Wealth Footprint or The True Cost of Your Wealth

Although the phrase “Carbon Footprint” is not as en vogue as it once was it is still part of the vernacular of our age.  Reading this article this morning about how 82% of wealth created in 2017 was pocketed by 1% of the population led me to think about wealth entitlement in a new way as a “wealth footprint.”  For those unfamiliar with wealth entitlement, it is similar to the type of criticism people on welfare receive for taking advantage of available programs.  Entitlement the way we define it today means that someone feels they have an inherent right to a certain privilege or treatment.  I think of wealth entitlement as something most get born into, much like poverty, and because they have known no other life, the very wealthy feel entitled to their wealth.

I have covered before that there is an illusion that hard work creates wealth.  Certainly the opposite could be said that great wealth is often created passively through investment or ownership or by getting others to work for you at wages far below what you yourself would expect.  This is not to say that many of the wealthiest class have never worked hard, but that a state of hard work is not necessary to increase wealth.

But there is a class of people who feel entitled to their wealth and why shouldn’t they?Wealth wields a greater amount of power than the poor, and so our laws continue to create an environment for the extremely wealthy to become wealthier and increasingly for the less wealthy to be parted with their wealth.

Now a carbon footprint helps us trace the cost of being a consumer, how what we buy creates pollution, how we treat our trash, use our water and examines many aspects of our life to create a personal environmental impact statement.  This way of thinking has caused many people to change their habits and seek to reduce their carbon footprint.

We can treat wealth this way as well and paint not just the environmental impact of acquiring wealth, but rather the point I am more interested in this discussion is the human impact.  What is the necessary human component to create capital?  How does accepting a high level of wealth impact those that are responsible and responsive to your wealth?

Take a fast food restaurant for example.  In a reasonable size town, let’s say that it makes $1 Million in total revenues, and that after expenses, nets a respectable $200,000.  Wages for this particular restaurant are around $300,000 outside of the owner who will pull in that $200K and an additional officer compensation of $50K.  From the start, he makes almost as much as all of his employees combined.  Now there may be a couple managers here making $40-60K annually, but the rest are low wage workers making $8-10/hr.

With that illustration, the owner has accepted that from his highest paid worker, he’s going to make at least 4 times that.  And from his lowest paid employee at least 10 times what they make.  With this example, I’m modifying slightly from a real example, but this is not far off the mark.  Restaurants are difficult businesses to run, with crazy hours and require continuous injection for capital improvements, dealing with turnover, and is certainly not an example of extreme wealth.  And in this example, the owner works 40-60 hours a week in the restaurant, which is not always the case with restaurant owners.

The point I’m trying to make that regardless of the sacrifice and hours the owner puts in, he values his work far above what he values his workers.  The low wage and middle wage employees are necessary for him to make his income.  The case only becomes more extreme the more wealth is created.

A local regional CEO made $4 Million in total compensation and his entry level people come in making $12-15/hr.  That’s over 130 times what his lowest level employee makes.  Even his middle managers make less than 2% of what he does.  We can argue about merit, experience, hard work all we want, but in order to make that level of wealth the fundamental thing you must do is to accept that many other people’s contributions are worth less than your own.  Their hard work is worth less than your own, that you deserve to make 130 times more than your lowest wage employee.  Maybe that’s the ego required to have that kind of success, and I wouldn’t know.

Unless you mistake me, I do not advocate for a mandated egalitarian society.  I do not want a governed pure socialist state.  I merely point out the growing inequities between the lowest class and the highest.  So there is a solution to the so-called welfare state that the truly wealthy could amongst their echelon declare an end to.  Pay your employees a living wage.  What labor unions and the labor movement have advocated for before is for people to make a wage that gives them access to reasonable housing, benefits and a standard of living that allows for some upward mobility.

I think the problem that usually rears its head when discussing a living wage is most are enamored with the illusion that hard work produces wealth, and so we get this idea that the wealthy work harder than the poor.  Then we have wealth entitlement where, understandably, the very wealthy see no reason to part with any of their wealth because they are entitled to it.  It should be theirs for no other reason than they have it or could get it.

That Undercover Boss show I think did a good job helping CEOs learn about their employees, because it is easy to be removed and insulated when you have great wealth.  More revealing shows and news and HR reports can help with the human cost of wealth.  I hope that if I ever accumulate great wealth that I am able to pay it back down the line and create opportunities for others to share in that wealth.

Looking further down the line at your own wealth footprint I invite you to think first about your wages or pay however that is accumulated.  If you have an employer, coworkers, own a company, and have customers, they are all part of that footprint.  Consider the manufacturer of a product.  From the owners or shareholders, to the employees, to the suppliers and their employees, on down to the raw materials, all are part of that wealth footprint.  Look down that line and pay attention to what your own wealth costs in terms of the quality of life for others.

In seeing your own footprint and the human cost of it, there may not be anything you can do to make it equitable, but in becoming aware, the opportunity for action will follow.  Maybe next time a living wage standard is proposed it seems a little more reasonable.  Maybe when you see a Bangladeshi person seeking refugee status, the conditions they live and work in may change how you feel about immigration.

It is difficult to face the human cost of living our first world standard of living, but with it comes compassion and the opportunity for change.  Shared prosperity creates a better world for us all.