Q: Is Obama right to say some CEOs make more in 10 minutes than an average worker does in a year?
A: By our calculations only Steve Jobs did so in 2006.
I’ve heard Obama on the radio in Wisconsin (and seen a video of this, too), saying that "you’ve got CEOs making more in 10 minutes than the average workers make in a year." Is that true?
Barack Obama has said in ads and in speeches that "we’ve got CEOs who are making more in 10 minutes than ordinary workers are making in a year."
It’s quite a stark claim and one that several readers have asked us about. To start, we need to determine what an "ordinary worker" might be. The Bureau of Labor Statistics tracks the usual weekly earnings of full-time wage and salary workers, who make up nearly three-quarters of all jobholders in the U.S. private and public sectors. (Notably excluded are part-time workers and the self-employed.) We take this to be as good a measure of "ordinary worker" as we could find.
For the last three months of 2007, BLS found the median weekly earnings of those 108.3 million full-time workers to be $700. ("Median" means that half would have made more, and half would have made less.) That gives us yearly earnings of $36,400 for our "ordinary worker."
Now let’s figure out how much money a CEO would earn in a year if the CEO was making that much money in 10 minutes:
$36,400 ( yearly salary for "ordinary worker")
x 6 ( number of 10 minute increments in an hour)
x 40 ( number of hours in a work week)
x 52 ( number of weeks in a year)
The figure for Jobs may be inflated. The Apple CEO (and founder) famously takes only $1 per year in actual salary and no bonus payments. He does get the use of an airplane, but the Forbes "compensation" figure for 2006 is mainly paper profits on stock options which matured that year.
A conservative commentator at NewsBusters did an analysis with an even lower standard for "ordinary workers": those making minimum wage. With this lower threshold, the commentator found that three CEOs in 2006 and one in 2005 would have, as Obama said, earned more in 10 minutes than an ordinary worker made in a year. But NewsBusters also points out that if you look at Forbes’ five-year total compensation levels, none of the CEOs averaged enough over that time period to qualify for Obama’s grand statement.
And our fact-checking colleagues over at Politifact used the Census’ median household income and the Forbes numbers to check out the claim, finding, as we did, that only Steve Jobs met Obama’s standard. Politifact concluded, "[W]hile it’s fair to say some CEOs ‘are making more in 10 minutes than ordinary workers are making in an entire year,’ Obama would be on safer ground if he qualified his statement."
Blumer, Tom. "Old Media Lets Obama’s Shaky CEO Earnings Claim Go Unchallenged." NewsBusters, 25 Feb. 2008.
"Special Report: CEO Compensation." Forbes Magazine, 3 May 2007.
"Usual Weekly Earnings Summary." Bureau of Labor Statistics, 17 Jan. 2008.
"Usual Weekly Earnings Explanatory Note." Bureau of Labor Statistics, 17 Jan. 2008.