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This is true, but I have a slightly different question to ask. Imagine you work at, say, a game development company, along with 99 other developers. The only ot

This is true, but I have a slightly different question to ask. Imagine you work at, say, a game development company, along with 99 other developers. The only other member of the company is a CEO and shareholder, who decides how much to keep for himself and how much to pay the employees, but, importantly, does none of the actual work himself. Let's say the game is wildly successful and the employees are collectively paid 60% of the profit, with the remaining 40% going to the sole shareholder. This is not an uncommon arrangement, and it is allowed and encouraged, culturally and legally. Morally and practically speaking, not legally speaking, does this not amount to wage theft?

interfaced 4y ago
If the game fails are those 99 employees ready to give their salary back? I imagine many places would allow their employees to buy options or stock.
- vladharbuz 4y ago
  Great question! Maybe they are, maybe they're not, and you're right that this should influence how the company is structured. But our current system goes quite a bit past simply "solving" this problem with investor shareholders, because that sole shareholder is entitled to any future profits the company makes, regardless of whether it makes a completely different game, and regardless of the massive contributions future employees may have made in the meantime. What do you think? I discuss this in more detail in this essay: https://vladh.net/alternatives-to-wage-labour https://vladh.net/alternatives-to-wage-labour
  - matwood 4y ago
    It's the same argument if someone should take options in lieu of salary in a startup, and the answer is almost always no. Options tend to end up worthless as most startups fail. IMO, a better question is to ask what allowed the single investor to become an investor to begin with. The nature of investing means the investor must be able to also lose all their capital. What can we do as a society to make easier for the 99 other employees to 'invest'. For me this means having social safety nets like healthcare and UBI so that people can take less salary or risk what little they have in a venture like you originally described.
    - interfaced 4y ago
      The challenge is that the company you work for is almost never the best investment on its own. That's why retirement funds are diversified. I would worry about giving everyone the ability to bet 99% of their wealth on a single company. The reason there are investors is because they've previously invested their money in a risk appropriate way. Now there's a whole argument around intergenerational family wealth which skews everyone's starting point, but it's probably better than concentrating that wealth in a single point of failure (the state who gives you UBI). Probably the right approach to wealth inequality is more tax on non-beneficial uses of money(yachts), and more incentives for mutually beneficial pursuits (cheaper energy).
    - deleted 4y ago
      [deleted]
    - nunez 4y ago
      Bolt (the 1-click payment) company tried this, and immediately after (justified) layoffs you saw articles about people taking out (relatively) massive loans to buy now-worthless options: https://www.wired.com/story/bolt-stock-loans/amp https://www.wired.com/story/bolt-stock-loans/amp Had Bolt made it, those employees would have become investors... It's all about luck IMO
    - vladharbuz 4y ago
      Yes, I fully agree with your conclusion! I think changes in the structure of work have to be accompanied by things like UBI to fully work.
lbriner 4y ago
Yeah, I was just thinking something similar. "Rich means someone who earns more than me". As someone pointed out, even earning $50K a year puts you in the top 1% globally and arguments about "it's all relative" aside, I think most people are a bit more attached to their income than they think "rich" people should be. I think the sad truth is that a lot of us don't necessarily believe deep-down that us forgoing, say, 10% of our potential income will actually be an investment into the world but will simply be sucked up somewhere else. That's why I like schemes like micro-investment where you can see that your money is genuinely invested in making the world better.
lr4444lr 4y ago
No, it is not wage theft, because wages are not assets. The shareholders take the risk. Employees get their salary regardless of whether the game is a success, flop, or somewhere in the middle. Bonuses tread that middle ground. I personally do not like bonuses, but they are exactly that: give the employee the opportunity to partake in the profits in a way that exposes him to some risk.
- vladharbuz 4y ago
  Yes, this is the prevailing view! However, I think the magnitude of the reward an investor should get, as well as the actual amount of risk they are exposed to, is overstated. Also, there is nothing stopping us from having a system where the employees become "members" of the company and shoulder some of the (diluted) financial risk, thus doing away with shareholders. This comment has a couple more thoughts on this, as well as a link to my essay on this topic. Let me know what you think! https://news.ycombinator.com/item?id=32424519 https://news.ycombinator.com/item?id=32424519
onlyrealcuzzo 4y ago
People always bitch about CEOs. Do the math. Intel employs 120k people. The CEO makes $10M per year. Distribute his salary evenly to everyone at the company, it's not even a 0.2% increase to the average person's pay. Let's say there's 10 execs like this. Still not even 2% (and there aren't 10 execs like that). Most of the megacaps look the same. The salaries are massive. But they employ a LOT of people, and the average salaries at those companies are high. You can find edge cases for sure with smaller startups that are wildly successful - or Elon Musk and Jeff Bezos and Mark Zuckerberg.
- zimpenfish 4y ago
  > Do the math. A counterpoint with 5 minutes of searching: from [1], Peter Kern (3rd highest paid CEO) got $296M in 2022 overseeing ~15k employees (from [2]). Distribute that salary evenly and everyone gets a ~19k boost which, on an average base of $108k (from [3]), is about +17%, if I'm not mistaken. If you want an even more ludicrous example, David Baszucki (Roblox, 7th highest, also [1]) got $232M in 2022 overseeing ~1600 employees (from [4]). Even distribution gives a $145k boost on an average base of ~$135k (from [5]) is about +107%. Which is a bit better than Intel's +0.2%, no? In summary, you can pick and choose examples to make either point. [1] https://www.equilar.com/reports/95-equilar-new-york-times-top-200-highest-paid-ceos-2022 https://www.equilar.com/reports/95-equilar-new-york-times-to... [2] https://www.macrotrends.net/stocks/charts/EXPE/expedia/number-of-employees https://www.macrotrends.net/stocks/charts/EXPE/expedia/numbe... [3] https://www.payscale.com/research/US/Employer=Expedia%2C_Inc./Salary https://www.payscale.com/research/US/Employer=Expedia%2C_Inc... [4] https://www.statista.com/statistics/1279348/roblox-number-of-employees/ https://www.statista.com/statistics/1279348/roblox-number-of... [5] https://www.comparably.com/companies/roblox/salaries https://www.comparably.com/companies/roblox/salaries
  - onlyrealcuzzo 4y ago
    I said you will find outliers. Congratulations. You found one extreme case, and included links to some others. There are many. There are also 5000+ large companies in the US that employ tens of thousands of people. 20,000+ companies globally. This isn't the average. Use a normal distribution, and you'd expect 20+ companies with 3 sigma (where CEO pay would increase pay by 6%+). Corporate profits definitely don't have a normal distribution, neither does CEO pay. This isn't surprising to me. Elon Musk has $200B. He's an edge case of an edge case. Should we pretend all billionaires are like him, too? The average Billionaire has almost 50x less money. The average CEO makes much less than 50x the links you cited. The average CEO for the top 350 companies made $24M in 2020 (a good year). The average CEO for all companies over the last decade makes less than $1M - according to BLS it's $190k: https://www.bls.gov/ooh/management/top-executives.htm#:~:text=%2445%2C760-,The%20median%20annual%20wage%20for%20chief%20executives%20was%20%24179%2C520%20in,percent%20earned%20more%20than%20%24208%2C000 https://www.bls.gov/ooh/management/top-executives.htm#:~:tex.... And that's the average not the median - so people like the links you provided are skewing that higher than the median... > In summary, you can pick and choose examples to make either point. This is called cherry picking. You can always find what you're looking for if you're willing to cherry pick hard enough on a large dataset. Your starting hypothesis is that CEO pay is ridiculous - and you're finding examples to confirm that - rather than looking at averages to easily disprove the idea that the examples you cited are the exception not the norm.
yreg 4y ago
>does none of the actual work himself How did this person become the sole shareholder of a 100 person game company producing wildly successful game without any work in your story?
- pwinnski 4y ago
  Bank loans and venture capital.
  - yreg 4y ago
    Banks are handing out game studios now? Did you get one as well?
    - pwinnski 4y ago
      Perhaps you forgot what you asked? You said: > How did this person become the sole shareholder of a 100 person game company producing wildly successful game without any work in your story? Steve Jobs somewhat famously never wrote any code for Apple. So the answer to how a person becomes the sole shareholder without doing any work is that they focus on things like bank loans, which enable the hiring of people to do the "work" that leads to the company's success. Same as any company. Many, many, many companies are headed by people who have never engaged in the low-level work done by that companies. Many of them are there because they deal with finance.
refurb 4y ago
No, absolutely not "wage theft". Presumably the CEO bring something to the table - capital, fundraising ability. I mean why else have him/her? CEO hires a bunch of employees, all who get paid. The game is a success and since he put the capital at risk, he gets most the reward. The employees get their salary. Unfair? Well, what if it doesn't work out? Employees all get their salary, CEO loses his capital. Workers can certainly get a similar trade off in some industries - plenty of tech start-ups will pay you $50,000/yr (when you could be making $300,000 at Google) and a chunk of the company. Why not take that job if you want CEO-type risk and reward?
- pwinnski 4y ago
  > Presumably the CEO bring something to the table - capital, fundraising ability. I mean why else have him/her? You're so close! In fact, there's an expectation that the more you pay a CEO, the better they perform, and that those making the most must be the best. This seems to be a largely-unexamined assumption that "just makes sense," but it turns out when you try to see whether it's true, it's not[0]. By and large, highly-paid CEOs are a drain on corporate profits. As the research paper I linked shows, even those highly-compensated CEOs who win awards end up performing worse than their non-award-winning counterparts. Everybody seems to like the idea of a CEO providing strong leadership and deserving their high compensation. The stress, they say, makes it worth it. Besides, if we didn't pay them that much, someone else would! And yet the facts don't seem to support any of that. 0. http://d1c25a6gwz7q5e.cloudfront.net/reports/2014-02-2-Armstrong-paper.pdf http://d1c25a6gwz7q5e.cloudfront.net/reports/2014-02-2-Armst...
  - refurb 4y ago
    Why did you completely ignore the capital part I talked about? Instead of raising $10M for a business through a CEO (either their own money or through road shows), there is nothing stopping a company of 100 employees from ponying up $100,000 of their own money and reaping a share of the rewards (or losing it all). Are you really that surprised that workers prefer a risk-free salary instead? I mean I have the option of taking cash or equity at my company and I turn down the equity every time. I don't begrudge the ones who take the risk and make 10x what I do. I'll be honest, you don't seem to understand how businesses work today - you're working from a flawed understanding.
badpun 4y ago
The employees also get wages if the game craters completely and company looses millions on it. Unless the employees are willing to eat up the losses as well (i.e. pay back some portion of the wages they got earlier), they should not enjoy 100% of the profits.
themaninthedark 4y ago
>The only other member of the company is a CEO and shareholder, who decides how much to keep for himself and how much to pay the employees, but, importantly, does none of the actual work himself. What is actual work? The coding or the graphics or perhaps the music? What about the QA? The way your comment is formatted, I guess you don't mean the accounting, parole, shipping and receiving. On this forum, I often see developers lamenting how much unrelated work, overhead and meetings they have to do and how saying how they could be more productive if they could just be allowed to sit down and code. How much more "actual work" can you and others like you do when you have to meet with lawyers, file trademarks, order hardware/software while staying in a budget. Or perhaps, the CEO does some of those tasks so you can do the "actual work".
- vladharbuz 4y ago
  My comment oversimplified the work to be done for the sake of argument. Feel free to replace some of those 100 programmers with accountants or other kinds of employees. I agree those other kinds of work are very important, and my argument remains the same.

interfaced 4y ago

If the game fails are those 99 employees ready to give their salary back? I imagine many places would allow their employees to buy options or stock.

vladharbuz 4y ago
Great question! Maybe they are, maybe they're not, and you're right that this should influence how the company is structured. But our current system goes quite a bit past simply "solving" this problem with investor shareholders, because that sole shareholder is entitled to any future profits the company makes, regardless of whether it makes a completely different game, and regardless of the massive contributions future employees may have made in the meantime. What do you think? I discuss this in more detail in this essay: https://vladh.net/alternatives-to-wage-labour https://vladh.net/alternatives-to-wage-labour
- matwood 4y ago
  It's the same argument if someone should take options in lieu of salary in a startup, and the answer is almost always no. Options tend to end up worthless as most startups fail. IMO, a better question is to ask what allowed the single investor to become an investor to begin with. The nature of investing means the investor must be able to also lose all their capital. What can we do as a society to make easier for the 99 other employees to 'invest'. For me this means having social safety nets like healthcare and UBI so that people can take less salary or risk what little they have in a venture like you originally described.
  - interfaced 4y ago
    The challenge is that the company you work for is almost never the best investment on its own. That's why retirement funds are diversified. I would worry about giving everyone the ability to bet 99% of their wealth on a single company. The reason there are investors is because they've previously invested their money in a risk appropriate way. Now there's a whole argument around intergenerational family wealth which skews everyone's starting point, but it's probably better than concentrating that wealth in a single point of failure (the state who gives you UBI). Probably the right approach to wealth inequality is more tax on non-beneficial uses of money(yachts), and more incentives for mutually beneficial pursuits (cheaper energy).
  - deleted 4y ago
    [deleted]
  - nunez 4y ago
    Bolt (the 1-click payment) company tried this, and immediately after (justified) layoffs you saw articles about people taking out (relatively) massive loans to buy now-worthless options: https://www.wired.com/story/bolt-stock-loans/amp https://www.wired.com/story/bolt-stock-loans/amp Had Bolt made it, those employees would have become investors... It's all about luck IMO
  - vladharbuz 4y ago
    Yes, I fully agree with your conclusion! I think changes in the structure of work have to be accompanied by things like UBI to fully work.

lbriner 4y ago

Yeah, I was just thinking something similar. "Rich means someone who earns more than me". As someone pointed out, even earning $50K a year puts you in the top 1% globally and arguments about "it's all relative" aside, I think most people are a bit more attached to their income than they think "rich" people should be. I think the sad truth is that a lot of us don't necessarily believe deep-down that us forgoing, say, 10% of our potential income will actually be an investment into the world but will simply be sucked up somewhere else. That's why I like schemes like micro-investment where you can see that your money is genuinely invested in making the world better.

lr4444lr 4y ago

No, it is not wage theft, because wages are not assets. The shareholders take the risk. Employees get their salary regardless of whether the game is a success, flop, or somewhere in the middle. Bonuses tread that middle ground. I personally do not like bonuses, but they are exactly that: give the employee the opportunity to partake in the profits in a way that exposes him to some risk.

vladharbuz 4y ago
Yes, this is the prevailing view! However, I think the magnitude of the reward an investor should get, as well as the actual amount of risk they are exposed to, is overstated. Also, there is nothing stopping us from having a system where the employees become "members" of the company and shoulder some of the (diluted) financial risk, thus doing away with shareholders. This comment has a couple more thoughts on this, as well as a link to my essay on this topic. Let me know what you think! https://news.ycombinator.com/item?id=32424519 https://news.ycombinator.com/item?id=32424519

onlyrealcuzzo 4y ago

People always bitch about CEOs. Do the math. Intel employs 120k people. The CEO makes $10M per year. Distribute his salary evenly to everyone at the company, it's not even a 0.2% increase to the average person's pay. Let's say there's 10 execs like this. Still not even 2% (and there aren't 10 execs like that). Most of the megacaps look the same. The salaries are massive. But they employ a LOT of people, and the average salaries at those companies are high. You can find edge cases for sure with smaller startups that are wildly successful - or Elon Musk and Jeff Bezos and Mark Zuckerberg.

zimpenfish 4y ago
> Do the math. A counterpoint with 5 minutes of searching: from [1], Peter Kern (3rd highest paid CEO) got $296M in 2022 overseeing ~15k employees (from [2]). Distribute that salary evenly and everyone gets a ~19k boost which, on an average base of $108k (from [3]), is about +17%, if I'm not mistaken. If you want an even more ludicrous example, David Baszucki (Roblox, 7th highest, also [1]) got $232M in 2022 overseeing ~1600 employees (from [4]). Even distribution gives a $145k boost on an average base of ~$135k (from [5]) is about +107%. Which is a bit better than Intel's +0.2%, no? In summary, you can pick and choose examples to make either point. [1] https://www.equilar.com/reports/95-equilar-new-york-times-top-200-highest-paid-ceos-2022 https://www.equilar.com/reports/95-equilar-new-york-times-to... [2] https://www.macrotrends.net/stocks/charts/EXPE/expedia/number-of-employees https://www.macrotrends.net/stocks/charts/EXPE/expedia/numbe... [3] https://www.payscale.com/research/US/Employer=Expedia%2C_Inc./Salary https://www.payscale.com/research/US/Employer=Expedia%2C_Inc... [4] https://www.statista.com/statistics/1279348/roblox-number-of-employees/ https://www.statista.com/statistics/1279348/roblox-number-of... [5] https://www.comparably.com/companies/roblox/salaries https://www.comparably.com/companies/roblox/salaries
- onlyrealcuzzo 4y ago
  I said you will find outliers. Congratulations. You found one extreme case, and included links to some others. There are many. There are also 5000+ large companies in the US that employ tens of thousands of people. 20,000+ companies globally. This isn't the average. Use a normal distribution, and you'd expect 20+ companies with 3 sigma (where CEO pay would increase pay by 6%+). Corporate profits definitely don't have a normal distribution, neither does CEO pay. This isn't surprising to me. Elon Musk has $200B. He's an edge case of an edge case. Should we pretend all billionaires are like him, too? The average Billionaire has almost 50x less money. The average CEO makes much less than 50x the links you cited. The average CEO for the top 350 companies made $24M in 2020 (a good year). The average CEO for all companies over the last decade makes less than $1M - according to BLS it's $190k: https://www.bls.gov/ooh/management/top-executives.htm#:~:text=%2445%2C760-,The%20median%20annual%20wage%20for%20chief%20executives%20was%20%24179%2C520%20in,percent%20earned%20more%20than%20%24208%2C000 https://www.bls.gov/ooh/management/top-executives.htm#:~:tex.... And that's the average not the median - so people like the links you provided are skewing that higher than the median... > In summary, you can pick and choose examples to make either point. This is called cherry picking. You can always find what you're looking for if you're willing to cherry pick hard enough on a large dataset. Your starting hypothesis is that CEO pay is ridiculous - and you're finding examples to confirm that - rather than looking at averages to easily disprove the idea that the examples you cited are the exception not the norm.

yreg 4y ago

>does none of the actual work himself How did this person become the sole shareholder of a 100 person game company producing wildly successful game without any work in your story?

pwinnski 4y ago
Bank loans and venture capital.
- yreg 4y ago
  Banks are handing out game studios now? Did you get one as well?
  - pwinnski 4y ago
    Perhaps you forgot what you asked? You said: > How did this person become the sole shareholder of a 100 person game company producing wildly successful game without any work in your story? Steve Jobs somewhat famously never wrote any code for Apple. So the answer to how a person becomes the sole shareholder without doing any work is that they focus on things like bank loans, which enable the hiring of people to do the "work" that leads to the company's success. Same as any company. Many, many, many companies are headed by people who have never engaged in the low-level work done by that companies. Many of them are there because they deal with finance.

refurb 4y ago

No, absolutely not "wage theft". Presumably the CEO bring something to the table - capital, fundraising ability. I mean why else have him/her? CEO hires a bunch of employees, all who get paid. The game is a success and since he put the capital at risk, he gets most the reward. The employees get their salary. Unfair? Well, what if it doesn't work out? Employees all get their salary, CEO loses his capital. Workers can certainly get a similar trade off in some industries - plenty of tech start-ups will pay you $50,000/yr (when you could be making $300,000 at Google) and a chunk of the company. Why not take that job if you want CEO-type risk and reward?

pwinnski 4y ago
> Presumably the CEO bring something to the table - capital, fundraising ability. I mean why else have him/her? You're so close! In fact, there's an expectation that the more you pay a CEO, the better they perform, and that those making the most must be the best. This seems to be a largely-unexamined assumption that "just makes sense," but it turns out when you try to see whether it's true, it's not[0]. By and large, highly-paid CEOs are a drain on corporate profits. As the research paper I linked shows, even those highly-compensated CEOs who win awards end up performing worse than their non-award-winning counterparts. Everybody seems to like the idea of a CEO providing strong leadership and deserving their high compensation. The stress, they say, makes it worth it. Besides, if we didn't pay them that much, someone else would! And yet the facts don't seem to support any of that. 0. http://d1c25a6gwz7q5e.cloudfront.net/reports/2014-02-2-Armstrong-paper.pdf http://d1c25a6gwz7q5e.cloudfront.net/reports/2014-02-2-Armst...
- refurb 4y ago
  Why did you completely ignore the capital part I talked about? Instead of raising $10M for a business through a CEO (either their own money or through road shows), there is nothing stopping a company of 100 employees from ponying up $100,000 of their own money and reaping a share of the rewards (or losing it all). Are you really that surprised that workers prefer a risk-free salary instead? I mean I have the option of taking cash or equity at my company and I turn down the equity every time. I don't begrudge the ones who take the risk and make 10x what I do. I'll be honest, you don't seem to understand how businesses work today - you're working from a flawed understanding.

badpun 4y ago

The employees also get wages if the game craters completely and company looses millions on it. Unless the employees are willing to eat up the losses as well (i.e. pay back some portion of the wages they got earlier), they should not enjoy 100% of the profits.

themaninthedark 4y ago

>The only other member of the company is a CEO and shareholder, who decides how much to keep for himself and how much to pay the employees, but, importantly, does none of the actual work himself. What is actual work? The coding or the graphics or perhaps the music? What about the QA? The way your comment is formatted, I guess you don't mean the accounting, parole, shipping and receiving. On this forum, I often see developers lamenting how much unrelated work, overhead and meetings they have to do and how saying how they could be more productive if they could just be allowed to sit down and code. How much more "actual work" can you and others like you do when you have to meet with lawyers, file trademarks, order hardware/software while staying in a budget. Or perhaps, the CEO does some of those tasks so you can do the "actual work".

vladharbuz 4y ago
My comment oversimplified the work to be done for the sake of argument. Feel free to replace some of those 100 programmers with accountants or other kinds of employees. I agree those other kinds of work are very important, and my argument remains the same.