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RHD's One Percent Solution
9/4/2009 11:55:44 AM
The first time I offered to give up one percent of my CEO salary and put it in a pool that anyone could draw from, no one took me up on it.
But now at Resources for Human Development, a comprehensive human services organization based in Philadelphia, we have a thriving program called the One Percent Solution that opens a discussion about the massive issue of income inequality in our society. Income inequality creates tremendous social problems, violence and disruption at the basic levels of our society – and it’s only getting worse.
According to the University of California study released last week, income inequality is at an all-time high, surpassing Great Depression levels. This comes as no surprise to people who’ve seen exorbitant executive pay even in failing Wall Street firms that went begging for government bailouts. In the 1970s, corporate chief executives earned 30 times as much as their average worker. Today a CEO makes 364 times as much as their average worker.
The New York Post recently reported that Goldman Sachs leadership told employees to keep a low profile with their bonus payments and avoid big-ticket purchases. When it comes to massive salaries and disturbing income disparity, they don’t want to talk about it. Of course that’s wrong. In a capitalist, free market economy some people make more than others. That’s how it works, and how it should work. But light is better than darkness. So let’s talk about it.
RHD is a non-profit corporation that pioneers social programs designed to empower the most vulnerable and marginalized members of society through 160 managed programs in 13 states. We work to help people with mental illness or developmental disabilities, with histories of substance abuse or homelessness, build better lives for themselves, their families and their communities.
But we are still a corporation that pays some people more than others. We talked quite a bit at our corporation about some of the poor salaries we are able to pay, and the tensions between fellow workers as a result of large differences in pay. What evolved was the One Percent Solution.
We believe there is a benefit for the organization when an executive steps forward and says: I will give up one percent of my salary and put it in a pool. The purpose is twofold: One is to be able to let people participate in something that entitles them to a piece of an executive salary. The other is to open a discussion about income inequality.
Here, briefly, is how the One Percent Solution works:
Every member – starting with me – contributes one percent of their salary from each paycheck into a fund. The fund is then divided equally by the number of club members into each paycheck. Every club member puts in an amount, frankly, that they hardly notice – 1 percent of their paycheck. Everyone receives an equal payout from the One Percent Solution.
As CEO, I make the largest contribution. A young woman who works with people with disabilities in Florida happens to have the lowest salary in the One Percent Solution club and makes the smallest contribution. We both get back the same amount as each of the 54 participants in this year’s club. I lose a little money. She makes a little money.
Most of the lower-paid members take home an extra $10-20 a month. They tell me it means an extra dinner, some new clothes, babysitting or gas money. It’s like a penny jar that adds up over time.
Together we form a club that meets to discuss other ways to save money, a group of people willing to say: Let’s try this. It has given birth to a great many ideas that we’ve embraced at RHD – including a new Food Bank.
Initially there was a disbelief that people who earn more than they do give up some of their income to their fellow employees. But one percent of a salary is a small price to pay to get into a discussion about income disparity with my fellow co-workers – and do something about it.
I invite other executives to offer One Percent Solution clubs in their corporations. Your relationship with your co-workers, after all, doesn’t end at payday. Just talk about it. Talk with your people. Perhaps you will not solve it all. But listen. And talk. And you, and they, can come up with new ideas how to solve all your problems.
And then let’s see what else we can talk about.