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Compensation Doesn’t Compensate: I work for a wonderful nonprofit organization that does fantastic work. My job suits me pretty nicely, and although it pays only enough to live modestly, I wouldn’t want to leave it. My problem is that the director of the organization makes half a million dollars a year and spends a lot of his time appearing at black-tie galas, while at the bottom of the organization, the people doing the most unpleasant, tedious, and even in some cases dangerous or physically demanding work make just above minimum wage, with few perks. Isn’t this unethical?
—Pent Up about His Penthouse
Dear Pent Up,
It is inequitable but not necessarily unethical—within the parameters of our current social system. It’s unfortunate that the gap between top and bottom salaries continues to grow ever wider, despite attempts at leveling it. A few years ago a CEO pledged to limit his salary to no more than a specific multiple of the salary of his lowest-paid employee, but quickly abandoned the plan as unworkable. It just wasn’t good business practice in a free-market, capitalist economy where competitors could easily fill the bottom jobs for so little, and where top talent might not be attracted to a firm that imposed a ceiling on pay (particularly if other companies didn’t). Although $500K may seem like a lot, take a look at what top executives of for-profit companies pull in annually. Your executive director may indeed be passing up millions to be at the helm of your organization instead of plying his skills elsewhere.
Believe it or not, there are some trade-offs at both the top and bottom. It’s very likely that your ED’s position is very insecure and risky. He probably has to hit moving short- and long-term targets for fundraising, membership, publicity and public opinion, efficiency, budgeting, etc. or find himself another job. He has to attend all those evening and weekend black-tie affairs to schmooze with people who might write checks to the organization, even if he’d rather spend the time doing something else. He not only has to monitor and manage all the people under him in the organization, but also many over him, such as answering to the board of directors and catering to donors. If anything goes wrong at just one of the many levels under his purview—for instance, if a single inadequately trained worker injures someone—he could find himself out of a job or out of a career, and perhaps even faced with a lawsuit or jail. Meanwhile, he must have a skillset that’s not only outstanding in general but also a good fit for your organization in particular.
Meanwhile, the people at the bottom of the organization may only have to answer to one or a few supervisors, and as long as they keep fulfilling the requirements of their jobs, they may be able to hang on to them until they choose to leave or retire. Or there may be a path for them to move up to better-paying, more fulfilling positions within the organization. On the other hand, there may be far more qualified and eager applicants than openings, however paltry the pay. No organization, but particularly no nonprofit, is inclined to pay anyone more than they can get away with.
It’s a complex undertaking to alter the trajectory of “the rich get richer and the poor get poorer.” That dynamic is in play not only in nonprofits and to a much greater degree in for-profits, it’s also one of the factors causing the US middle class to evaporate into two unbalanced extremes: a small minority of the fabulously wealthy, and a growing majority approaching or slipping beneath the poverty line. It’s not enough for billionaires to call for higher taxes on the wealthy or donate billions to the Bill and Melinda Gates Foundation, which is doing its best to bring an unprecedented bolus of funding to bear on some of the world’s most intractable and underfunded problems. But those efforts are a start. And so are people like you, who notice the emperor has fabulous clothes while his subjects are in rags. So, please, keep pointing out these inequities and doing your best—with your voice and your vote—to bring about change that will give more people more, particularly those with the least.