Persistent Poverty in a Smug Meritocracy

A response to Dan Pallottas TED Talk on nonprofit executives pay.

http://www.ssireview.org/blog/entry/persistent_poverty_in_a_smug_meritocracy

By Michelle Kweder, Gerald Denis, & Maureen Scully | 37 | Mar. 22, 2013
Nearly 1 million people have viewed Dan Pallottas recent TED Talk, The Way We Thin
k About Charity Is Dead Wrong. One of his most lauded and controversial assertion
s is that compensation in the third sector is too low to attract the talent nece
ssary to solve the worlds most pressing problems. His resonant phrase is: The $400
,000 talent will not work for $84,000.
Pallottas case for paying higher wages has wide appealit echoes deeply held belief
s about pay and merit in the United States. We want the neurosurgeon, the cancer
researcher, and the bridge designer to be well paid, because that reassures us
that they are well qualified and performing their life-or-death tasks with vigor
. Pallottas vision rests on stubborn myths about meritocracyand it is precisely th
ese myths that impede efforts to address poverty and inequality in the United St
ates.
Myth #1: There are $400,000 talents. The first falsehood is that there are peopl
e who are just worth more. Defending wide inequality relies upon the notion that
some people are worth much more, based on training, ability, or certain special
qualities. This notion makes inequality appear legitimate to people at all leve
ls, and thereby harder to redress. The use of the phrase low-wage worker, instead
of worker who is paid a low wage, hints at a peculiarly American sleight of hand:
Someones place in the wage structure is an indicator of their true merit.
Myth #2: The best people become the $400,000 talents. This is appealing if we be
lieve that anyone can become a $400,000 talent. Faith in meritocracy requires be
lief that we all stand equally at the starting line. However, a high volume of d
ata shows that upward mobility is increasingly rare in the US. The institutional
infrastructure and structural racism that surrounds poor versus rich children m
eans that there is not an equal contest for the $400,000 jobs. By embracing Myth
#2, we can neither rest assured that we have found the best talent nor address
the root causes of inequality and poverty.
Myth #3: The top person does the work that generates the value. The willingness
to pay top money for top talent is based on the idea that executives have the spe
cial sauce that motivates others and generates results. Interestingly, this idea
collides with an increasingly popular view of a leader in every seat. Indeed, dispe
rsed innovation comes from all levels of an organization, including front-line wo
rkers paid low wages. In the third sector, these workers bring insights about ro
ot problems and connections to the community that generate trust, and, in turn,
real change. Why not pay them more?
Myth #4: Its relative pay that matters. Pallottas plan is appealing, in part, beca
use $400,000 really isnt that much when compared to private sector CEO salaries.
Average top executive salaries at nonprofits range from $84,000 to $232,000. Mea
nwhile, CEO pay in the private sector averaged $12.9 million dollars in 2012, an
d it keeps ratcheting upward as top executives focus their comparison game on on
e another. What gets lost is the absolute numbers that should shock us. A $400,0
00 salary is a lot when compared to $18,720 (which Obamas proposed minimum wage w
ould yield) or $45,000 (twice the poverty threshold for a family of four and the
income on which some 45 percent of families subsist, according to research).

Myth #5: The talent wont work without the big prizes. Its just not true. In the no
nprofit sector, the mission-focused ethos has drawn many top executives to work
for $84,000. Lets consider cancer researchers again. They face a salary cap of $1
79,700 placed by the National Institutes for Health. Pallotta would argue that t
he best talent would therefore not be drawn to study cancer. However, talented c
ancer researchers who love their work have made much progress (while puzzled eco
nomists have concluded that scientists pay to do science when they forego higher p
ay in the biotech sector). The breast cancer mortality rate has dropped substant
ially from 100 percent sixty years ago to 23 percent today, a success that did n
ot hinge on big salaries for talent. In fact, much of this success hinged on fun
ding from the sector that Pallotta did not even mentionthe public sector.
Pallotta offers an easy, market-based solution, putting the captains of charity
on par with the captains of industry. He co-opts our national conversation about
income inequality to advance his goals and the goals of a socio-economic elite
that is content to believe in meritocracy and their own meritoriousness. We argu
e that it is misguided to base the pay of executives in inequality-alleviating n
onprofits on ideological myths that have done much to reproduce and legitimate i
nequality. Lets shine the light directly on the problem of inequality and poverty
, not on those who need some additional economic incentives to get involved. Lets
pay living wages to the great mass of humanity and end the applause for those who
think their wealth is proof of merit.
Michelle_Kweder Michelle A. Kweder (@MichelleKweder) is a public and nonprofit c
onsultant pursuing her doctorate in Organizations and Social Change at the Colle
ge of Management at the University of Massachusetts Boston. Her research interes
ts include the reimagining of MBA education for a just and equitable world.
Denis_University_Massachusetts Gerald V. Denis (@GDenisBoston) is associate prof
essor of Pharmacology and Medicine at Boston University School of Medicine and a
n American Cancer Society research scholar. His past work has investigated trans
criptional control of the cell cycle in B cell malignancies, while more recent r
esearch seeks to understand the molecular mechanisms that stratify risk for the
obesity-associated cancers.
Maureen_Scully Maureen A. Scully (@ProfScully) is associate professor of Managem
ent at the College of Management at the University of Massachusetts Boston. She
studies how employees mobilize for grassroots change efforts in the workplace, i
ncluding domestic partner benefits for LGBT employees, more participatory forms
of work, and living wages.