The Prof G Pod with Scott Galloway - CEO Pay Gaps, Should I Quit My Job to Start My Own Business? and Why Community Colleges Matter

Episode Date: June 20, 2025

In today’s episode, Scott tackles America’s widening income gap and what it reveals about our priorities. He offers perspective to a 20-something weighing comfort vs. ambition, and wraps with a big-picture take on the overlooked value of community colleges. Want to be featured in a future episode? Send a voice recording to [e-mail], or drop your question in the r/ScottGalloway subreddit. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Welcome to office hours with Prog G This is the part of the show where we answer your questions about business big tech entrepreneurship and whatever else is on your mind What's happening? Just a reminder. You can now catch office hours every Monday and Friday That's right every Monday and Friday book ends of the week Feeling a little exposed a little insecure if you'd like to submit a question for next time, you can send a voice recording to officehoursappropetite media.com. Again, that's officehoursappropete media.com. Or post a question on the Galloway Scott Galloway subreddit and we just might feature it on our next episode. What a thrill. Question number one. Our first question comes from L from Pennsylvania on Reddit. They ask,

Our first question comes from L from Pennsylvania on Reddit. They ask, in 2024, median CEO pay rose 9.7% to 17.1 million. Median employee raise rose 1.7% to $85,000. That's roughly a 200 to 1 ratio in CEO earnings to employee earnings. In the 60s and 70s, presumably a time where MAGA thought America was great, it was much closer to 20 or 30 to one per the Economic Policy Institute. Seeing stuff like this and hearing working class Americans more concerned with identity politics than

the massive disparity in compensation between wealthy executives and the working class drives me insane. What can we do to make this issue more well known and understood additionally, and what can we do to address this disparity in earnings? Love your show and opinions, been sharing your content with a lot of folks. Thanks, Elle from PA. So we'll look, we're brothers from another mother.

We're cut from the same cloth. Birds of a feather. I think it's insane. I think income inequality, my entire investment strategy is pretty much income inequality. I'm like, okay, certain companies have more access to cheaper capital and running away with it. I only invest in companies that I see are probably

either a monopoly or some sort of strange left for dead company that might offer a 10 or 20X return. And also I've been buying a lot of real estate in very kind of Tony areas, London, Palm Beach, Aspen and New York, because I think that essentially really, really wealthy people are the most boring or homogenous people in the world and they only live in one of five places,

Dubai, London, Palm Beach, New York, or Aspen. But it's insane and part of it is CEO compensation. And first let me tell you how it happens and to what I think we should do about it. Okay. What happens? I've served on the compensation committee of boards that decide the compensation for the CEO. And this is very sensitive because obviously the CEO is usually there for money and knows what his or her buddies are making a CEO of their competitor. And they're very sensitive about it. And it's taken them a long time and they're very talented

to get to the iron throne and they wanna get paid really well. And also compensation committee members don't like to actually do any real work. So we hired this firm called Towers Parent or another compensation consultant. And the compensation consultant comes in with the following, a bunch of data on, say you're running,

say you're on the board of the New York Times. I think I was on the compensation committee there. I don't know. Anyways, they bring in a bunch of data that says, okay, this is a $5 billion media company, $5 billion media companies. Here's the range. Here's the lowest paid CEO.

Here's the highest paid CEO of a $5 billion media company. And then the CEO will try and stuff in new media companies because those compensation levels are much higher, right? The CEO's vested interest is to get a consultancy that will show that the market is paying people a shit ton of money, and he or she usually gets to decide who they hire.

And so it's a bit of a racket. It's a bit of an inside job. And this is what happens at the 50% level. That's where the average CEO of a $5 billion media company, that's what their compensation is. And psychologically, what happens is the following, despite the fact that the average pay

of a CEO of a $5 billion media company is really great compensation, we think, well, Janet Robinson, who was our CEO at the time, is trying hard and she's smart, and we want to send a good signal and keep her motivated. So despite the fact that she's a fairly mediocre CEO, in my view, at the time, and shooting everyone who potentially could be the next CEO

because of insecurity, that's a sign of a bad CEO, we're going to pay her at 60%, not at 50. And you think, well, that's no big deal, pay them slightly above average. But if you're paying someone 20% more than average, that means every three and a half years, you're doubling their compensation relative to the average of an already really well-compensated group of people.

As a result, the CEO compensation has skyrocketed, absolutely skyrocketed, whereas employee compensation compensation per your statistics has not really accelerated. Now here's the issue, what do you do about it? I don't think you can put caps on compensation. I don't, I think that's socialism, I don't think it works. What I think you can do is the following.

We need a more progressive tax structure. I think it's okay that CEOs make tens of millions or hundreds of millions or sometimes even billions. If the CEO is really adding that much value and creating that much shareholder value, I don't have a problem with them sharing in it. Even if they become, I remember when Mickey Drexler made a billion dollars the gap, I'm like, he deserves it. He's created so much shareholder value. He deserves it.

And who are we to tell him that compensation is too much? You want to use the word fair. You're not going to find a lot of fair in the corporate world, especially in a compensation table. But I do think we need to more aggressively address a progressive tax structure. And that is I see no reason why anyone who makes over $10 million a year

shouldn't have a 60% to 80% marginal tax rate. Why? We need that money. And there's a lot of people making crazy amounts of money right now. And we need to pay down our deficit. We need to reinvest in technology and education and food stamps and help some of our least fortunate figure out a way to pull themselves up. And we're going to have to just tax people more. Because what we have now is a regressive tax structure because the majority of your employees pay taxes on current

income, maximum rate 37%. And the CEO gets majority of their compensation from equity, maximum tax rate 23.8%. So the tax structures actually become regressive. So I would like to see an alternative minimum tax of 50 or 60%, no loopholes for people who make more than $10 million a year. And this is why that tax, while it sounds scary is less taxing. And Republicans would like you to believe that there are most productive employees and it's theft.

No, it's not. That's actually a lower tax rate than the super wealthy have been paying for most of the 20th century. And here's the good part. They're no less happy. Once you get above a certain amount of money, incremental money doesn't give you provide you with anything. It doesn't give you any additional value or happiness.

What are you gonna give it to your kids so they can have a Range Rover and a cocaine habit? I mean, you want taxes that are the least taxing, so to speak. I'm a big fan of raising taxes on estate taxes. I do think you're gonna have to raise taxes on corporations who are paying the lowest taxes since 1929, but I don't think you can put compensation caps. I think that socialism, it doesn't work,

and creates all sorts of gymnastics around spreading out all these unnatural acts that'll waste time and energy. But I do think anyone making over a certain amount of money should be subject to the same progressive tax structure that we've had for most of the 20th century. Appreciate the question. Our second question comes from Papaya Melon on Reddit.

You gotta give it to the Redditors. They sound very creative, but they sound like a group of people to be fun to do edibles with. All right, I'm a 23 year old engineer working in the aerospace industry at a Fortune 500 company. On one hand, I find that I have a good job that I could maybe rise up in, have great friends and a great family, all while living in one of the most beautiful places in the world. On the other hand, the job is very unchallenging, and I find myself wanting to go after my startup dream to chase that challenge.

I feel that at my age and skill, my risk tolerance is very high, and I should be going after the startup dream, but I struggle to identify if that's really what I want to do, or if that's just conditioning from the internet, and that I'm not doing enough. Do you think that a young 20-something should throw caution to the wind and bet on their ability or value the growth? Opportunity and comfort that corporate America provides this is what the passe

Internet answer is going to be and is going to be go for it now. You're young Start a company. This is America. Absolutely chase your dreams You know all the shots you don't take, you miss. Okay, hold on, hold on. Anyone who's telling you to start a company without a solid idea of what you're doing is already rich. And here's the thing, we romanticize entrepreneurship and we diminish unfairly the power of the US corporation. The greatest wealth generator in history

is the US corporation. And it sounds like you're at a good one. So I would be very careful before leaving that seat. The greatest wealth generator in history is the U.S. corporation, and it sounds like you're at a good one. So I would be very careful before leaving that seat. If you're making good money at a good company and doing well, they're going to have no trouble replacing you. There's going to be a lot of applications that come in for your job. Now, as someone who started nine companies, if you have a co-founder, if you have an idea, if you have a small company that reaches out to you and they already have traction, I actually

think the sweet spot of upside on a risk-adjusted basis is not being the founder of a company because there's just so much infant mortality and hooking up the printer and finding money and trying to find those first few employees. I think the sweet spot is being employee kind of 10 to 50, because some of the risk has already been starched out. A lot of the people who work at ProfG were joined L2 after the first few employees. So they kind of knew it was working. They kind of knew we had some level of product market fit, but it was still early enough that they got a decent chunk of equity.

I think that's the sweet spot. But if you have a great idea, you feel like you've already lined up. If you want to start a business, start it before you leave. And that is have a company or have people who've already kind of started it. And you know, it sort of works, but just deciding to take off with a backpack and come back and start a company and give up a job time goes fast. And I think there's a really decent chance that two, three years into it, you look back and think, I probably just should have stayed at that company and

bank some money. If you're not challenged at work, then what I would suggest if you're good is you have a transparent conversation with your manager and your review and say, um, I don't, you know, I like it here. Be appreciative, be thoughtful, but I'd like some more challenging work. I'd like to challenge myself and push myself. And if it's a good company, they're going to find the type of work that challenges you.

So in sum, we romanticize entrepreneurship and people don't appreciate how great it is to have a big platform that pays for you to have that mole removed and you can make a lot of money. You know, corporations are a great place to get rich slowly and time goes fast. And if you're maximizing out your 401k and getting equity participation and they like you,

I would think about trying to find a more entrepreneurial culture or more challenging work within that organization. But again, these are very personal decisions. One thing I would definitely recommend doing is assembling a kitchen cabinet of kind of sober people who know your situation, how important economic security is. And if you find an opportunity that you can bounce it off of, because sometimes it's hard to read the label from inside of the bottle in some, anyone who just

hears the question and answers one way or another, isn't being very thoughtful. It depends on your situation at work. It depends on your opportunities. Quite frankly, it depends on how much money you have. If you have rich parents you can fall back on. Sure, you can be more risk-aggressive. If you just had your second child and your spouse isn't working, it's very hard to give up that steady salary. So, but again, a big theme here is we have a tendency to romanticize entrepreneurship and not appreciate how powerful the U.S.

corporation is. Congratulations on all your success. It sounds as if you're doing really well. We'll be right back after a quick break. Support for the show comes from Upway. If you're stuck in traffic again or frustrated with rising gas prices, there's a better way to get around. Commuting by e-bike isn't just great for your health, it can be a game changer for your wallet and your time. Here's a tip, head over to upway.co to find e-bikes

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Get up to 45% off when you go to gruns.co and use code profg. That's G-R-U-N-S.co, using codeVG for 45% off. Welcome back onto our final question. Hey, Professor Galloway, Patrick here from New Hampshire. I've spent over 25 years in higher education, mostly at public universities and colleges. I have been a student, an RD, an adjunct, and a dean, but now I'm a community college administrator. So basically, I've had every seat except the one with huge endowments.

You often focus on the overly-rejective schools, the elites of the world, if you will, and how they need to evolve and are not. I'd love to hear your take on the rest of the iceberg, community colleges. We serve almost half of the undergraduate population, quietly, efficiently, and without a marketing budget that rivals a Marvel film. In a future driven by ROI, relevance and access,

and where education is critical to the nation's success, where do you see community colleges fitting in? Thanks. What a great question. And also, you press on soft tissue. I'm a little defensive because you're right. By the way, when you find yourself getting a little offensive, it's usually because whoever's asking you

a question is right and it's touched a nerve. And I don't speak nearly enough about community colleges. And the Cal State system, I'm very involved at UC. I went to UC Berkeley, I went to UCLA, and I talk a lot about the UC system, but sort of the hero of California is the Cal State system that is the biggest grantor of Pell grants, meaning they're educating more kids

from low income households. And it's a great way. Most of us aren't remarkable. I applied to college when I was 17. I showed up to UCLA and rushed to fraternity when I was 17 years old. My boy is 17. The idea of him at college right now totally freaks me out.

And within like a couple of weeks, I got too fucked up, fell, was in the emergency room, barely got through my freshman year, almost got kicked out of school. I was on academic probation because I couldn't handle the temptation of alcohol and sports and being away from home. And everything ended well.

It turned out okay. And maybe that was part of the learning process. But community colleges and you know, they're sort of a chance to marinate a bit, not the same. First off, I love the fact that they have much lower admission standards and much lower cost. That is where higher ed needs to go. Anyways, according to the US Department of Education, there are 1,022 community colleges

in 2020-2021 making up 28% of US colleges participating in federal aid programs. Nearly 9 million students attended community colleges, accounting for 44% of all US undergrads. Most 72% attended part-time. Average in-district tuition, love this, $3,300 and 32% a third received Pell grants 13% took out federal loans my roommate my junior in college a kid named Mike went to junior college first and he was one of the more impressive people that I went to college with and I kind nice handsome anyways just and he had gone to community college for one or two years it was a ton of kids in the fraternity at UCLA who were like,

okay, I didn't get 1600 on the SAT. Maybe I'm helping my parents out, maybe I don't have the money right now, whatever it is. So I'm going to marinate, if you will, and go to community college. I think that there's a huge opportunity in role for community colleges. What I would like to see is, I mean, essentially, there's a huge opportunity and role for community colleges. What I would like to see is it, I mean, essentially there's kind of a trade here.

And that is colleges become so expensive that there's sort of a community college arb. What is that? Rather than going to UC Santa Barbara, let's not even use UC Santa Barbara, rather than going to USC, which costs probably $100,000 a year, when you take on tuition and living costs.

You go to community college for two years, which costs a lot less. And basically you cut the total cost of your four year education by a third, maybe even a half. Now, having said that you lose a lot because you don't have the same momentum and the same friends and the same kind of four year experience. But at the end of the day, if you don't have the money, it's a pretty good arb. It's also a chance to get into a really good school. One thing that's wonderful about our elite schools is they do take in a lot of transfers. And if you show you can operate well

in the academic environment at Santa Monica Community College, where I was gonna go had I not got into UCLA the last minute, UCLA likes that. And they say, well, clearly you can operate in an academic environment. So I'm a big fan of, if I were gonna say, all right, where does Governor Newsom need to allocate

more or less funds? I hate to say this. The University of California has people like me donating millions of dollars. The Cal State system, because it's not as sexy and people don't brag about naming the new wing at Santa Monica Community College, it doesn't get nearly the philanthropic giving

because it's not as prestigious and doesn't tickle rich people's egos. But that is really where the greatest return on investment right now. I'm not as familiar with the curriculum, but what I would suggest is I think the biggest opportunity and also a foots to this kind of emerging crisis of struggling young men is more vocational programming. And that is a track for kids looking to transfer to a four-year program that's more liberal arts, more general, if you will.

And then there's tracks for kids who are like, I'm not cut out for school. We all knew that person in high school was usually a guy who had hated school, wasn't good at it, but could fix your car and loved Wood, Auto and Metal Shop, which we've replaced with Computer Science for some reason, or Mandarin.

So I wonder if there's more investment or tracks available for great vocational jobs. You've probably seen that TikTok showing that an 11th grader who gets through Auto Shop, they're being offered $70,000 a year jobs out of the 11th grade. So I wonder if the role of vocational programming that fits to the economy where we're supposed to going to have somewhere between 7-11 million open jobs in the vocations, the skill needed to install energy efficient heaters, fix an EV, build a nuclear power plant, specialty construction, specialty nursing, healthcare, all the long-winded way of saying, I think you're doing God's work and I'd like to see greater resources. And if there's any suggestion I would make, and maybe you're already making it, is to not fall into this drunken, intoxicated elitism that you have to have a liberal

arts education. There's great trades jobs out there that someone with 12 to 24 months in apprenticeship right away can put themselves on an on-ramp to a wonderful middle-class life. But again, appreciate your good work. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. Again, that's officehours at propgmedia.com. Or if you prefer to ask on Reddit, just post your question on

the Scott Galloway subreddit and we just might feature it in an upcoming episode.