4 ms·

...and where does the market rate come from? Written by God on a stone tablet, never to be questioned by management?

blackoil 5y ago
By the Gods of demand and supply adjusted by God of minimum wages. No matter how much mgmt question it they'll not be able to pay 10$/hr unless someone is ready to work at that rate and if allowed by the govt.
- h0l0cube 5y ago
  > if allowed by the govt. ... and if unchallenged by organized labor
ultrablack 5y ago
Google is your friend.
- crooked-v 5y ago
  Google tells me that unskilled delivery drivers and in some places even fast food workers are getting $20/hour right now.
1123581321 5y ago
At a company that size, it’s typically based on how well they are filling their pipeline of candidates. Difficulty finding people pressures pay to rise (this is the pressure UAW is exploiting.) They also conduct salary studies and survey employees to figure out if they’re satisfied by their pay. So while there may temporarily be a pay schedule, it’s constantly revised. In a large company there are many roles and schedules so at any point, many are somewhere in the process of changing. The UAW situation is different. Unions negotiate contracts that affect all employees. These are set by the ability of the union and management to negotiate, with some pressure from market rates. These are closer to the “stone tablet” idea of yours, but only fixed until the next negotiation. There is no ‘dividing up the income’ activity, like the other user suggested. Management just focuses on making more revenue than it’s paying for all expenses, and tries to employ as many people as it thinks it needs to acquire that revenue or grow future revenue. This is a simple explanation that elides a lot of detail, but hopefully helps.
- consp 5y ago
  > survey employees to figure out if they’re satisfied by their pay. If those are done they are likely ignored or used to figure out how much lower the pay can be. And a strike is a result of that. The idea that employees cannot profit from a company doing well, not profit from their own labor and simply get a fixed low pay is insulting.
  - 1123581321 5y ago
    Yes, I tried to distinguish between market research and market pressure setting prices and the more negotiation-based process of a large unionized employer.
- jollybean 5y ago
  "There is no ‘dividing up the income" Yes, that is effectively what is happening. The value is 'divided' between customers, suppliers, employees, executives and investors and it will go to who has the most power. If the power balance means they can charge higher prices (less surplus to customers), then that money will go to the remaining parties. If suppliers are commodity, then it's a 3 way fight between execs, employees and investors. If the company sees increasing sales and is flush with cash, the execs and workers will try to negotiate for higher pay. "Management just focuses on making more revenue than it’s paying for all expenses, and tries to employ as many people as it thinks it needs to acquire that revenue or grow future revenue." That process boils down to dividing up surpluses.
  - 1123581321 5y ago
    It’s a useful mental model to picture the contributions of all these parties, and it can serve some indirect value as a framing in overt negotiations, but it’s not an actual process.
    - jollybean 5y ago
      The process matters, but is not hugely important. Whatever the process is, it's walking along a gradient towards finding somewhere close enough to the balance of power.
flyinglizard 5y ago
The same way all commodity pricing is determined - when you don’t get enough of what you want, you pay more, or go somewhere there’s more supply. A “better” CEO would surely minimize labor expenses, by automating, moving to cheaper regions, etc. In most businesses, labor is the largest expenditure.

By the Gods of demand and supply adjusted by God of minimum wages. No matter how much mgmt question it they'll not be able to pay 10$/hr unless someone is ready to work at that rate and if allowed by the govt.

h0l0cube 5y ago
> if allowed by the govt. ... and if unchallenged by organized labor

ultrablack 5y ago

Google is your friend.

crooked-v 5y ago
Google tells me that unskilled delivery drivers and in some places even fast food workers are getting $20/hour right now.

1123581321 5y ago

At a company that size, it’s typically based on how well they are filling their pipeline of candidates. Difficulty finding people pressures pay to rise (this is the pressure UAW is exploiting.) They also conduct salary studies and survey employees to figure out if they’re satisfied by their pay. So while there may temporarily be a pay schedule, it’s constantly revised. In a large company there are many roles and schedules so at any point, many are somewhere in the process of changing. The UAW situation is different. Unions negotiate contracts that affect all employees. These are set by the ability of the union and management to negotiate, with some pressure from market rates. These are closer to the “stone tablet” idea of yours, but only fixed until the next negotiation. There is no ‘dividing up the income’ activity, like the other user suggested. Management just focuses on making more revenue than it’s paying for all expenses, and tries to employ as many people as it thinks it needs to acquire that revenue or grow future revenue. This is a simple explanation that elides a lot of detail, but hopefully helps.

consp 5y ago
> survey employees to figure out if they’re satisfied by their pay. If those are done they are likely ignored or used to figure out how much lower the pay can be. And a strike is a result of that. The idea that employees cannot profit from a company doing well, not profit from their own labor and simply get a fixed low pay is insulting.
- 1123581321 5y ago
  Yes, I tried to distinguish between market research and market pressure setting prices and the more negotiation-based process of a large unionized employer.
jollybean 5y ago
"There is no ‘dividing up the income" Yes, that is effectively what is happening. The value is 'divided' between customers, suppliers, employees, executives and investors and it will go to who has the most power. If the power balance means they can charge higher prices (less surplus to customers), then that money will go to the remaining parties. If suppliers are commodity, then it's a 3 way fight between execs, employees and investors. If the company sees increasing sales and is flush with cash, the execs and workers will try to negotiate for higher pay. "Management just focuses on making more revenue than it’s paying for all expenses, and tries to employ as many people as it thinks it needs to acquire that revenue or grow future revenue." That process boils down to dividing up surpluses.
- 1123581321 5y ago
  It’s a useful mental model to picture the contributions of all these parties, and it can serve some indirect value as a framing in overt negotiations, but it’s not an actual process.
  - jollybean 5y ago
    The process matters, but is not hugely important. Whatever the process is, it's walking along a gradient towards finding somewhere close enough to the balance of power.

flyinglizard 5y ago

The same way all commodity pricing is determined - when you don’t get enough of what you want, you pay more, or go somewhere there’s more supply. A “better” CEO would surely minimize labor expenses, by automating, moving to cheaper regions, etc. In most businesses, labor is the largest expenditure.