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Gvien the forum we're on, it's worth pointing out that today's white collar laborers are capturing one or two orders of magnitude less of the value they're crea
by throwaway729 10y ago
Gvien the forum we're on, it's worth pointing out that today's white collar laborers are capturing one or two orders of magnitude less of the value they're creating than the blue collar workers of 1990's detroit.
360 billion* divided by 1.2 million = 300000 "per employee". Typical salary to 40,000ish-100,00ish range for laborers/engineers. The disparity in those numbers isn't so bad at all.
Conversely, 1 trillion divided by 137000 = 7,299,270 "per employee". Typical salary of engineers in those firms is closer to 100,000 to 200,000, and that's just for the golden child software engineers. And without accounting for massive cost of living differences between 1990 Detroit and modern day SV.
Which wouldn't be so bad if there were some engineers earning close to or more than the "per employee" numbers, but I've never heard of anyone making even close to 7 figures as an engineer at a big firm...
* I think you meant 360 bn, not 36 bn, right?
- mbillie1 10y agoDon't think you needed a throwaway for that, that's a cogent point.
- ersii 10y agoWhen it comes to opinions or facts in sensitive subjects (such as anything related to taxation) - to be able to discuss freely you actually need a throwaway account. A lot of people only down vote when they disagree to some content or questions and leave the questions and discussions somewhere else.
- deleted 10y ago[deleted]
- nonameface 10y agoThat is a direct quote from the article. The article states $36B as well, not $360B. "None of this helps the image of big business. Paying tax seems to be unavoidable for individuals but optional for firms. Rules are unbending for citizens, and up for negotiation when it comes to companies. Nor do profits translate into jobs as once they did. In 1990 the top three carmakers in Detroit had a market capitalisation of $36 billion and 1.2m employees. In 2014 the top three firms in Silicon Valley, with a market capitalisation of over $1 trillion, had only 137,000 employees."
- sharemywin 10y agoI look it up Ford, GM had sales over 100B that year. assuming maybe Toyota as the 3rd.
- Eridrus 10y agoMaking cars is pretty capital intensive; Ford's Market Cap in 1990 was in the ~20bn range depending on what point you look at.
- hx87 10y agoMarket cap tends to be much lower than revenue for capital-intensive industries. Factories, machine tools, and steel cost a lot of money, after all.
- AnimalMuppet 10y ago> assuming maybe Toyota as the 3rd. Chrysler.
- jackcosgrove 10y agoNot only that, but in US salaried status is routinely used to avoid paying overtime, when overtime is a tacit requirement of many jobs.
- pmoriarty 10y agoThis is a great point. Comparisons should really take in to account salary per real hour worked, not just salary per year.
- soulnothing 10y agoEven as a contractor with an hourly rate. The assumption is the rate given is for 40 hours a week. I've had a number of hourly contracts where I was told either work the over time or find a new contract. The lack of care to employees is appalling at times.
- devonkim 10y agoI've been on contracts that are flat billed based upon 40 hours / week but no overtime is chargeable. The problems start when more than 40 hours / week is regularly expected to perform assigned tasks to standards of the contract and there's little control you have over the client putting barriers in place that make you less productive making the true hourly rate at least 25% lower.
- soulnothing 10y agoI've only had two types of contracts. One is absolutely nothing to do, what I'm hired to do is not feasible and shelved. The second is so busy, so much overtime you can't breathe. So many jobs now, over work and expect over 40 hours. With no additional compensation. A majority of my contracts are flat rate. I had one role that paid half of my rate for over time.
- sevensor 10y agoNot just tacit -- I used to work at a factory, where as an engineer I was exempt. But I was on 12 hour shifts, 3 on, 4 off, 4 on, 3 off. Except that if there's a meeting, you stay an extra hour or come in an hour early. Or if there's an incident, you stay until everything is cleaned up. And if there's a meeting on your off day? You come in anyway. You get paged in the middle of the day / night when you're supposed to be asleep? You call in, and if things are bad enough you come in. Nothing tacit about it. If you didn't do those things, you were getting fired.
- fra 10y agoComparing yearly wage with market cap makes no sense. You should be looking at gross profit / year.
- sharemywin 10y agoit would look even more out of wack. Tech companies are way more profitable.
- nickff 10y agoMore importantly (for market cap), they often grow faster.
- deleted 10y ago[deleted]
- sharemywin 10y agoFunny cause amazon is closer to the 330K per employee mark. Wonder why their P/E is so high? Assuming it took all of walmart's sales it would only get 4 times bigger then now. how much profit can it extract?
- redorb 10y agoAmazon appears to be able to ramp of profit at will via controlling expenditures and promotions. Review this years numbers vs the prior years. I think they wanted to show a investor what it looks like when they 'wanted' to turn a profit instead of plowing money back into everything imaginable. https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=UvbaV-HHMdihjAH0qojYBw https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=... If I'm wrong and they are still plowing money back into everything and are still throwing off numbers like this (compared to the past) ~ that's simply amazing. even after thinking through that defense - a 191 P/E is above my understanding. I think their technology and software revenues are seen a hyper growth
- sharemywin 10y agoI think AWS is masking the non tech size profits of a bunch of warehouses moving and storing goods.
- nickpsecurity 10y agoIt's possible. I did a research report on Amazon many years ago since I kept hearing people gripe about them not being profitable. They turned a large enough profit on that year that they could've wiped out all their debt in 1 to 2 years. They could then just keep pulling in profit. It was clear they were instead re-investing all their money back into the company's operations for growth and dominance. They also had this growing business selling computing resources that had taken over a new market with projected long-term potential. ;)
- rogerbinns 10y agoI'll bite. How about for every incremental $1 in ecommerce spending, Amazon gets about 50 cents? And (roughly speaking) many new startups start out and grow on AWS providing new revenue as well as valuable intelligence. http://www.marketwatch.com/story/amazon-will-account-for-more-than-half-of-2015-e-commerce-growth-says-macquarie-2015-12-22 http://www.marketwatch.com/story/amazon-will-account-for-mor... https://stratechery.com/2016/the-amazon-tax/ https://stratechery.com/2016/the-amazon-tax/
- arca_vorago 10y ago"today's white collar laborers are capturing one or two orders of magnitude less of the value they're creating than the blue collar workers of 1990's detroit." Which is why the problems associated are much more about the macro-economy than they are about silicon valley. The middle class is being gutted before our very eyes while the elite gobble up more and more of the "created value" through the power of technology.
- WalterBright 10y agoWealth isn't zero sum. Creating something of value doesn't take anything away from anyone else.
- Decade 10y agoWell, it is zero sum, but the actual limits are unimaginably vast. Though, there is a very high energy barrier to exploiting the resources of the entire universe. Let’s at least get to Mars, first. There’s the matter of supply and demand. Nothing comes out of nowhere. When you create a thing, you demand some resources, and then the next person has to pay more for the same resource. Even for a creative output from yourself, you need food and shelter. (And what a controversy shelter has become, in the San Francisco Bay Area.) In the ideal case, the resources you consume enable you to create more wealth than you cost to the rest of society, and thus society benefits. (Not the now homeless person in San Francisco, though.) Technology is sort of weird in that consumption actually decreases costs, in some situations. The semiconductor companies are paying exponentially increasing costs for state of the art fabs, and they need to keep the fabs selling at peak capacity to make a profit. Also, software is merely knowledge, with very low reproduction costs, so a small production of software can be consumed on a vast scale across the planet, and facilitate the production of more software, enriching people’s lives. This does not make it easy to reward the creators fairly.
- crdoconnor 10y ago>Wealth isn't zero sum. It is sometimes. The profits "earned" by Wall Street are nearly always zero sum, for instance. They are not making other people richer.
- snowwrestler 10y agoThe difference is that the autoworkers were organized and used collective bargaining to capture more value.
- Decade 10y agoAnd what a mixed blessing that turned out to be. On the one hand, we had a few decades of unprecedented sharing of prosperity. Those times have ended. On the other hand, the unions have become their own sclerotic system of oppression. The greater pity, they do not see it that way. Especially once all this “deregulation” has finished. Actually, it was not deregulation, but divestiture of public services to the plutocrats. Barely any regulations have been removed. Now we have basic services supposedly available on a free market, but in practice there are so many requirements that it’s all crony capitalism. And one of the major powers fighting for its share of the bureaucracy and waste is the unions. That’s one reason why it costs so much and takes so long to do anything in an industry controlled by unions. Unions are nice, but tricky to do right, and currently there are a lot of bad examples.
- TimJYoung 10y agoThe private sector unionization rate is around 6.7% in the US so, despite whatever issues unions may have presented in the past, they are certainly not the primary cause of any of our current economic issues.
- Decade 10y agoBut the public sector unionization rate is more like 36%, and unions have an outsized economic impact. They aren’t the primary cause of our issues, but they have their share. Whether it’s teacher unions that make sure teachers can’t get promoted for their quality, or construction unions that make sure housing can’t be built without protracted negotiations and significant expense, or transportation unions that make sure automated subways always have an operator, multiple operators in New York, or dockworker unions that oppose new technology on the (correct) assumption that they would lose jobs. Union opposition to technology was one reason why the Port of San Francisco no longer is a major shipping port; rather than some losing their jobs, everybody lost their jobs. It’s nice if labor can partner with capital. In practice, it’s often more like a squabble for scarce resources. Sometimes you have to accept that a role is no longer necessary, but that idea doesn’t fit the union ideology.
- aub3bhat 10y agoYou can't divide market capitalization by number of employees and compare that with "yearly" salary figure. A better comparison would be to divide revenue by number of employees.
- amelius 10y agoAt least explain why this is not a good first-order comparison.
- planteen 10y agoYou are going to have high market cap per employee in asset rich companies like oil producers and REITs. The value in those cases is primarily the mineral and real estate assets, not the employees, so tying salaries to it doesn't make a lot of sense.
- amelius 10y agoYes, but in the case of silicon valley, the actual assets aren't that big.
- oli5679 10y agoAnnual salaries come from our weird convention of defining years as groups of 365 days. A software engineer can earn $100k/year but also $1m/decade. Neither is comparable to a company being worth $xbillion because you're comparing stocks with flows.
- danmaz74 10y agoEven better, value added per employee.