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Fun on Friday: It’s All Relative

Summary:
A guy made a comment about my article highlighting Chipotle’s recent decision to raise menu prices in order to cover some of the cost of higher wages, pointing out that the CEO made some million last year, noting “I doubt he needs it.”The first thought that popped into my head was, ‘how exactly do you know what Brian Niccol needs?’ My second thought was, ‘what does that have to do with anything?’ And my third thought was ‘dude, you don’t have a clue how business works.’Let’s start with my third thought.Sure, million is a lot of money. People see a number like that and think, jeeze, if he’d just take a pay cut, the company could pay its employees a lot more. But that’s not how any of this works.As of December 2019, Chipotle had about 83,000 employees. Let’s say the average

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A guy made a comment about my article highlighting Chipotle’s recent decision to raise menu prices in order to cover some of the cost of higher wages, pointing out that the CEO made some $38 million last year, noting “I doubt he needs it.”

The first thought that popped into my head was, ‘how exactly do you know what Brian Niccol needs?’ My second thought was, ‘what does that have to do with anything?’ And my third thought was ‘dude, you don’t have a clue how business works.’

Let’s start with my third thought.

Sure, $38 million is a lot of money. People see a number like that and think, jeeze, if he’d just take a pay cut, the company could pay its employees a lot more. But that’s not how any of this works.

As of December 2019, Chipotle had about 83,000 employees. Let’s say the average employee works 25 hours. (I would expect that to be quite low given many employees work full-time.) The average pay was raised to $15 an hour earlier this year. So, that would make the weekly payroll around $31.1 million.  By the way, this doesn’t include the Social Security and Medicare taxes the company has to pay on each employee. So, if you stopped paying Niccol completely, his salary would cover just a little over 1 week of payroll.

Now, let’s bump average pay up to $16 an hour, a $1 per hour increase. That would add just under $2.1 million a week to the payroll. That comes to an additional $107.9 million per year. So, cutting Niccol’s pay to zero would only cover about one-third of a $1 per hour average pay increase.

Clearly, the CEO’s pay isn’t the problem here.

But of course, Niccol doesn’t “need” $38 million. And really, that’s my commenter’s real problem. He’s jealous that some guy he doesn’t know makes more money than he does. Well, that my friend is the difference between running a major company and flipping fajita meat on a grill.

And you know, you probably should be careful with that kind of envy. Because I’m pretty certain you don’t “need” that X-box.

Everything is relative. Look at the world from the perspective of a third-world farmer living in a grass hut with no running water. I’m pretty sure he could make a pretty strong argument that you don’t “need” a cell phone, or $100 tennis shoes, or a TV, or a microwave, or air conditioning, or… I could go on. But you get the point.

I get it. Niccol has a lot more than you. Heck, he has a lot more than me. But his $38 million hasn’t impacted my life one iota. This notion that he should have some of his taken away so you can have more is a little dangerous. Because our grass hut farmer can make the same case about you. So, until you’re willing to get rid of your X-box and send a big chunk of your earnings to that farmer, your sanctimonious preaching about the CEO having “too much” falls pretty flat.

Really, it’s just jealousy. And quite frankly, that’s not a good look for anybody.

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