The Heritage Foundation’s Report on Performance-Based Pay and How It’s Driving Inequality In America

From my favorite humanitarian group, The Heritage Foundation, I have a breakdown of another one of their reports titled “Performance-Based Pay Driving Increase in Inequality” by James Sherk.

This article, as does their report on poverty, seeks to remove the rich from reproach for rewarding themselves, through the companies they own or govern, while leaving little for those that actually perform the work every day. Rather than speak to the huge gap between the rich, middle-class, and poor this report seeks to put middle-class worker against middle-class worker and poor against poor by stating that those that work harder will reap more rewards from their working life. It basically states “You’re poor because you don’t work as hard as your fellow countrymen.”

This article contains the following gems:

“The much maligned “rich” have earned so much not because they were born into the right family, but because they are working harder” (Page 2 fourth paragraph) – Ok, so by this logic George W. Bush works harder than others. His financial success (before his presidency) was completely by his own doing and had nothing to do with who his father was. The same goes for his father who definitely didn’t benefit by nepotism as well.

“Many commentators believe that the increase in income inequality over the last 30 years is a serious problem. They argue that America has become an increasingly class-based society where a rich minority lives in opulence while most other Americans struggle with little hope of becoming wealthy themselves. New research into income inequality debunks that notion.” (Page 1 – first paragraph) – The United States has been a class-based society since the beginning; this is nothing new to American. Large corporations have controlled our cities and towns and were often the benefactors of cities and towns throughout our history. These companies favored their executives just like companies of our time.

“Performance pay increases inequality directly because it means the workers who produce more, earn more.” (Page 2 second paragraph) – I think the people at The Heritage Foundation are slightly out of touch with the people. It’s the rich that create this great divide not the fact that one employee produces 10 more widgets an hour than his coworker or the fact that one cars salesperson sells more cars than their colleague

“Higher wages for these workers, but not others, increases inequality.” (Page 2 second paragraph) – I’m sorry James Sherk, of The Heritage Foundation, but the multi-million dollar (sometimes hundreds of millions) bonuses to executives are what fuel inequality.

“Companies have embraced performance pay because it encourages employees to work harder.” (Page 2 first paragraph) – James may want to read up more on encouraging employees because many books state that employees are less concerned about salary than they are about working at a company they like that provides an encouraging environment. Sure, nobody’s going to turn down ten or twenty thousand more per year in the name of amenity, but it does go a long way in ensuring employee retention. When the top execs at your company are receiving insane amounts of money, hundreds of time more than the amount any regular employee can receive, your loyalty starts to drop really quickly.

In the article James uses Google as an example of how you can become wealthy by working hard. “Consider the impact of Google, Inc. The company’s founders, Larry Page and Sergey Brin, are now worth more than $16 billion each. Their financial success has made America a demonstrably less equal country, and most Americans are better off for it.” (Page 1 fourth paragraph) – One could argue whether or not Google has made better the lives of American’s, but what’s for sure is that Google Inc. has not made America an unequal country. That was done long before modems were ever invented. In addition, James may want to read about Google’s culture at work. They are an inspiring team that reward their workers and treat them well. Most other companies should follow their example. Life at Google, Inc.

Again, The Heritage Foundation has used their member’s donations to push a misguided report seeking to blame Americans for their failure of not becoming as rich as those that hold high rank at this organization and those that can afford to become founder’s ($100K), trustees ($500K), and chairman’s ($1M) of their organization.

Thanks for making me feel bad James. Now I don’t want to work at all.


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