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Workers are rarely paid that way because they don't want the risk. Most businesses will end up with negative profits. At best, no profits. Imagine being an empl

Workers are rarely paid that way because they don't want the risk. Most businesses will end up with negative profits. At best, no profits. Imagine being an employee for a year or two and then having to pay for the luxury at the end. It is no surprise that it is avoided, usually. It is definitely an option, though, for the workers who like the risk and think the chance of winning the lottery is there. Instead, workers usually prefer to estimate what the profitability will be up front and determine what they want out of the pie based on that assumption. Then they lock in at that price regardless of what happens. If the business fails, they still get their agreed upon amount. If the business thrives, they might only end up with a small piece of the pie, but it was worth it given the risk of ending up with nothing. It's essentially a futures contract. It seems a little much to get to have it both ways – to be guaranteed the estimated piece of the pie when the business fails, but also all the upside when the business succeeds beyond imagination. Why would anyone agree to that? Those rare moonshot wins are what pays the workers for the times that there are losses. If the workers got the proceeds from the moonshot wins and the proceeds from their futures contracts, the math would stop adding up and employment would grind to a halt.

crumbshot 6y ago
> Instead, workers usually prefer to estimate what the profitability will be up front and determine what they want out of the pie based on that assumption. I'm not certain what you mean here. When does this happen? This doesn't sound like the usual method or motivation for job seeking.
- randomdata 6y ago
  It happens all the time. It is why software developers in incredibly high margin tech companies will ask for incomes >$100,000/year, while servers at low margin restaurants are left to ask for minimum wage. Tech companies can end up never making a dime and restaurants can produce fortunes, but on a statistical probability basis, the profitability of a tech company is more likely to round out to that $100,000 per employee figure and a restaurant the minimum wage figure, on average. That makes those asks to be quite reasonable and the market settles there. When the future is unknown, when the futures contracts are being established, one can only guess as to how much money that labour input is going to return. The value that is established for a given job, commensurable to its relation to producing that future income, is always done on a best guess basis, knowing that reality can swing widely in either direction. It's an average, of sorts. If you think the prevailing best guess is wrong and that a restaurant will easily make enough to give you back $100,000 as a server, you can defer your payout until that quantity is known. This arrangement does happen, but is usually eschewed as the worker would usually rather have the guaranteed known quantity, based on the best guess of their contribution in the profitability, even if removed from the final earnings, for their work. It reduces their risk. As an aside, servers at restaurants are an interesting example as they do commonly play both sides. They lock in some of their income on the future's market, but also capture a share of the profit when it is made. There is a lot of flexibility in your options. Typically, most workers prefer to stay within the futures market entirely, though, as they want the security of a known quantity for their income, rather than making millions one year and loosing millions the next.
  - crumbshot 6y ago
    Are you talking about employees being paid a wage? If so, what you describe isn't what happens for the vast majority of people. We need income to pay for rent (or mortgage), food, utilities, and other essentials. With a bit saved over, where we can. There's no scope for estimating the profitability of the business or anything like that, we just need money to live. I'm sure it's the same for Apple's factory workers in the article.
    - randomdata 6y ago
      Yes, although not specifically as the specific dispersal mechanism is immaterial. A wage is one of many ways payout of the futures contact can be structured.
Frondo 6y ago
I don't believe the workers at these huge factories are doing anything approaching "estimate the profitability and determine what they want out of that pie." I think they're desperate for jobs in a way that precludes estimating profitability and negotiating for pie.

crumbshot 6y ago

> Instead, workers usually prefer to estimate what the profitability will be up front and determine what they want out of the pie based on that assumption. I'm not certain what you mean here. When does this happen? This doesn't sound like the usual method or motivation for job seeking.

randomdata 6y ago
It happens all the time. It is why software developers in incredibly high margin tech companies will ask for incomes >$100,000/year, while servers at low margin restaurants are left to ask for minimum wage. Tech companies can end up never making a dime and restaurants can produce fortunes, but on a statistical probability basis, the profitability of a tech company is more likely to round out to that $100,000 per employee figure and a restaurant the minimum wage figure, on average. That makes those asks to be quite reasonable and the market settles there. When the future is unknown, when the futures contracts are being established, one can only guess as to how much money that labour input is going to return. The value that is established for a given job, commensurable to its relation to producing that future income, is always done on a best guess basis, knowing that reality can swing widely in either direction. It's an average, of sorts. If you think the prevailing best guess is wrong and that a restaurant will easily make enough to give you back $100,000 as a server, you can defer your payout until that quantity is known. This arrangement does happen, but is usually eschewed as the worker would usually rather have the guaranteed known quantity, based on the best guess of their contribution in the profitability, even if removed from the final earnings, for their work. It reduces their risk. As an aside, servers at restaurants are an interesting example as they do commonly play both sides. They lock in some of their income on the future's market, but also capture a share of the profit when it is made. There is a lot of flexibility in your options. Typically, most workers prefer to stay within the futures market entirely, though, as they want the security of a known quantity for their income, rather than making millions one year and loosing millions the next.
- crumbshot 6y ago
  Are you talking about employees being paid a wage? If so, what you describe isn't what happens for the vast majority of people. We need income to pay for rent (or mortgage), food, utilities, and other essentials. With a bit saved over, where we can. There's no scope for estimating the profitability of the business or anything like that, we just need money to live. I'm sure it's the same for Apple's factory workers in the article.
  - randomdata 6y ago
    Yes, although not specifically as the specific dispersal mechanism is immaterial. A wage is one of many ways payout of the futures contact can be structured.

Frondo 6y ago

I don't believe the workers at these huge factories are doing anything approaching "estimate the profitability and determine what they want out of that pie." I think they're desperate for jobs in a way that precludes estimating profitability and negotiating for pie.