Is $5 million just too much? The legitimacy of executive pay in the United States in an era of rising inequality
Department of Sociology, the University of Hong Kong
The takeoff in income inequality in the United States has been driven in large part by a dramatic rise in the earnings of high-salaried workers. Although there has been much research about the general conditions under which pay is deemed fair, we do not know whether the same principles obtain for extremely high earners. Are the usual rules and principles by which people justify pay suspended when it’s extremely high? How tolerant are Americans of the super-rich? Based on interview data and a national experiment, I show that many Americans are not very accepting of extremely high pay. And, moreover, the conditions under which high pay is seen as justifiable differ from those that justify more moderate pay. While an earner’s effort and performance have long been accepted as important in justifying pay, I show that very high effort is minimally important in increasing tolerance for high salaries. A third dimension of merit, contribution to the greater good of society, enters fundamentally into people’s considerations of fair pay at the top. These findings shed new light on the recent public discontent with high incomes in the United States after the Great Recession of 2008.
Burak Ho, E. (2013, March). Is $5 million just too much? The legitimacy of executive pay in the United States in an era of rising inequality. Paper presented at the Departmental Seminar, Department of Sociology, the University of Hong Kong, Hong Kong. Abstract retrieved from http://www.sociodep.hku.hk/html/dep_recent.html