I HEAR, ALL THE TIME, that athletes make too much money. “I can’t believe they pay that quarterback $35 million and our local public school teachers only make $29 thousand per year. It’s so unfair!” While I profoundly respect and appreciate the work of our public school educators and the work they do for our local students, the economist in me wants to explain why this is - not to defend the reality, but to lower the general anger level of the population on this issue.
The vast pay difference certainly isn’t because the quarterbacks are more personally important. After all, our country’s most valuable resource is, undoubtedly, the education and knowledge advancement of our citizens (even little ones). Nevertheless, to those that say that it’s unfair that athletes make exponentially more money than teachers, or more other working people in the world, I ask this simple question: When was the last time that 20,000 people came to watch them work? Last time I checked, there weren’t people lined up out the door to purchase tickets to watch one of my math classes.
The truth is that the only unfair part of this discussion is the improper use of the word “fair.” What is “fair?” We live in a free country with a free economy. If 20,000 people freely and willingly choose to spend their money to watch their favorite player on their favorite team throw a touchdown pass or slam dunk a basketball, what’s unfair about that? Another truth is that the athlete with the enormous salary started out the way everyone else did—as a baby human with no skills. As he grew up, he learned skills and became a professional. As a professional, his industry hired him at a salary commensurate to the benefit that they thought he could bring their business (sports franchise).
What seems unfair to me is that, often, the same people who complain about the amount of money professional athletes make are the same ones who go to their games, buy their jerseys, and purchase the products they endorse. The general populace holds the key to how much these professionals make, so if you think they make too much, stop paying their salaries!
On a slightly more complicated level, the same can be said for the executives of large corporations and their astronomical salaries and bonuses. A large corporation can have tens of thousands of employees, but only one CEO. That means that, in theory, one executive is in charge of tens of thousands of people. If a small business owner, who manages 8 employees, makes $80 thousand per year, why is it unfair that a CEO who is at the helm of an international conglomerate, managing, say, 18,000 employees makes $18 million. While I know of a few that make that much, the vast majority do not command a salary that big. The way I see it, the executives are getting the short end of that stick.
The intent here was not to take sides with the top-dollar makers in the world; it was merely to explain why and how they make the money they do. They are either immensely popular or manage an extremely large number of people. The reality is that in business, typically, the reason why people make the money they do is probably some combination between popularity and management.
