I think capitalism is about not putting ceilings on earnings, and I believe in a market demand versus supply-based labor pool with a higher minimum wage. I don't have a problem with CEOs making billions of dollars. I don't want the government to regulate ratios. What I think the government should do is the following: I don't have a problem with Elon Musk making $1 trillion. I think he should pay a 70% marginal tax rate on that trillion. So I have no problem with people making a ton of money. What I want is a more progressive tax policy.
In today's office hours, we talk about CEO pay and inequality, how to motivate young men to engage, and managing employees with competing visions. Question number one: our first question comes from Reddit user and Stigmat and asks, "In 2025, CEO pay spiked 20 times faster than worker pay. Do you still think there is nothing we can do or should do to regulate this emerging class of oligarchs?" I'm not sure I ever said that, boss. Okay, so let's look at the data. According to an Oxfam study, S&P 500 CEO pay rose 26% between 2024 and 2025, while the average hourly earnings for private sector workers rose just 1.3% in real terms, meaning CEO pay grew 21 times faster than workers' wages in the US alone. The report covered 1,500 companies across 33 countries and found that the average CEO pocketed $8.5 million last year, up from $5.5 million in 2019.
So some more data: CEOs of major US companies were paid 21 times as much as the typical worker in 1965. That ratio grew to 31 to 1 by 1978, 60 to 1 by 1989, and surged to 380 to 1 in 2000 at the height of the stock market bubble. In 2024, it was 281 to 1. CEOs are paid excessively even relative to other high earners. Between 1965 and 1978, the average CEO at a large firm was paid almost three times as much as the average top 1% earner. By 2023, the ratio had risen to 7.5x. I'll just give you some examples. The Starbucks CEO, Brian Niccol, received $98 million in 2024. That's 6,600 times more than the median Starbucks worker. That worker would have had to have started working in 4600 BC just to earn what the CEO made in one year. Tesla's proposed a pay package for Elon Musk worth up to $1 trillion over 10 years. I mean, it just gets worse and worse.
So, what to do about it? I think capitalism is about not putting ceilings on earnings. And I believe in a market demand versus supply-based labor pool with a higher minimum wage. I don't have a problem with CEOs making billions of dollars. I don't want the government to regulate ratios. What I think the government should do is the following. I don't have a problem with Elon Musk making $1 trillion. I think he should pay a 70% marginal tax rate on that trillion dollars. I think corporations should pay an alternative minimum tax of 40%. They're paying about 22%. I think the average is probably closer to 17 or 15% when they stitch in all their loopholes. So, I have no problem with people making a ton of money. What I want is a more progressive tax policy.
And what happens now is that because the majority of CEO compensation comes in the form of equity, equity is taxed at a lower rate than salary. That makes no [__] sense. Go back to what Reagan used to say — it was just income. The battle isn't rich versus poor so much as it's owners versus earners and everyone versus the super rich. If you're making a million dollars in salary as the head of the M&A practice for a law firm and you're living in New Jersey, you're probably paying a 50% tax rate. But if you get to a point where you're the general counsel of a firm with public equity and you get a million dollars in stock, you pay a lot less in tax rate. That makes no [__] sense. So when did we decide money is more noble than sweat?
So I think we need to equalize and lower the rates for earners and increase the rates or the alternative minimum tax or the rates that owners pay, because essentially their wealth compounds annually with no friction. If you're a stock and every year you increase by $100,000, that's your salary. We're going to take 20 or 30% of it every year. So it just never grows that big. But if you own $100,000 worth of stock, it can grow tax-deferred and keep compounding without ever getting clipped unless you sell it. I'm all for enormous pay packages. I think anything to try and get in the way of that is just going to create all sorts of weird, perverted behavior.
What do we need to do? We need to ensure that at minimum employees are making 25 bucks an hour in certain urban counties in America, which would put, you know, chicken processing plants out of business. Fine. Then you could adjust it down for certain territories where you can manage a middle-class household on 20 bucks an hour. Okay, fine. But for most of us, most places in the nation, 25 bucks an hour minimum wage. It would be 23 if it had just kept up with productivity and inflation since the 70s. In addition, have at it. Pay the CEO of Starbucks 87 million — he should be taxed 60, 70% on that money. Why? What you want is a tax system that is the least taxing. And when you tax the CEO of Starbucks, who I'm sure is a lovely man, 70%, this is what happens: nothing.
I mean, you put more money into the government so we can reduce our deficit and invest in schools and the navy and parks and what have you, but nothing happens to him or his family in terms of happiness. Daniel Kahneman, one of my intellectual role models, did a study, talked a lot about money above a certain amount. Money can buy happiness up until a certain point, and then once you can afford healthcare, nice vacations, housing, an economic shock — which is a lot of money — it levels out. Now, another myth: billionaires are unhappy. No, billionaires are no less happy than millionaires, but they're no happier.
So if you're going to get no incremental happiness from — if Elon Musk is going to get no incremental happiness from that trillion dollars, but hundreds of thousands of households would get a lot of incremental happiness from universal child care, then my attitude is let's go back to the 50s, 60s, and 70s where we had a much more progressive tax structure. I don't believe you can get in the way of market dynamics around CEOs making a [__] ton of money. A good CEO adds a lot of value. Let me add some nuance. I've been on the compensation committee of a bunch of companies, and this is how it got out of [__] control.
Every year, Towers Perrin comes in to the board and we pay them a quarter of a million dollars to do a compensation study, and they say, "Okay, Janet Robinson" — I was on the board of the New York Times — "is the CEO of a $5 billion media company. This is what the average person at the 50th percentile makes of CEOs of $5 billion media companies. They make $3 million." And we say, "But wait, Janet's nice. We don't want to just pay her at 50%. We want to pay her at 60 or 70, so we pay Janet at 3.8." But here's the problem. When you pay people 20% above the median, that doesn't sound like a lot. But then every other company, the median starts to explode, and every company has to keep up with the Joneses.
Meanwhile, the people who don't play golf or have relationships with the board just get slightly above inflation. But the CEO, who's a good guy or a good gal who you get to know, who by the way puts you on the board and you're making a quarter of a million dollars a year on the board of the New York Times — you want to pay her above average. So if you pay 20% above average, which doesn't sound like a lot, that's just at the 60th percentile. That means every three and a half years you're doubling CEO compensation because everybody else has to adjust as well. So we have seen a skyrocketing and an explosion in compensation. This is about tax policy more than the government trying to interfere with compensation.
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>> Question number two comes from Andrea.
