Just a quick note about the 1%......
Former Labor Secretary Robert Reich works at the University of California-Berkeley and has a teaching schedule of one class. The class is Public Policy 260 and meets on Monday for two hours. This does not include his preparation time or his office hours. Professor Reich is paid, for this grueling work load, $242,613 a year (2013). This works out to $2,500 an hour for those of you worried that Professor Reich might not be getting minimum or a living wage. Now this also works out to about what an adjunct college professor gets paid for teaching a 15 week, one semester, class ($2,700 according to the AAUP report).
You now ask "Why do you bring this up Jerry when you never complain about the exorbitant pay those greedy CEOs get and how the income inequality gap between the CEOs and the ordinary worker has gotten to almost 300-to-1 (It was only 20-to-1 fifty years ago)."
My answer is that I don't really care how much Professor Reich is paid by UCB except that Professor Reich, on the days he is not teaching (4 days a week), is on the lecture circuit where he get a speaking fee of $40,000 for a one-hour talk (this includes Q&A, first class travel for two people from California, hotel accommodations for up to two nights, ground transportation, meals and incidentals).
The reason I bring this up is that Professor Reich, for the most part, talks about how CEOs get paid too much and that the workers that produce don't get paid enough.
Again let me say that it is great that Professor Reich can command what the market will bear for teaching and public speaking, and that is what economics is all about. Selling what you produce by the sweat of your brow.
Let's consider the numbers. The average CEO earned about $176,400 last year (government numbers and not something I pulled out of thin air), got an increase in salary less than the average worker, and earned only about 5 times more than the average worker (not 300 times more).
If you crunch the numbers you will find that Professor Reich makes about 36% more than the average CEO for teaching his two hours a week (I taught some at the University of Oklahoma and for a two hour class I would spend about 5 hours in prep time, follow up time, and office hours for each hour I taught) so I think I can safely say that Professor Reich does not put in the 50 to 60 hours that a CEO puts in each week nor does he live under the pressure of worrying that his business will fail if he does not make the correct decisions (guesses wrong in other words). Also, if Professor Reich gives just six one hours speeches a year (and he gives more than that I hear) then his income is near $500,000 thus putting him in with the evil 1% that we hear so much about.
Again I applaud the good professor for his success, I just consider him a bit hypocritical.
Jerry
BTW - And yes, I understand that UCB keeps Professor Reich on because of his name and the prestige that he brings to the school and not because his teaching of one class is worth a quarter of a million dollars. Still I have to wonder just what it is that the Professor does that is worth that amount of money?
Make sure and download a copy of Lucky and Good: Risk, Decisions and Bets for
Investors, Traders and Entrepreneurs.
