14 ms·

US bosses now earn 312 times the average worker's wage

172 points by eplanit 8y ago

pitaj 8y ago
"The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both." - Milton Friedman
- jeffreyrogers 8y ago
  Milton Friedman would find a lot to criticize about our current economic system.
  - ionised 8y ago
    He's partly responsible for our current system.
    - jeffreyrogers 8y ago
      To some extent, though I'd argue that many of the failures of the current system are either orthogonal to or directly in conflict with Friedman's own policies.
      - pitaj 8y ago
        One thing Friedman was incorrect about was monetary policy. Most other things, he was correct about.
- jmcqk6 8y ago
  He would have a hard time justifying that in the face of historical fact. Historically speaking, people who have gained power have used that power to limit the freedom of others. I think history is pretty clear that optimizing for "most freedom" means "allow people lucky enough to gain power the freedom to exercise it over others." Maximizing for freedom is great if you're part of a group that tends to hold power. It's not so great if you're part of a group that tends to not.
  - pitaj 8y ago
    Historically speaking, the more freedom, the more equality and the better off everyone is. - Countries which add restrictions the the economy see slower wealth growth and more inequality - Countries which free up their economy see acceleration in growth and more equality - Countries with free economies outperform neighboring, similar countries which are more restrictive - Industries which are more free are more innovative, and become cheaper, faster than heavily regulated industries
    - jmcqk6 8y ago
      I can appreciate what you're saying, but please don't ignore the countless counter-examples. Compare health outcomes of countries with socialized medicine to those without, for example. How many regulations exist because private companies couldn't be trusted to do the right thing on their own? The Civil Rights act. Sure, you can point out that soviet russia failed economically, especially compared to the US, but there is nothing about that fact that contradicts the point that "freer" economic structures have also led to serious power imbalances between employers and employees, and that many of the rights employees have today in the US are only due to regulation imposed by governments.
      - pitaj 8y ago
        > Compare health outcomes of countries with socialized medicine to those without, for example. Socialized medicine is likely better than the current state of US healthcare, but US healthcare is by no means a free market. In fact, it's probably the most regulated and otherwise distorted by government policy. It all started with the introduction of medicare and the wage caps of the WWII era leading to employer-linked insurance. Before that, it was much more affordable. > How many regulations exist because private companies couldn't be trusted to do the right thing on their own? The Civil Rights act. The civil rights act was created as a response to other state distortions, like Jim Crow laws and segregation. It isn't necessary to prevent discrimination: incentives against that already exist in the marketplace. Give me an example of a regulation, and I'll tell you why it is either unnecessary or actively harmful. > the point that "freer" economic structures have also led to serious power imbalances between employers and employees To the contrary, freer economies led to the reduction of child labor and improvements to worker's lives before any policy actions were implemented. > many of the rights employees have today in the US are only due to regulation imposed by governments If by rights, you mean privileges.
- ionised 8y ago
  Milton Friedman was one of a few economists responsible for what would become the neoliberal economic policies that free markets are infallible that we have today. Policies that have benefitted primarily the already wealthy amassers of capital and which are in large part responsible for the massive income inequality and erosion of labour rights that is present for the first time since the Gilded Age. His idea of human beings as rational, self-interested economic actors that is a ludicrously narrow model of the human being and has been disastrous for the working and middle classes all over the developed world. Quotes from Friedman are worth nothing to me, personally.
  - fbonetti 8y ago
    > His idea of human beings as rational, self-interested economic actors that is a ludicrously narrow model of the human being Sure, but in order to understand human behavior on the scale of millions of people making billions of transactions, you need to start with a simple axiom and move on from there. I think people hear the word "self-interest" and think "greed", and assume that mainstream economics must be predicted on a very cynical view of human beings. That's not the case at all. We all want to survive. We can't possibly understand the individual needs of other people outside of a small circle of people that we love and care about. None of us are omniscient. The beautiful thing about markets is that none of us need to have perfect information in order to participate. By simply buying the things we need and selling things the things we don't, prices emerge in a totally decentralized way. If you can think of a more accurate way to describe human economic motives, I'd like to hear it. > has been disastrous for the working and middle classes all over the developed world. Capitalism has lifted billions out of poverty. Sure, there's a large gap between the richest and poorest, but the poorest people of the world are also materially better off than at any other point in human history. I don't see how this is a bad thing.
    - s73v3r_ 8y ago
      That doesn't mean Capitalism can't do better. I'm extremely tired of this "Capitalism did good things once! Why are you criticizing Capitalism?" trope when talking about the very obvious flaws of it.
- jimbokun 8y ago
  Was he right?
  - s73v3r_ 8y ago
    Most would probably say no.
- marcosdumay 8y ago
  Yeah, on some magical world where there being a couple of powerful people on your area that decide if you'll have enough to eat or will starve isn't an obstacle for personal freedom. I wouldn't get lifetips from Friedman. Has was an important economist, and certainly pushed our knowledge forward... but I don't think there is any of his personal opinions on the theory that wasn't proven false already.
GlobalFrog 8y ago
That reminds me of a study about the ancient Rome by Walter Schiedel et Steven Friesen (The Size of the Economy and the Distribution of Income in the Roman Empire) Link there : https://doi.org/10.3815/007543509789745223 https://doi.org/10.3815/007543509789745223 To sum it up, they studied the economy of that time and noticed a few things : the "elite" (1,5% of pop.) had about 20% of the state wealth, they studied the other classes, and reached the conclusion that the economy structure could not allow for more concentration of the wealth. And if you analyze the numbers, the inequality in the USA is more important today than it was in Rome. That's quite striking when you remember that in Rome, they had slaves, their kind of nobility, domination of vast lands and resources... I don't know where, but I read something else about Rome, and the parallels with today : - the candidate elected to an office was the one who spend the more money on 90% of the time - the draft abolition led to distancing the citizens to the blood shed in wars, and there was a rise in the use of mercenaries ("private contractors") - the empire expanding, being a citizen was not being simply a white guy born close to the country. All those three points were true for Rome and they are today true also for most of the Western countries. In Rome, it led first to the fall of the Republic, the rise of the empire, the growth of inequalities and its fall. So my guess is that all Western countries should think about it, because they all have some similarities with this society evolution course.
- orf 8y ago
  The elite also retreated into their estates, away from the law. This led to perverse insentives where they would withhold fighting men from the state, illegally, as the empire desperately needed men to replenish losses. There are many parallels to draw, not all are valid given the 1500 year difference, but... Yeah.
tribesman 8y ago
it's the same story in football. I am an average player and Ronaldo makes a lot of money, while i nearly went broke playing football. Pretty, sure most people don't understand what it takes to be a good CEO, so they'll be crying inequality. Inequality comes from the nature.
jeffreyrogers 8y ago
I wonder what this looks like if you break it down by industry and firm size. It seems odd that this sort of thing can persist (and increase) over time since you'd expect competition within industries to drive this down over time.
- dantheman 8y ago
  Just to flip your assumptions around here's an idea; no personal knowledge here, just a potential alternate narrative. Perhaps competition drives executives salaries faster than general workers. There is intense competition for those who can have a large impact on the bottom line. In tougher/faster paced competitive environment the demand for qualified/experienced individuals must be intense.
  - maxerickson 8y ago
    I imagine much of the explanation is firm size growing. You don't have to scrape out a lot of Walmart's revenues to get a huge salary. You have to scrape out a pretty big chunk of the revenue of a 50 person firm to get a large salary, never mind a huge one.
- abvdasker 8y ago
  Simplest explanation could be a macro-level decrease in competition through greater levels of consolidation and monopoly.
- deleted 8y ago
  [deleted]
- tdb7893 8y ago
  I'm under the impression from anecdotes that competition is decreasing in the American economy (though I would love to see data on it). Industries have been consolidating and even startups seem to avoid actually competitive markets as they are less profitable.
- duxup 8y ago
  I feel like there is a fairly heavy executive... club that is happy to hire their buddies and keep paying each other.... they're also on the boards that make these decisions. I think that forces driving the market are often, these same guys who are getting paid.
xiphias 8y ago
If I was looking for a job, no open-office policy and ,,private spaces for teams of 3-6'' would be a great benefit. Hopefully at some point companies will use this benefit in their recruitment practices (though I'm not keeping my hopes up, as office space is expensive).
Pica_soO 8y ago
If these guys where not so often basically preventing the kind of growth they are paid for- maybe this would be a acceptable state of affairs. But looking at the patent-machinery, the lawsuit-crusades and their murderous buying sprees into any space where a challenger could grow- these guys are really expensive, for humanity as a total. Also take note, that the agreements to not enter bids for software developers - basically limiting wage growth, seems not to apply for CEOs.
eeZah7Ux 8y ago
> Bezos ... took home $1.7m in 2017 while the average Amazon worker earned $28,446 - a ratio of 59-to-one. The claim is highly misleading. Bezos owns a large amount of Amazon stocks. The stock value growth is a huge extra to his salary.
- Waterluvian 8y ago
  Which is pretty great way to bind Performance to compensation.
  - phil248 8y ago
    And a truly great way to exacerbate economic inequality.
forinti 8y ago
As the US's gini gets closer and closer to Brazil's, its politics start to look similar also.
- marcosdumay 8y ago
  When you marginalize people, they'll look more and more outside of society's box. The US is luck in that there are plenty of opportunities for non-workers without advanced education to make their life, but there is no way their inequality can keep increasing without those opportunities disappearing (as they depend on a middle class). When they disappear, the only thing out of society's box will be crime. If you want to know how the US will become once it gets more similar to Brazil, take a look at Brazil.
roenxi 8y ago
If I put my shareholder hat on I can believe that competence at the CEO level is 312x more valuable than at the worker level. Personally, I'm suspicious that all the extra money won't correlate with any sort of useful increase in performance. How is paying these people more going to encourage better decisions? It just means they'll have more comfortable holidays. I've seen head-office politics, and believe that the system used for promotions can tell great from terrible. But there is no way it has the capability of picking who would be best choice to run a company out of 50 senior management figures. There is a lot of pot luck in whether the market conditions are favorable in any given CEOs tenure. Anyone 3-4 levels away from the frontline probably has a reasonable shot at being the best choice to manage a large company.
- ballenf 8y ago
  Another informative metric might be the ratio of pay of a manager to all managed employee salaries. So as companies grow and consolidate, you have a single CEO managing the employee force of a dozen acquired companies (or what could be separated out into many different companies). Just seems like CEOs today are something like the CEO of multiple CEOs, companies have grown so large. Should the person who is skilled at managing CEOs be paid more than the CEO that is skilled at managing business units? The market says 'yes'. Maybe CEOs should just explain that they have x jobs, one for each business unit. And then get paid independently for each one.
- duxup 8y ago
  I think the pot luck you describe combined with it being super hard to evaluate who is a valuable executive and who isn't ... just makes it a very muddy / weird market.
- Eridrus 8y ago
  Maybe it's just me, but I'm not really mad at how much the CEO of the big tech company I work at makes, it really has no impact on me. If we took his compensation and spread it around, no-one would feel it. I was much more irked by the difference between founder/early employee stakes at a startup where the magnitude of the difference was much smaller than 312x, but redistributing their stake would actually have been felt due to the smaller size.
Shivetya 8y ago
I am still of the opinion that you need to look at the overall compensation of the company versus how much the bosses are taking in. this type of comparison can be made in many industries from sports to movies as well. there are always people at the top of the food chain but for some reason we single out corporate leaders rather than sports and movie stars. heck we could sit back and compare the pay and benefits of the leaders in politics to the rank and file at the bottom of their party or typing pools too. my local university pays over a million plus benefits to its chancellor/president, how does that compare to the cafeteria workers or sanitation people of the university? a public funded university. it is all perspective, you are being led by the nose to look everywhere but behind the curtain. behind that curtain you will find many who want to slap others with rules they will quietly excuse themselves from or word in such a way as to miss them. it is exploitation of jealousy for political benefit
anilshanbhag 8y ago
Average Walmart worker earned $19,177 in 2017 while CEO Doug McMillon took home $22.8m – a ratio of 1,188-to-one. Yes its a big number, however I don't see anything wrong here. Walmart has around 2.3m workers, Doug's salary is roughly $10 per worker per year. Also, $23M is chump change as he is doing a great job in moving Walmart (just this morning Walmart stock increased 10% == $26B - 1000x his salary). Salaries are only part of the equation. For example, Drew Houston (founder of Dropbox) is worth $3 billion while an software developer at Dropbox has net equity of less than $1 million. Thats 3000-to-1.
- jmcqk6 8y ago
  So what about the fact that the average worker earned a salary low enough to qualify them for foodstamps (given a household size of 2)? Basically walmart is paying these low wages and getting subsidized by the federal government so that their workers can eat. Or when you say "I don't see anything wrong here" are you really just limiting yourself to the difference between average worker salary and ceo pay?
  - zdragnar 8y ago
    Worker pay is a function of the available supply of people capable and willing to work the job and the opportunity cost of not filling the position. The opportunity cost of not filling a low paying job is generally quite low. Likewise, the wages for such jobs vary quite a bit, moreso than cost-of-living differences would account for. If you want to price wages based on some moral virtue, you will risk losing investors, or hurt poor people (aka your customers) by raising prices. In your scenario, it isn't Walmart that's being subsidized, it's a community with so many people desperate for work but not qualified enough to get a better job that they're willing to take a job that doesn't pay enough.
    - aerotwelve 8y ago
      Don't you think there are plenty of people out there that would be willing to do Doug's job just as well (or better) for < 22.8 million?
weeksie 8y ago
It's simple: workers have less bargaining power than they used to have so they can't demand a share of the profits the way that those at the top can. I'm not a fan of unions because they have the same power-structure problems that any large organizations have, but the rise in pay inequality clearly coincides with the decline of unions. No idea what the answer is. Whether it's some version of ensuring a worker advocate is on the board of a corporation or that some kind of coop ownership scheme gives employees voting rights, hell I have no idea, but pay inequality won't change on its own. Workers that have done well are those who can either draw a direct line between their contribution and profits (sales) or are scarce enough to demand high compensation (tech workers). Most everybody else is shit out of luck from a negotiation perspective, at least without some form of collective action.
- hedora 8y ago
  The answer is open shop unionization. The US is closed shop, which means you can only have one choice of union, take it or leave it. With open shops, the unions have to compete for your membership so they actually have to do stuff in your interest, or you can make your own union to replace them. With closed shop, you get stuff like the UAW pushing for pay caps on graduate students (really).
  - pseudalopex 8y ago
    In the US, "closed shop" means the company can only hire union members, which is illegal. "Open shop" means the union has to represent non-members but they don't have to pay for it. It sounds like you're talking about members-only unions.
- maxxxxx 8y ago
  Unions have to make a comeback. Look at German unions. They are organized over a whole industry, not just companies, have a seat on the board of directors. I think this system works really well.
  - TearsInTheRain 8y ago
village-idiot 8y ago
I’m worried that this is starting to get to destabilizing levels of inequality.
- sgc 8y ago
  It's well beyond that already. There is just a lag between the condition and its effect. But if you look at American politics, it seems we might be in the midst of the destabilization process.
  - village-idiot 8y ago
    I live there, so I’m not super thrilled about this social experiment.
  - deleted 8y ago
    [deleted]
- gscott 8y ago
  One thing that helps is that the super-rich live separate lives then the poor so it isn't thrown in your face. The super rich in their enclaves can enjoy their fancy cars, food, etc while the poor don't have to see all that excess. The poor don't even know that type of excess exists except for a glimmer on tv occasionally.
  - zdragnar 8y ago
    Seriously? A glimmer? TV is a wasteland of shows glorifying the lives of the wealthy. There's even an entire genre of reality TV called "Real Housewives of...". Or, you know, the Kardashians, who literally multiplied their net worth by filming a TV show about their wealthy, drama filled lives...
    - germinalphrase 8y ago
      But are those really a reflection of how - say - Bezos or some oil rich prince actually live? I doubt it. I expect it is actually mostly banal despite the staggering level of resources they and theirs casually consume.
locklock 8y ago
What are the chances that this has anything to do with merit? It's just another example of the same thing happening everywhere else in the American economy: people who are already rich taking more and more money for themselves, leaving much less for the rest of it. Of course there are people whose job it is to tell us that yes, these CEOs actually deserve this and have earned it, but that's just another part of the scam.
maxxxxx 8y ago
"the bosses of America’s largest companies got an average pay rise of 17.6% in 2017, taking home an average of $18.9m in compensation while their employees’ wages stalled, rising just 0.3% over the year." That's the worst part of it. Companies are split up in two sections. One that benefits from the company's success while others get almost nothing. I see that in my company. In meetings they celebrate increased revenue and earnings. When I look around almost nobody except a few top guys I see benefits from that success and instead has to wonder when his job goes to India. There was a discussion here about increasing employee participation. I really think we should get away from the belief that only shareholders count but also acknowledge that employees and even the communities where the company has its buildings have a stake.
- freehunter 8y ago
  Man I hate that too. We throw parties to celebrate the company's financials if they're above target, but we don't get pay raises for it. Yet when the company is still profitable but misses revenue targets by 0.5%, we get told no pay raises because we missed targets and you're just lucky you're not getting laid off because we only made $9.95b in profits, not the $10b we wanted.
  - ajeet_dhaliwal 8y ago
    The weirdest thing about these parties is some of the gormless employees love them.
    - s73v3r_ 8y ago
      I mean, it's at least free cake. And an hour or so where you don't have to do work.
  - nojvek 8y ago
    Supply and Demand. If you don’t like it, make some noise and leave to a place where you do get equity. If you think you are truly worth that money, then build your own business. AAGMF has becoming a massive juggernaut taking in insane amount of talent and sometimes directing them towards mundane causes. Quitting is always an option.
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close04 8y ago
Getting a big payout is not the problem. Getting a big payout that's disproportional to the company's performance or profitability is. Getting a golden parachute while the plane is diving should not be an option. Bonus/malus.
- s73v3r_ 8y ago
  Agreed. I'd wager that most people on this board, if they fuck up at their job and get fired, are not going to get any kind of golden parachute. They're just going to be kicked out on their ass.
pome 8y ago
Maybe somewhere there are CEO/Workers salary statistics by country in 2018? I'm found only this[0], but 2014 years. [0] https://www.statista.com/statistics/424159/pay-gap-between-ceos-and-average-workers-in-world-by-country/ https://www.statista.com/statistics/424159/pay-gap-between-c...
HugoDaniel 8y ago
How do I become a US boss ?
- xkcd-sucks 8y ago
  I became my own boss through a program called AmWay, and you can too. Email me for details
  - selimthegrim 8y ago
    Even as a troll, that shit isn’t funny here. I’ve seen college students at Tulane trying to “finance their education” by selling Cutco. These guys are not from poor families.
jandrewrogers 8y ago
This is only the 350 highest paid CEOs in the US -- there are >50k enterprises of substantial size in the US. The median pay for CEOs per the government is less than many medical professionals. Some CEOs receive lavish compensation but most work for wages of a Silicon Valley software engineer. I'd much rather work as a software engineer than a CEO.
- pcarolan 8y ago
  I love this perspective. Do you have data to support it?
  - onefishtwofish 8y ago
    > The median pay for CEOs per the government https://www.bls.gov/oes/current/oes111011.htm https://www.bls.gov/oes/current/oes111011.htm
  - pcarolan 8y ago
    Can the person who down-voted me explain why asking for a source on a fact-based statement is worth a down-vote? Just curious why that's offensive? I could have googled it myself, but it's not my source, it's the OPs I was interested in.
- heurist 8y ago
  But how many employees do those 350 CEOs represent?
- gonvaled 8y ago
  You should also consider: 1) The percent of income that those 350 CEOs have of the whole employee's income. And more importantly: 2) The percent of wealth that those 350 CEOs have, compared to the whole US population. And even more importantly: 3) How is wealth distributed in the US? Those CEOs are probably outclassed by other categories. All this to say that trickle down does not work, at all.
  - Veelox 8y ago
titzer 8y ago
I'll be flamed or downvoted or both, but food for thought: After a long time (most of my adult life) as a small-l libertarian believing in the rationality of free markets, the rule of the invisible hand, and heck, the sheer morality of profitability, after seeing what wreckage that has brought to societal institutions, the internet, the environment, and generally speaking, what growthism has done to our ability to plan long-term as a species, as nations, societies, and what selfishness and greed has led us all to, I have gradually come to the conclusion that the world should institute an overall personal wealth cap that specifically targets the people at the top. Concretely, I think that no human should be allowed to have personal assets of more than $~100 million in any way, shape or form. Yeah, I know, it's unworkable. Unfair! Impossible to enforce! It won't fix our financial mess! It'll suppress growth and innovation! How do you expect people to motivate themselves if they can't make a billion dollars!? Well I'll humbly submit that anybody who feels driven to earn a billion dollars--that's enough greenbacks that if you thumbed through them, one a second every second of every single day of every day of the year, it'd take you 30 years just to count them--has a severe mental illness called greed. A billion dollars is 100 lifetimes of living 100 years at $100,000/yr living standard. It's just insane to think that we're OK with this because they "earned it". Horseshit. Jeff Bezos's $150 billion is 15,000 lifetimes worth. Billionaires are accidents. They are artifacts of hierarchy that we endure, cowed, because we don't have stomach to see how empty our souls are and do something about it. No billionaire has ever earned 100 lifetimes of wealth.
- guru4consulting 8y ago
  To put the 15,000 lifetimes in perspective... there has been 7,500 generations of humans since the emergence of Homosapiens. Civilization started only 500 generations ago..
ratsz 8y ago
The CEO of my company could give each of his 10,000 employees $1M and he'd still have a higher net worth than all of them combined.
makecheck 8y ago
The problem, as always, is that there are no apparent penalties for being Worst CEO Ever, except “fewer millions of dollars”. And the screw-ups are the ones that make workers say “hell, pay me 1/100th of what you paid him and I can make bad decisions too!”. Worse, there is a scale of effect here. If you take a million dollars away from even an above-average worker, his life savings is gone and he’s screwed and in debt. If you take it away from an overpaid exec, he’s just a little pissed but he’ll be fine. Heck, the excellent PR alone should make it a good idea for companies to spread extra millions among workers, as it is unquestionably the right thing to do morally (besides: the workers probably deserve it due to inflation alone, the company will do better due to worker motivation, etc.).

172 points by eplanit 8y ago

"The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both." - Milton Friedman

jeffreyrogers 8y ago
Milton Friedman would find a lot to criticize about our current economic system.
- ionised 8y ago
  He's partly responsible for our current system.
  - jeffreyrogers 8y ago
    To some extent, though I'd argue that many of the failures of the current system are either orthogonal to or directly in conflict with Friedman's own policies.
    - pitaj 8y ago
      One thing Friedman was incorrect about was monetary policy. Most other things, he was correct about.
jmcqk6 8y ago
He would have a hard time justifying that in the face of historical fact. Historically speaking, people who have gained power have used that power to limit the freedom of others. I think history is pretty clear that optimizing for "most freedom" means "allow people lucky enough to gain power the freedom to exercise it over others." Maximizing for freedom is great if you're part of a group that tends to hold power. It's not so great if you're part of a group that tends to not.
- pitaj 8y ago
  Historically speaking, the more freedom, the more equality and the better off everyone is. - Countries which add restrictions the the economy see slower wealth growth and more inequality - Countries which free up their economy see acceleration in growth and more equality - Countries with free economies outperform neighboring, similar countries which are more restrictive - Industries which are more free are more innovative, and become cheaper, faster than heavily regulated industries
  - jmcqk6 8y ago
    I can appreciate what you're saying, but please don't ignore the countless counter-examples. Compare health outcomes of countries with socialized medicine to those without, for example. How many regulations exist because private companies couldn't be trusted to do the right thing on their own? The Civil Rights act. Sure, you can point out that soviet russia failed economically, especially compared to the US, but there is nothing about that fact that contradicts the point that "freer" economic structures have also led to serious power imbalances between employers and employees, and that many of the rights employees have today in the US are only due to regulation imposed by governments.
    - pitaj 8y ago
      > Compare health outcomes of countries with socialized medicine to those without, for example. Socialized medicine is likely better than the current state of US healthcare, but US healthcare is by no means a free market. In fact, it's probably the most regulated and otherwise distorted by government policy. It all started with the introduction of medicare and the wage caps of the WWII era leading to employer-linked insurance. Before that, it was much more affordable. > How many regulations exist because private companies couldn't be trusted to do the right thing on their own? The Civil Rights act. The civil rights act was created as a response to other state distortions, like Jim Crow laws and segregation. It isn't necessary to prevent discrimination: incentives against that already exist in the marketplace. Give me an example of a regulation, and I'll tell you why it is either unnecessary or actively harmful. > the point that "freer" economic structures have also led to serious power imbalances between employers and employees To the contrary, freer economies led to the reduction of child labor and improvements to worker's lives before any policy actions were implemented. > many of the rights employees have today in the US are only due to regulation imposed by governments If by rights, you mean privileges.
ionised 8y ago
Milton Friedman was one of a few economists responsible for what would become the neoliberal economic policies that free markets are infallible that we have today. Policies that have benefitted primarily the already wealthy amassers of capital and which are in large part responsible for the massive income inequality and erosion of labour rights that is present for the first time since the Gilded Age. His idea of human beings as rational, self-interested economic actors that is a ludicrously narrow model of the human being and has been disastrous for the working and middle classes all over the developed world. Quotes from Friedman are worth nothing to me, personally.
- fbonetti 8y ago
  > His idea of human beings as rational, self-interested economic actors that is a ludicrously narrow model of the human being Sure, but in order to understand human behavior on the scale of millions of people making billions of transactions, you need to start with a simple axiom and move on from there. I think people hear the word "self-interest" and think "greed", and assume that mainstream economics must be predicted on a very cynical view of human beings. That's not the case at all. We all want to survive. We can't possibly understand the individual needs of other people outside of a small circle of people that we love and care about. None of us are omniscient. The beautiful thing about markets is that none of us need to have perfect information in order to participate. By simply buying the things we need and selling things the things we don't, prices emerge in a totally decentralized way. If you can think of a more accurate way to describe human economic motives, I'd like to hear it. > has been disastrous for the working and middle classes all over the developed world. Capitalism has lifted billions out of poverty. Sure, there's a large gap between the richest and poorest, but the poorest people of the world are also materially better off than at any other point in human history. I don't see how this is a bad thing.
  - s73v3r_ 8y ago
    That doesn't mean Capitalism can't do better. I'm extremely tired of this "Capitalism did good things once! Why are you criticizing Capitalism?" trope when talking about the very obvious flaws of it.
jimbokun 8y ago
Was he right?
- s73v3r_ 8y ago
  Most would probably say no.
marcosdumay 8y ago
Yeah, on some magical world where there being a couple of powerful people on your area that decide if you'll have enough to eat or will starve isn't an obstacle for personal freedom. I wouldn't get lifetips from Friedman. Has was an important economist, and certainly pushed our knowledge forward... but I don't think there is any of his personal opinions on the theory that wasn't proven false already.

GlobalFrog 8y ago

That reminds me of a study about the ancient Rome by Walter Schiedel et Steven Friesen (The Size of the Economy and the Distribution of Income in the Roman Empire) Link there : https://doi.org/10.3815/007543509789745223 https://doi.org/10.3815/007543509789745223 To sum it up, they studied the economy of that time and noticed a few things : the "elite" (1,5% of pop.) had about 20% of the state wealth, they studied the other classes, and reached the conclusion that the economy structure could not allow for more concentration of the wealth. And if you analyze the numbers, the inequality in the USA is more important today than it was in Rome. That's quite striking when you remember that in Rome, they had slaves, their kind of nobility, domination of vast lands and resources... I don't know where, but I read something else about Rome, and the parallels with today : - the candidate elected to an office was the one who spend the more money on 90% of the time - the draft abolition led to distancing the citizens to the blood shed in wars, and there was a rise in the use of mercenaries ("private contractors") - the empire expanding, being a citizen was not being simply a white guy born close to the country. All those three points were true for Rome and they are today true also for most of the Western countries. In Rome, it led first to the fall of the Republic, the rise of the empire, the growth of inequalities and its fall. So my guess is that all Western countries should think about it, because they all have some similarities with this society evolution course.

orf 8y ago
The elite also retreated into their estates, away from the law. This led to perverse insentives where they would withhold fighting men from the state, illegally, as the empire desperately needed men to replenish losses. There are many parallels to draw, not all are valid given the 1500 year difference, but... Yeah.

tribesman 8y ago

it's the same story in football. I am an average player and Ronaldo makes a lot of money, while i nearly went broke playing football. Pretty, sure most people don't understand what it takes to be a good CEO, so they'll be crying inequality. Inequality comes from the nature.

jeffreyrogers 8y ago

I wonder what this looks like if you break it down by industry and firm size. It seems odd that this sort of thing can persist (and increase) over time since you'd expect competition within industries to drive this down over time.

dantheman 8y ago
Just to flip your assumptions around here's an idea; no personal knowledge here, just a potential alternate narrative. Perhaps competition drives executives salaries faster than general workers. There is intense competition for those who can have a large impact on the bottom line. In tougher/faster paced competitive environment the demand for qualified/experienced individuals must be intense.
- maxerickson 8y ago
  I imagine much of the explanation is firm size growing. You don't have to scrape out a lot of Walmart's revenues to get a huge salary. You have to scrape out a pretty big chunk of the revenue of a 50 person firm to get a large salary, never mind a huge one.
abvdasker 8y ago
Simplest explanation could be a macro-level decrease in competition through greater levels of consolidation and monopoly.
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tdb7893 8y ago
I'm under the impression from anecdotes that competition is decreasing in the American economy (though I would love to see data on it). Industries have been consolidating and even startups seem to avoid actually competitive markets as they are less profitable.
duxup 8y ago
I feel like there is a fairly heavy executive... club that is happy to hire their buddies and keep paying each other.... they're also on the boards that make these decisions. I think that forces driving the market are often, these same guys who are getting paid.

xiphias 8y ago

If I was looking for a job, no open-office policy and ,,private spaces for teams of 3-6'' would be a great benefit. Hopefully at some point companies will use this benefit in their recruitment practices (though I'm not keeping my hopes up, as office space is expensive).

Pica_soO 8y ago

If these guys where not so often basically preventing the kind of growth they are paid for- maybe this would be a acceptable state of affairs. But looking at the patent-machinery, the lawsuit-crusades and their murderous buying sprees into any space where a challenger could grow- these guys are really expensive, for humanity as a total. Also take note, that the agreements to not enter bids for software developers - basically limiting wage growth, seems not to apply for CEOs.

eeZah7Ux 8y ago

> Bezos ... took home $1.7m in 2017 while the average Amazon worker earned $28,446 - a ratio of 59-to-one. The claim is highly misleading. Bezos owns a large amount of Amazon stocks. The stock value growth is a huge extra to his salary.

Waterluvian 8y ago
Which is pretty great way to bind Performance to compensation.
- phil248 8y ago
  And a truly great way to exacerbate economic inequality.

forinti 8y ago

As the US's gini gets closer and closer to Brazil's, its politics start to look similar also.

marcosdumay 8y ago
When you marginalize people, they'll look more and more outside of society's box. The US is luck in that there are plenty of opportunities for non-workers without advanced education to make their life, but there is no way their inequality can keep increasing without those opportunities disappearing (as they depend on a middle class). When they disappear, the only thing out of society's box will be crime. If you want to know how the US will become once it gets more similar to Brazil, take a look at Brazil.

roenxi 8y ago

If I put my shareholder hat on I can believe that competence at the CEO level is 312x more valuable than at the worker level. Personally, I'm suspicious that all the extra money won't correlate with any sort of useful increase in performance. How is paying these people more going to encourage better decisions? It just means they'll have more comfortable holidays. I've seen head-office politics, and believe that the system used for promotions can tell great from terrible. But there is no way it has the capability of picking who would be best choice to run a company out of 50 senior management figures. There is a lot of pot luck in whether the market conditions are favorable in any given CEOs tenure. Anyone 3-4 levels away from the frontline probably has a reasonable shot at being the best choice to manage a large company.

ballenf 8y ago
Another informative metric might be the ratio of pay of a manager to all managed employee salaries. So as companies grow and consolidate, you have a single CEO managing the employee force of a dozen acquired companies (or what could be separated out into many different companies). Just seems like CEOs today are something like the CEO of multiple CEOs, companies have grown so large. Should the person who is skilled at managing CEOs be paid more than the CEO that is skilled at managing business units? The market says 'yes'. Maybe CEOs should just explain that they have x jobs, one for each business unit. And then get paid independently for each one.
duxup 8y ago
I think the pot luck you describe combined with it being super hard to evaluate who is a valuable executive and who isn't ... just makes it a very muddy / weird market.
Eridrus 8y ago
Maybe it's just me, but I'm not really mad at how much the CEO of the big tech company I work at makes, it really has no impact on me. If we took his compensation and spread it around, no-one would feel it. I was much more irked by the difference between founder/early employee stakes at a startup where the magnitude of the difference was much smaller than 312x, but redistributing their stake would actually have been felt due to the smaller size.

Shivetya 8y ago

I am still of the opinion that you need to look at the overall compensation of the company versus how much the bosses are taking in. this type of comparison can be made in many industries from sports to movies as well. there are always people at the top of the food chain but for some reason we single out corporate leaders rather than sports and movie stars. heck we could sit back and compare the pay and benefits of the leaders in politics to the rank and file at the bottom of their party or typing pools too. my local university pays over a million plus benefits to its chancellor/president, how does that compare to the cafeteria workers or sanitation people of the university? a public funded university. it is all perspective, you are being led by the nose to look everywhere but behind the curtain. behind that curtain you will find many who want to slap others with rules they will quietly excuse themselves from or word in such a way as to miss them. it is exploitation of jealousy for political benefit

anilshanbhag 8y ago

Average Walmart worker earned $19,177 in 2017 while CEO Doug McMillon took home $22.8m – a ratio of 1,188-to-one. Yes its a big number, however I don't see anything wrong here. Walmart has around 2.3m workers, Doug's salary is roughly $10 per worker per year. Also, $23M is chump change as he is doing a great job in moving Walmart (just this morning Walmart stock increased 10% == $26B - 1000x his salary). Salaries are only part of the equation. For example, Drew Houston (founder of Dropbox) is worth $3 billion while an software developer at Dropbox has net equity of less than $1 million. Thats 3000-to-1.

jmcqk6 8y ago
So what about the fact that the average worker earned a salary low enough to qualify them for foodstamps (given a household size of 2)? Basically walmart is paying these low wages and getting subsidized by the federal government so that their workers can eat. Or when you say "I don't see anything wrong here" are you really just limiting yourself to the difference between average worker salary and ceo pay?
- zdragnar 8y ago
  Worker pay is a function of the available supply of people capable and willing to work the job and the opportunity cost of not filling the position. The opportunity cost of not filling a low paying job is generally quite low. Likewise, the wages for such jobs vary quite a bit, moreso than cost-of-living differences would account for. If you want to price wages based on some moral virtue, you will risk losing investors, or hurt poor people (aka your customers) by raising prices. In your scenario, it isn't Walmart that's being subsidized, it's a community with so many people desperate for work but not qualified enough to get a better job that they're willing to take a job that doesn't pay enough.
  - aerotwelve 8y ago
    Don't you think there are plenty of people out there that would be willing to do Doug's job just as well (or better) for < 22.8 million?

weeksie 8y ago

It's simple: workers have less bargaining power than they used to have so they can't demand a share of the profits the way that those at the top can. I'm not a fan of unions because they have the same power-structure problems that any large organizations have, but the rise in pay inequality clearly coincides with the decline of unions. No idea what the answer is. Whether it's some version of ensuring a worker advocate is on the board of a corporation or that some kind of coop ownership scheme gives employees voting rights, hell I have no idea, but pay inequality won't change on its own. Workers that have done well are those who can either draw a direct line between their contribution and profits (sales) or are scarce enough to demand high compensation (tech workers). Most everybody else is shit out of luck from a negotiation perspective, at least without some form of collective action.

hedora 8y ago
The answer is open shop unionization. The US is closed shop, which means you can only have one choice of union, take it or leave it. With open shops, the unions have to compete for your membership so they actually have to do stuff in your interest, or you can make your own union to replace them. With closed shop, you get stuff like the UAW pushing for pay caps on graduate students (really).
- pseudalopex 8y ago
  In the US, "closed shop" means the company can only hire union members, which is illegal. "Open shop" means the union has to represent non-members but they don't have to pay for it. It sounds like you're talking about members-only unions.
maxxxxx 8y ago
Unions have to make a comeback. Look at German unions. They are organized over a whole industry, not just companies, have a seat on the board of directors. I think this system works really well.
- TearsInTheRain 8y ago

village-idiot 8y ago

I’m worried that this is starting to get to destabilizing levels of inequality.

sgc 8y ago
It's well beyond that already. There is just a lag between the condition and its effect. But if you look at American politics, it seems we might be in the midst of the destabilization process.
- village-idiot 8y ago
  I live there, so I’m not super thrilled about this social experiment.
- deleted 8y ago
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gscott 8y ago
One thing that helps is that the super-rich live separate lives then the poor so it isn't thrown in your face. The super rich in their enclaves can enjoy their fancy cars, food, etc while the poor don't have to see all that excess. The poor don't even know that type of excess exists except for a glimmer on tv occasionally.
- zdragnar 8y ago
  Seriously? A glimmer? TV is a wasteland of shows glorifying the lives of the wealthy. There's even an entire genre of reality TV called "Real Housewives of...". Or, you know, the Kardashians, who literally multiplied their net worth by filming a TV show about their wealthy, drama filled lives...
  - germinalphrase 8y ago
    But are those really a reflection of how - say - Bezos or some oil rich prince actually live? I doubt it. I expect it is actually mostly banal despite the staggering level of resources they and theirs casually consume.

locklock 8y ago

What are the chances that this has anything to do with merit? It's just another example of the same thing happening everywhere else in the American economy: people who are already rich taking more and more money for themselves, leaving much less for the rest of it. Of course there are people whose job it is to tell us that yes, these CEOs actually deserve this and have earned it, but that's just another part of the scam.

maxxxxx 8y ago

"the bosses of America’s largest companies got an average pay rise of 17.6% in 2017, taking home an average of $18.9m in compensation while their employees’ wages stalled, rising just 0.3% over the year." That's the worst part of it. Companies are split up in two sections. One that benefits from the company's success while others get almost nothing. I see that in my company. In meetings they celebrate increased revenue and earnings. When I look around almost nobody except a few top guys I see benefits from that success and instead has to wonder when his job goes to India. There was a discussion here about increasing employee participation. I really think we should get away from the belief that only shareholders count but also acknowledge that employees and even the communities where the company has its buildings have a stake.

freehunter 8y ago
Man I hate that too. We throw parties to celebrate the company's financials if they're above target, but we don't get pay raises for it. Yet when the company is still profitable but misses revenue targets by 0.5%, we get told no pay raises because we missed targets and you're just lucky you're not getting laid off because we only made $9.95b in profits, not the $10b we wanted.
- ajeet_dhaliwal 8y ago
  The weirdest thing about these parties is some of the gormless employees love them.
  - s73v3r_ 8y ago
    I mean, it's at least free cake. And an hour or so where you don't have to do work.
- nojvek 8y ago
  Supply and Demand. If you don’t like it, make some noise and leave to a place where you do get equity. If you think you are truly worth that money, then build your own business. AAGMF has becoming a massive juggernaut taking in insane amount of talent and sometimes directing them towards mundane causes. Quitting is always an option.

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close04 8y ago

Getting a big payout is not the problem. Getting a big payout that's disproportional to the company's performance or profitability is. Getting a golden parachute while the plane is diving should not be an option. Bonus/malus.

s73v3r_ 8y ago
Agreed. I'd wager that most people on this board, if they fuck up at their job and get fired, are not going to get any kind of golden parachute. They're just going to be kicked out on their ass.

pome 8y ago

Maybe somewhere there are CEO/Workers salary statistics by country in 2018? I'm found only this[0], but 2014 years. [0] https://www.statista.com/statistics/424159/pay-gap-between-ceos-and-average-workers-in-world-by-country/ https://www.statista.com/statistics/424159/pay-gap-between-c...

HugoDaniel 8y ago

How do I become a US boss ?

xkcd-sucks 8y ago
I became my own boss through a program called AmWay, and you can too. Email me for details
- selimthegrim 8y ago
  Even as a troll, that shit isn’t funny here. I’ve seen college students at Tulane trying to “finance their education” by selling Cutco. These guys are not from poor families.

jandrewrogers 8y ago

This is only the 350 highest paid CEOs in the US -- there are >50k enterprises of substantial size in the US. The median pay for CEOs per the government is less than many medical professionals. Some CEOs receive lavish compensation but most work for wages of a Silicon Valley software engineer. I'd much rather work as a software engineer than a CEO.

pcarolan 8y ago
I love this perspective. Do you have data to support it?
- onefishtwofish 8y ago
  > The median pay for CEOs per the government https://www.bls.gov/oes/current/oes111011.htm https://www.bls.gov/oes/current/oes111011.htm
- pcarolan 8y ago
  Can the person who down-voted me explain why asking for a source on a fact-based statement is worth a down-vote? Just curious why that's offensive? I could have googled it myself, but it's not my source, it's the OPs I was interested in.
heurist 8y ago
But how many employees do those 350 CEOs represent?
gonvaled 8y ago
You should also consider: 1) The percent of income that those 350 CEOs have of the whole employee's income. And more importantly: 2) The percent of wealth that those 350 CEOs have, compared to the whole US population. And even more importantly: 3) How is wealth distributed in the US? Those CEOs are probably outclassed by other categories. All this to say that trickle down does not work, at all.
- Veelox 8y ago

titzer 8y ago

I'll be flamed or downvoted or both, but food for thought: After a long time (most of my adult life) as a small-l libertarian believing in the rationality of free markets, the rule of the invisible hand, and heck, the sheer morality of profitability, after seeing what wreckage that has brought to societal institutions, the internet, the environment, and generally speaking, what growthism has done to our ability to plan long-term as a species, as nations, societies, and what selfishness and greed has led us all to, I have gradually come to the conclusion that the world should institute an overall personal wealth cap that specifically targets the people at the top. Concretely, I think that no human should be allowed to have personal assets of more than $~100 million in any way, shape or form. Yeah, I know, it's unworkable. Unfair! Impossible to enforce! It won't fix our financial mess! It'll suppress growth and innovation! How do you expect people to motivate themselves if they can't make a billion dollars!? Well I'll humbly submit that anybody who feels driven to earn a billion dollars--that's enough greenbacks that if you thumbed through them, one a second every second of every single day of every day of the year, it'd take you 30 years just to count them--has a severe mental illness called greed. A billion dollars is 100 lifetimes of living 100 years at $100,000/yr living standard. It's just insane to think that we're OK with this because they "earned it". Horseshit. Jeff Bezos's $150 billion is 15,000 lifetimes worth. Billionaires are accidents. They are artifacts of hierarchy that we endure, cowed, because we don't have stomach to see how empty our souls are and do something about it. No billionaire has ever earned 100 lifetimes of wealth.

guru4consulting 8y ago
To put the 15,000 lifetimes in perspective... there has been 7,500 generations of humans since the emergence of Homosapiens. Civilization started only 500 generations ago..

ratsz 8y ago

The CEO of my company could give each of his 10,000 employees $1M and he'd still have a higher net worth than all of them combined.

makecheck 8y ago

The problem, as always, is that there are no apparent penalties for being Worst CEO Ever, except “fewer millions of dollars”. And the screw-ups are the ones that make workers say “hell, pay me 1/100th of what you paid him and I can make bad decisions too!”. Worse, there is a scale of effect here. If you take a million dollars away from even an above-average worker, his life savings is gone and he’s screwed and in debt. If you take it away from an overpaid exec, he’s just a little pissed but he’ll be fine. Heck, the excellent PR alone should make it a good idea for companies to spread extra millions among workers, as it is unquestionably the right thing to do morally (besides: the workers probably deserve it due to inflation alone, the company will do better due to worker motivation, etc.).