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UNIT 7: Employee Compensation
• Unit Background/Author Perspective
• Module 38: CEO Compensation
• Module 39: Taxes and Salaries: Egalitarian and Libertarian Policies
• Module 40: Rawls' Veil of Ignorance and Fair Compensation Systems
Unit Background/Author Perspective
Americans are keenly interested in how much money they are paid relative to others.
Newspaper articles about salaries are a constant because people find them interesting.
Companies have limited resources, and they are never in a position to give every worker
every dollar he or she would like to have. Salary trade-offs are a constant struggle for many
businesses.
American CEOs) earn tidy sums. In many nations, a typical CEO earns 20 times what an
entry-level employee makes. In the United States, the multiplier is several hundred. Boards of
directors justify large pay packages by pointing to the tremendous difference in revenue between
well-led and poorly-led organizations. But many politicians, reporters, and workers remain
unconvinced. The first module examines extreme CEO compensation and whether it is justified
for all leaders, only for successful leaders, or for no leaders at all.
The remaining modules look at pay for “regular” workers. Libertarian and egalitarian
thinkers have different points of view on compensation policies, and the two philosophies are
contracted. John Rawls's “veil of ignorance” is one of the more useful tools for thinking through
these issues, and it is presented in the unit's final module.
Unit Core Ethical Issues
• Are American CEOs paid too much? How much is too much? Under what
circumstances should large compensation packages be considered?
• When allocating scarce resources, should people be treated equally, or should
they be rewarded according to the wealth that they generate?
