Energized CEOs: They Keep Going and Going
Subject Supply of Labor
Topic Labor Markets
Key Words CEOs, Executives, Workweek
News Story

The pattern for CEOs who left their positions used to be that they would become consultants, teach business courses, and serve on corporate boards. Now, a number of high-flying CEOs are leaving their positions, only to become senior executives elsewhere, especially if they are young.

A case in point is Lewis Platt, who was CEO of Hewlett-Packard, a $50 billion multinational company, and is now CEO of Kendall-Jackson Wine Estates, a mere $365 million company. Mr. Platt has reduced his workweek from 90 to 70 hours a week, affording him more time with his family. He now often opens his own mail, writes his own speeches, and has few opportunities to mix with federal politicians and world leaders, but he still relishes molding his new company.

The same applies to former Washington figures, such as Mike McCurry, the ex-White House Press Secretary. He is now CEO of a political communications Internet firm, Grassroot.com. He says that the pace is equivalent to that of a presidential campaign.

(Updated April 1, 2001)

1. a) Historically, CEOs retired from business with generous financial packages, and for the most part withdrew from the business world. Explain this in terms of the theory of labor supply.
b) Nowadays, many executives are choosing to stay in business in spite of being financially secure. How do you explain this in terms of the theory of labor supply?
c) Explain how age, the excitement of an Internet start-up, and working for a winemaker might affect the decision to continue working, but as a CEO for another firm.
2. a) When some CEOs, like Mr. Platt, change jobs, they reduce their hours of work. Why do you suppose this is? Answer in terms of the labor supply curve. Draw Mr. Platt's labor supply curve and illustrate what is likely to be happening.
b) On the other hand, Mr. McCurry is putting more hours into his Internet company job than he generally did in the White House. Explain this with reference to the labor supply curve, and illustrate on a diagram.
3. a) What are income and substitution effects?
b) Given your answers in (2) above, what are their relative sizes for Mr. Platt and Mr. McCurry? Explain.
Source Jon Swartz, "Career changes have CEOs shifting gears into not-so-fast lane," USA Today, March 9, 2001.

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