Why work has failed us: Because companies aren’t sharing the profits

[Mdlerth]

Quote:

Originally Posted by RetireBy90 While there are problems in all systems of civilization, my momma used to say our system is the worst except for all the others. Changes in executive compensation could be had and may even benefit the masses, how much would taking $40M from an executive and parsing it between “workers” change the average “worker”? I added “ because many of the posts assume C suite just sit around and don’t “work”. Splitting that$40M might only add $1,000 or less to the employees. Is this about how much I make, or jealous of how much another makes? How much does that exec pay in taxes? How much does the exec contribute to charity?

All your observations are sound, and their implications regarding our own motives are worth pondering.

But consider that it may not be relevant. Wasn't the point of the (undoubtedly biased and inflammatory) article cited in the OP that, compared to an earlier era, companies today treat their low-level employees shoddily while heaping riches on the top tier? Surely no rational observer would be surprised at the resentment this arrangement will spark.

Does a CEO actually produce $40M worth of goods and services to merit such compensation? Of course not. Neither do pro athletes or rock singers or movie stars. That they manage to convince somebody to pay them that much is amazing and grotesquely funny. But I'm not trying simply to grouse about a CEO's W2, although I can see that my earlier posts may have given that impression.

Whether spreading the CEO's $40M among the workers would make a palpable difference to their standard of living doesn't matter. Whether he pays a lot of taxes or gives to charity also doesn't matter. What does matter is whether workers think that the CEO's wealth was achieved by stealing it from THEM. This is a critical distinction.

My favorite college course was The History of Revolutions. It covered uprisings over most of the past 1000 years. I learned that revolutions don't automatically occur simply because times are hard. Famines, plagues, Visigoth invasions... all these and more have happened without starting revolts. What incites the populace to overthrow their masters is when they believe times are bad AND it's because the masters have hogged all the goodies.

I don't think we are nearing societal collapse... yet. Neither did Marie Antoinette.

[corn18]

Quote:

Originally Posted by Teacher Terry Poor people don’t have any money left over to invest.

How poor are you talking about? My DD is a manager at a fast food place making $11/hour and manages to save money (with no assistance from us).

[JDARNELL]

The business world is not about fairness it’s about efficiency. If you are more efficient with your time you have more time to do other things if you choose. I don’t want to be in a part of the world that is about fairness. The majority might be fairly miserable compared to how they could be. I like the world of incentives.

[HI Bill]

Quote:

Originally Posted by Teacher Terry Poor people don’t have any money left over to invest.

It's partly about choices. Alcohol, drugs, ciggarettes, lottery tickets [and iPhones] are all choices (that not only poor people make, just look at the opiode crisis)...but many in poverty do make poor choices that keep them from raising themselves up and getting out of their poverty. I saw a lady on SNAP driving a Cadillac Escalade. She couldn't save money because of her lifestyle. She ate better than I did!

People want to blame others on their being poor, because they are victims. Sometimes, prejudice does inhibit upward mobility, but there are many who are able to rise above. There are those who cannot or will not. We are born in an 'accident of birth', with no say in who our parents are, how much physical or mental ability we inherit through our parent's genes, or where in the world we are born. It is what we do after, with what we have, that matters.

[Walt34]

Quote:

Originally Posted by Teacher Terry Poor people don’t have any money left over to invest.

Quote:

Originally Posted by HNL Bill It's partly about choices. Alcohol, drugs, ciggarettes, lottery tickets [and iPhones] are all choices (that not only poor people make, just look at the opiode crisis)...(snip) People want to blame others on their being poor, because they are victims. Sometimes, prejudice does inhibit upward mobility, but there are many who are able to rise above. There are those who cannot or will not.

Exactly. Here's a thread from a few years ago, a pizza delivery driver who had accumulated assets of $675k by starting saving when he was a teenager and taking LBYM to heart. He didn't stick around long (our loss) but he showed that it can be done.

http://www.early-retirement.org/foru...ars-72212.html

[RetireBy90]

Quote:

Originally Posted by Mdlerth All your observations are sound, and their implications regarding our own motives are worth pondering. But consider that it may not be relevant. Wasn't the point of the (undoubtedly biased and inflammatory) article cited in the OP that, compared to an earlier era, companies today treat their low-level employees shoddily while heaping riches on the top tier? Surely no rational observer would be surprised at the resentment this arrangement will spark. Does a CEO actually produce $40M worth of goods and services to merit such compensation? Of course not. Neither do pro athletes or rock singers or movie stars. That they manage to convince somebody to pay them that much is amazing and grotesquely funny. But I'm not trying simply to grouse about a CEO's W2, although I can see that my earlier posts may have given that impression. Whether spreading the CEO's $40M among the workers would make a palpable difference to their standard of living doesn't matter. Whether he pays a lot of taxes or gives to charity also doesn't matter. What does matter is whether workers think that the CEO's wealth was achieved by stealing it from THEM. This is a critical distinction. My favorite college course was The History of Revolutions. It covered uprisings over most of the past 1000 years. I learned that revolutions don't automatically occur simply because times are hard. Famines, plagues, Visigoth invasions... all these and more have happened without starting revolts. What incites the populace to overthrow their masters is when they believe times are bad AND it's because the masters have hogged all the goodies. I don't think we are nearing societal collapse... yet. Neither did Marie Antoinette.

So what is the real problem if the pay of a CEO is not it? Is it the way workers feel? There will always be those that make more than you do. There are always going to be those with a nicer car, bigger house, etc.

My point was or is, many of those that will complain have not done what is needed to get ahead. Some, certainly not all, expect something to be guaranteed. If what you are doing isn’t paying the bills, then try something else?

[Mdlerth]

Quote:

Originally Posted by RetireBy90 So what is the real problem if the pay of a CEO is not it? Is it the way workers feel? There will always be those that make more than you do. There are always going to be those with a nicer car, bigger house, etc.

From my previous post:
What does matter is whether workers think that the CEO's wealth was achieved by stealing it from THEM. This is a critical distinction.

[sengsational]

There was a thread a while back where we discussed pass through voting for mutual funds and ETFs. I said it was possible if the owners filled out a profile for how they'd like their shares voted, but I "lost" to the "it can never work" crowd. But as the owner of 30 individual stocks, I see how repetitive these things are. It would be easy to have a profile that said to vote against executive compensation changes to accept share holder proposals and the basics. I do agree that unless your fraction of shares could be voted using a profile, it would be too laborious for fund holders. What if in the future you have a AI that you train that votes your shares?

[pb4uski]

The article states "A common effect of a private equity buyout is liquidation; if the company can’t keep up with its interest payments or isn’t able to create a big enough profit, the firms will sell the organizations for parts. This is still often considered a success for shareholders because they made a return."

I worked in M&A and many PE firms were our clients. I NEVER saw a deal that was premised on liquidation, though I am aware of some unsuccessful deals that ended up with that result.... in most cases, the PE investors took it on the chin.... ask Ceberus about Chrysler... and the owners of ToysRUs are taking a $1.3 billion bath as well.... but that is capitalism and risk.

Typically, our clients would look to buy business with good bones but operational challenges at a discounted price, bring in expertise and improve them and then sell them to a competitor or the public... when it worked, they made out like bandits and when it didn't they took a bath.

While I don't follow ToysRUs, an educated guess is that they were on the ropes even before Bain, et al LBOed them in 2005 and it just didn't work out.... and they lost $1.3 billion.

Quote:

KKR, Bain Capital, and Vornado Realty Trust, financial firms run by billionaires, pushed Toys "R" Us into bankruptcy protection in Virginia this week, abandoning any hope of ever recovering the $1.28 billion they invested to purchase Toys "R" Us over a decade ago. Vornado was already carrying its $428 million investment in Toys "R" Us at zero prior to the trip to bankruptcy court, according to its Securities & Exchange Commission filings.

[Red Badger]

Compensation is evenly distributed in North Korea for most workers in the "private sector." NK GovCo makes out pretty well. I'll settle for the unfairness of a capitalistic economy with a republic style of government.

[hopefullyoneday]

Quote:

Originally Posted by gcgang Union! Union! Union!

Unions are fading away and some don't have any power.

[Just_Steve]

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Originally Posted by Mdlerth From my previous post: What does matter is whether workers think that the CEO's wealth was achieved by stealing it from THEM. This is a critical distinction.

How could the CEO's steal something from them which never belonged to them to start with?

[JoeWras]

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Originally Posted by Walt34 Well, that depends on the nature of the work. Nurses are a prime example, as is any other occupation that demands "hands on" work. I just read an article about a coming shortage of aircraft technicians, electrical line workers, police officers, and many other jobs that require a physical presence at the location. It's kind of hard to offshore those jobs and the pay scales are beginning to show it. An aircraft technician earns ~$70k a year, not bad for a job that doesn't require a college degree.

Fair point. Knowledge workers (IT, engineers, accountants, etc.) are easy to offshore. Hand's on professions are not. Kids need to know it is OK to pursue these jobs. Over the last 40 years or so, we've done a great job in denigrating such jobs. That was wrong.

Quote:

Originally Posted by RetireBy90 Splitting that$40M might only add $1,000 or less to the employees.

It would be $1k more than they otherwise would have had.

My Megacorp decided that their tax repatriation bonus shall all go to the investors, none directly for employees. Some companies chose to give some to the employees (typically around $1k), mine did not and announced it very directly. The c-suite said, "It is important to remember we all benefit from improved stock price." Nope. Not everyone gets stock.

At least they had the guts to announce exactly what they were doing, like it or not.

[samclem]

Quote:

Originally Posted by ls99 A few times I had to explain to new hires just out of school: You are exchanging your skills, specialized techniques which we will teach you at no cost to you, for a set amount of time at a dollar figure we agreed on, to perform tasks we hired you for.

I think it is also helpful for employees to understand that it is not "their" job. The job belongs to the company. There can be no "they shipped my job overseas" or "the eliminated my job." If it were really "your" job, you could have taken it with you when you quit that employer.

[daylatedollarshort]

Quote:

Originally Posted by corn18 How poor are you talking about? My DD is a manager at a fast food place making $11/hour and manages to save money (with no assistance from us).

The cheapest rentals here within walking distance distance of the main public transportation stations start at $1,700 a month for a one bedroom apartment. On $11 an hour that leaves $192 a month left over for everything else, including groceries, Social Security and FICA deductions, and any health care premiums and deductions (for jobs with health insurance).

[Mdlerth]

Quote:

Originally Posted by Mdlerth From my previous post: What does matter is whether workers think that the CEO's wealth was achieved by stealing it from THEM. This is a critical distinction.

Quote:

Originally Posted by Just_Steve How could the CEO's steal something from them which never belonged to them to start with?

From my previous posts (Bolding added for clarification):
What does matter is whether workers think that the CEO's wealth was achieved by stealing it from THEM.

[HI Bill]

Quote:

Originally Posted by daylatedollarshort The cheapest rentals here within walking distance distance of the main public transportation stations start at $1,700 a month for a one bedroom apartment. On $11 an hour that leaves $192 a month left over for everything else.

At $11 an hour, living in the Bay Area, you need to have a room mate! Or get some training and another job! Or a bicycle, so you can be a little further from the main public tranporation stations. Why should someone making minimum wage in California expect to be able to live independently in the Bay Area of all places?

[Just_Steve]

Quote:

Originally Posted by Mdlerth From my previous posts (Bolding added for clarification): What does matter is whether workers think that the CEO's wealth was achieved by stealing it from THEM.

I guess I have difficulty believing any person of average intelligence could think that.

[JoeWras]

Quote:

Originally Posted by HNL Bill At $11 an hour, living in the Bay Area, you need to have a room mate! Or get some training and another job! Or a bicycle, so you can be a little further from the main public tranporation stations. Why should someone making minimum wage in California expect to be able to live independently in the Bay Area of all places?

Yes, the plebes and servants shouldn't be seen. Make them live somewhere else. I guess the COL disparity issue is just as relevant these days as the CEO pay disparity.

[Red Badger]

Quote:

Originally Posted by daylatedollarshort The cheapest rentals here within walking distance distance of the main public transportation stations start at $1,700 a month for a one bedroom apartment. On $11 an hour that leaves $192 a month left over for everything else, including groceries, Social Security and FICA deductions, and any health care premiums and deductions (for jobs with health insurance).

Not much empathy for someone who chooses to live in one of the most gentrified places in the country. My DS and BIL make serious coin in the bay area. She's seven years older than me, and they are both still grinding out (likely to ~ 70).

If someone is only worth $11/hour (to an employer), go where the hell $11/hour is real money, or learn to be worth more than $11.

Life is not complicated, but it can be hard.