workplace and job characteristics.” To wit: Unmarried college-educated women earn more than unmarried college-educated men.

In other words, women as a whole make less than men as a whole because they choose to take time out of the workforce; they’re less likely to have the relevant advanced degrees and experience; they’re less likely to hold executive positions; and they tend to choose professions that are less well-paying. Do we need federal rules to require more men to work at day cares and more women to go to MIT? Not any more bizarre a solution than the make-believe problems being sold by the professional grievance flacks.

• Richard Berman is the president of Berman and Company, a public affairs firm in Washington, D.C.

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