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Striking auto workers want a 40% pay increase–the same rate their CEOs’ pay grew
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Posted on Monday, September 18th 2023 by heavyset_go | 370 points
>Autoworker pay at "The Big Three" works on a tiered system, where more recent hires start at lower rates of pay than more tenured workers.
https://www.cnbc.com/2023/09/15/striking-uaw-auto-workers-wa...
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@ Monday, September 18th 2023 by cplusplusfellow | Open
Whereabouts should we purchase land in Mexico? Needs to be near the new factories that'll go in next year.
@ Monday, September 18th 2023 by supertrope | Open
Companies and individuals do not make decisions based on posturing or their pet peeves. If a company has not outsourced a plant already for cost savings there are reasons for still keeping that operation in the US.
@ Monday, September 18th 2023 by mortureb | Open
40%? I sincerely wish them the best of luck and I hope they get what is their due but this is probably good news for India, Mexico and China.
@ Monday, September 18th 2023 by mschuster91 | Open
So what, nothing prohibits the US and Europe from raising tariffs on industrial products.
The pendulum of globalization is bound to swing backwards for a multitude of reasons.
@ Monday, September 18th 2023 by vadym909 | Open
If it was that easy it would’ve happened already. And software engineers jobs would have moved first due to savings and low effort and low infrastructure changes required.
@ Monday, September 18th 2023 by mortureb | Open
40% of IT work is already outsourced and that’s a number that is rapidly growing and that’s only over a decade and a half. It doesn’t even take into account foreign employees that now just work remotely.
@ Monday, September 18th 2023 by tyingq | Open
It's interesting to see workgroups that are harder to outsource, and the kind of contract renewals they are getting. Like airline pilots, for example...and not just forward pay increases, but retroactive pay raises for 2+ years as a lump sum, and many other perks and changes to work rules, higher reimbursement for various things, etc.
@ Monday, September 18th 2023 by fabianhjr | Open
China has been averaging a 9% wage increase yoy or about 41% per 4 years. This wouldn't be news in China instead it would be the average case.
https://www.statista.com/statistics/743563/china-average-yea...
https://www.china-briefing.com/news/average-salaries-in-chin...
@ Monday, September 18th 2023 by astrange | Open
US market car manufacturing isn't in India/China because of NAFTA. And because cars are big and heavy, of course.
@ Monday, September 18th 2023 by endisneigh | Open
40% over 4 years isn't as crazy (especially when you consider that they had some concessions back in '08). typical clickbait when you consider this is a high value for negotiation and they're likely looking for anywhere between 20-30% over 4 years when it's all said and done. barely above inflation YoY.
@ Monday, September 18th 2023 by dmitrygr | Open
>they're likely looking for anywhere between 20-30% over 4 years when it's all said and done.
TFA conveniently points out to you that 20% has been offered to them and was rejected.
@ Monday, September 18th 2023 by l33t7332273 | Open
Good. As it should be. Record profits deserve record contracts.
@ Monday, September 18th 2023 by wang_li | Open
Only if the contracts automatically follow profits. Profits are not a ratchet, while contracts typically are.
Also they are asking for more than pay raises and shortened work week. They're also demanding health benefits for retirees and defined benefit pensions among other things.
@ Tuesday, September 19th 2023 by MuffinFlavored | Open
which automaker had record profits, when? all of their stocks are underperforming the index poorly on a 5 year timeframe
@ Tuesday, September 19th 2023 by mr_toad | Open
It’s not entirely on the media for using these headline numbers. The Unions like these numbers being used. It sounds better to their members that they’re getting a 40% pay rise.
@ Tuesday, September 19th 2023 by r00fus | Open
Shawn Fain (UAW President) has outright rejected a 20% offer. Not to say they won't agree to 30% but for context - UAW workers gave up a LOT of pay and rights in the 2010 auto bailout - the workers essentially helped to bail out management in that case along with the USG.
40% is table stakes.
@ Tuesday, September 19th 2023 by burnte | Open
40% over 4 years is PREPOSTEROUS.
@ Monday, September 18th 2023 by jonathankoren | Open
It’s important to note the workers made huge concessions in 2008 that saved the companies from bankruptcy. Over the years they’ve seen stagnant wage growth, while the execs got solid gold toilets. Even with 40% increase (inevitably spread out over many years), theyd barely be back to where the would have been without the concessions.
@ Monday, September 18th 2023 by sokoloff | Open
Arguably, without the 2008 concessions, they'd be out of a job entirely.
@ Monday, September 18th 2023 by TheCoelacanth | Open
And the shareholders would be out of their investment.
@ Monday, September 18th 2023 by lr4444lr | Open
They were in no position to negotiate back then. Plus, there was probably heavy influence from retirees to save the pension fund.
@ Monday, September 18th 2023 by econperplexed | Open
>From 1978 to 2021, CEO pay grew by 1,460%, adjusted for inflation, versus just 18.1% for the typical worker.
Why has the supply of CEOs not kept up with the demand for them? Surely, with the improvement in education and in increase in MBA programs, there must be far more CEOs today than in 1978. Why has the ratio of CEOs to Companies fallen by 14x for their wages to rise this much? /s
As many argue, wages are only set by supply and demand. And if workers are underpaid, then it is because they are replaceable. Use the same framework to explain CEO pay.
@ Monday, September 18th 2023 by kortilla | Open
There is no academic training to be a good CEO. They are not easily replaceable. If they were, board members wouldn’t bother offering such high pay. Shareholders don’t appreciate wasting money.
@ Monday, September 18th 2023 by thechao | Open
They've become 14.6x more efficient at ... what? Increasing their pay? C'mon.
@ Monday, September 18th 2023 by version_five | Open
Like it or not, they've become more efficient at maximizing shareholder returns. 1978 to present included all sorts of financial shenanigans designed to turn a company from the old school "return on assets" model to a financial vehicle that profits on the spread between it's revenue stream and financing costs. I think it's shit too, but the job turned from running a company go making money appear, and the pay went with it.
Don't hate the player, hate the game (seriously, the system is screwed up horribly)
@ Monday, September 18th 2023 by brutusborn | Open
Any idea why this change occurred?
I know it’s probably multifaceted, but my first thought was that increasing inflation since the 70s has meant that there is an incentive to have as much debt as possible, the hope being that it will be inflated away
@ Monday, September 18th 2023 by throw0101b | Open
>There is no training to be a good CEO. They are not easily replaceable.
If Steve Jobs—who first created and then basically rescued Apple and started it on the path to where it is today—can be 'replaced' then any other leader can be replaced.
Similarly there are plenty of CEOs that are paid oodles of money that were or are absolute garbage: see Boeing for the last 15+ years as Exhibit A.
@ Monday, September 18th 2023 by kortilla | Open
He was replaced, but not with someone as good. Apple has done well under Tim Cook, but there is an obvious lack of innovative vision since Steve’s passing.
@ Monday, September 18th 2023 by polemic | Open
Alternatively, as many argue, wages are not only set by supply and demand.
@ Monday, September 18th 2023 by Invictus0 | Open
What if CEOs were underpaid in 1978?
@ Monday, September 18th 2023 by endisneigh | Open
the supply of prospective management people definitely has kept up. there are literally tens of thousands of MBAs graduating every year, to say nothing of managers at existing F500 companies. there are only so many large companies, and thus so many CEOs.
look at tiny barely profitable companies, the gap between median wage and CEO is sometimes less than 2X.
all these takes on CEO pay when the reality is simple - CEOs are paid a lot because they the cost of being wrong is more than their pay. this results in companies that have a lot of money competing, driving up the price. the end. it's the same reason lebron james is paid 10X more than NBA average.
@ Monday, September 18th 2023 by astrange | Open
It depends how they're counting.
There was an example in Money Stuff this week where a CEO got a pay package "worth $110 million". It's actually made of stock options that vest if the share price went above $150, but the expected value was $110 million so that's what was reported.
…But the share price only reached $66. So in fact he was paid zero, and he quit. (Well, $1.5 million in cash.)
https://www.wsj.com/business/ceo-with-110-million-pay-packag...
@ Monday, September 18th 2023 by vel0city | Open
>paid zero
>paid $1.5 million in cash
These are two wildly different things.
@ Tuesday, September 19th 2023 by MichaelDickens | Open
$1.5 million is approximately $0 in comparison to the originally-quoted $110 million—it's less than 2% of the original amount.
@ Monday, September 18th 2023 by aaomidi | Open
Right, but in general the CEO doesn’t really do much to the stock price. If the general market is up, it’s going up. If the market is down, it’s going down.
How many companies really break that relationship in their market sector?
So tldr, ceo pay is based on the economic cycle rather than how the company does.
@ Monday, September 18th 2023 by WalterBright | Open
>but in general the CEO doesn’t really do much to the stock price
Steve Jobs, Bill Gates, Elon Musk, Satya Nadella, etc.
>ceo pay is based on the economic cycle rather than how the company does
You can always start your own corporation, name yourself CEO (all you gotta do is file some paperwork and pay an annual fee) and rake in the dough for doing nothing!!
@ Monday, September 18th 2023 by spondyl | Open
>It's actually made of stock options that vest if the share price went above $150, but the expected value was $110 million so that's what was reported.
It gets a little weirder than that I suppose since you might have a great deal of shares in a company, which you never exercise so you could say that money doesn't really exist until exercised.
You can however use those shares as collateral for a mortgage or other line of credit which is a pretty common tactic for wealthy people to avoid paying income tax that they otherwise would if they were to sell said shares.
@ Monday, September 18th 2023 by olliej | Open
As someone pointed out "1.5 million in cash" for not doing the job you were hired for is .. not zero.
I'm fairly sure I could achieve the same results for considerably less.
Moreover making compensation dependent on stock price movement encourages corruption and fraud - look at the numerous Enrons and other financial claims. All of which left the majority of those responsible enriched while destroying the lives of others.
@ Monday, September 18th 2023 by wins32767 | Open
>I'm fairly sure I could achieve the same results for considerably less.
I'm highly skeptical of that. Not driving the company value to zero is worth a significant amount of money; anyone who has worked under a bad executive or CEO can tell the difference between one that didn't accomplish aggressive goals and one that's objectively bad. If you have a bunch of executive experience, maybe you'd be able to replicate that CEO's performance, but absent that it's more likely you'd cause more harm than just not making the goal.
@ Monday, September 18th 2023 by hellojesus | Open
It's zero of the bonus, of which the CEO had assigned a prior that made him choose that job over other offers he likely had.
Performance based bonuses exist at virtually all levels of skill in companies. What you see as a catalyst for fraud could also be framed as a catalyst for incentivizing an outcome most likely achieved via hard/smart work.
$1.5M is not nothing, but it's less than 1% of the CEOs potential compensation.
@ Monday, September 18th 2023 by distortionfield | Open
Absolute lukewarm take here. Wages are not only set by supply and demand. Institutional power, regulatory concerns, etc... are huge factors in compensation, too. You can argue they're abstracted over by the market anyway, but you're not saying anything interesting until you dive into the tensions between those concerns.
And that's not even touching the fact that the workers are clearly valuable and irreplaceable enough that they can halt production like this.
@ Monday, September 18th 2023 by fallingfrog | Open
“Supply and demand” is a very limited special case of a broader principal, which is that pay reflects power. CEO’s power and control over their own pay has increased, and the power of regular workers has decreased. There are a myriad of reasons for this but it’s certainly deliberate.
@ Monday, September 18th 2023 by r3trohack3r | Open
Not all jobs have quantitative measures for impact. The more a job is decoupled from a measurable value, the more likely that job is to be bid up to "as much as the company can afford."
I've seen this in my career, the closer I get to "SRE" or "platform engineer" the more decoupled my salary has become from my actual measurable value.
I'd articulate the thinking as, roughly:
We know this role is important. We know that having a bad SRE team (or CEO or platform team) is expensive, it could cost us the 100% of the business. And we don't know how to measure the value a good one provides. Therefore we are willing to spend as much as we can afford to make sure we get a good one.
@ Monday, September 18th 2023 by candiddevmike | Open
SREs aren't on the board of directors setting the pay for other SREs who are on their board of directors though.
The elite/ownership/"capitalism winner" class are playing on an entirely different level with their power and influence. Don't kid yourself into drawing comparisons with your situation and miniscule in comparison compensation. It's always heads they win, tails you lose.
@ Monday, September 18th 2023 by chiefalchemist | Open
Yes. But now take CEOs and their pay and map it to company performance and stock performance. Are they skilled at bringing out the best in their company, or squeezing staff wages more and more?
@ Monday, September 18th 2023 by hackerlight | Open
Is that an apples to apples comparison? Is the mean inflation-adjusted market cap of all the companies in both their 1978 dataset and 2021 dataset the same?
@ Monday, September 18th 2023 by gretch | Open
I support the workers' decision and negotiating on labor rates is the basis of our economic system. Get what you deserve.
That said, the CEO pay is easily explainable:
>Profits at the struck auto companies increased 92% from 2013 to 2022, totaling $250 billion, according to EPI
>CEO pay at the Big Three has grown 40% in the last decade, according to EPI
If you're the CEO of a company and you increased profits by 92%, I don't know seems pretty fair to me. There's a lot of other businesses that suck and haven't raised their profits in the meanwhile.
I think talking about the CEO pay is the wrong path (though I do admit it's marketable in the mainstream news). Just ask for what you think you deserve and don't work if you don't get it. It's as simple as that.
@ Monday, September 18th 2023 by afavour | Open
>If you're the CEO of a company and you increased profits by 92%
Did you? Attributing all the success a company achieves to the CEO feels shortsighted.
Aside from anything else: if all these companies saw their profits grow by so much surely there’s an external commonality there? “The CEO did it all” would be slightly more plausible if only one company experienced that success.
@ Monday, September 18th 2023 by amarshall | Open
>If you're the CEO of a company and you increased profits by 92%
This assumes that the increase in profit is attributable primarily to the CEO. Well, that at least 43% (40/92) of it is.
>Just ask for what you think you deserve and don't work if you don't get it. It's as simple as that.
This only really works with unions. Fortunately, these workers have one.
@ Monday, September 18th 2023 by nerdponx | Open
>Just ask for what you think you deserve and don't work if you don't get it.
This is the most wildly privileged take possible on the issue.
@ Monday, September 18th 2023 by cratermoon | Open
>If you're the CEO of a company and you increased profits by 92%
YOU, the CEO, didn't single-handedly increase profits by even a single percentage point. One employee out of 1 million, take your millionth of a cut of the profits, that's still $150K.
@ Monday, September 18th 2023 by highwaylights | Open
To paint the above in starker terms:
Worker pay is set by the leadership, leadership pay is set by the leadership.
@ Tuesday, September 19th 2023 by hellojesus | Open
Leadership is set by shareholders. There is still accountability.
Public unions seem more undesirable. There we have the gov negotiating with itself with no external accountability, unlike your example.
@ Tuesday, September 19th 2023 by mullingitover | Open
>Leadership is set by shareholders.
Funny thing, I own a vast number of stocks through various means, either directly or via ETFs, and yet never in my life have I had an opportunity to weigh in on the salaries of anyone in the companies I hold equity in.
>Public unions seem more undesirable. There we have the gov negotiating with itself with no external accountability, unlike your example.
The government is negotiating with unions, not itself. However, if we're going to take a crack at public sector unions, let's start with the police unions.
@ Monday, September 18th 2023 by adventured | Open
>Use the same framework to explain CEO pay.
Sure. It's the same framework that explains the pay of Lebron James. The NBA became a massively popular global game during the era of fast growth globalization, in which billions of consumers entered into the active global economy.
Now you've got like 50 players earning $30m or more per year in the NBA. To play a game in just the US market.
~450 active players earning around $5 billion per year in just league salary (not counting endorsements).
Now do it for global football, NFL football, Nascar, Major League Baseball, Hockey, F1, and so on.
Who knows the insane total compensation figure. $30 billion?
The economic force producing that comically massive figure, is the exact same reason Tim Cook is worth every dollar he's getting paid to operate the juggernaut that is Apple. The same goes for Nadella at Microsoft.
The top 450 NBA players earn more in salary every year than the CEOs of the S&P 500. Why shouldn't a CEO get paid extraordinarily well, as well as an NBA all-star, for operating a $10 or $20 billion market cap corporation? Obviously they should.
The only time I see arguments against high CEO pay (speaking generally), it's from people that know absolutely nothing about what a CEO does or how exceptionally difficult it is to operate a very big company.
And should mediocre CEOs that fail or otherwise perform poorly get golden parachutes? No, of course not. Exceptional CEOs should get properly exceptional pay. They deserve to earn drastically more than the average worker.
The common Redditor railing against CEO pay, looks at a Tim Cook and thinks they can maybe do what Cook does (he just sits in his chair in a big office while other people do all the work, dur dur dur), or what Nadella does, or a random S&P 500 CEO does. In reality they can barely do their own basic job, much less one ten tiers above them. The average Redditor is further away from being able to do Tim Cook's job than they are being able to do the job of Lebron James. The issue is the average person doesn't know anything about what a CEO does at all, they're entirely ignorant of it. However they can watch Lebron James play basketball and immediately understand they can't do anything like what James can do, because they get the physical visual display immediately, meanwhile they know zip about the job of a CEO at a big company. As usual the issue is extreme ignorance and mediocre education.
@ Monday, September 18th 2023 by davorak | Open
>The only time I see arguments against high CEO pay (speaking generally), it's from people that know absolutely nothing about what a CEO does or how exceptionally difficult it is to operate a very big company.
The most common argument I see is that the ceo pay has increased relative to the common or average employee salary. I doubt being a ceo has become that much more difficult over the same time period though.
@ Monday, September 18th 2023 by drt5b7j | Open
Because the number 1 quality that you want in a CEO is that he has experience being CEO, and there aren't that many openings for you to get in on it, and the ones that are are given to people who's been CEO before.
Obviously.
@ Monday, September 18th 2023 by TaylorAlexander | Open
>As many argue, wages are only set by supply and demand.
Most of the time that I see people invoke "Econ 101" concepts, they are wrong. Supply and demand does not account for the power imbalance between workers and leadership, which unions specifically attempt to address. It does not account for the class differences between workers trying to make ends meet and the board of directors who believe they deserve much higher pay than workers. We are free to change the perceived value of workers through the power of worker solidarity - ensuring that individual workers are not so easily replaced to keep wages suppressed. You can simply say "it's supply and demand" and do nothing to support the workers whose labor is so clearly needed for our economy to function, or we can support collective bargaining rights to make sure that individual workers are not crushed under the power of company leadership. How you view this is up to you, and not a simple fact of natural laws of economics.
@ Monday, September 18th 2023 by WalterBright | Open
>Supply and demand does not account for ...
Yes, it does, in each scenario you presented.
>We are free to change the perceived value of workers through the power of worker solidarity
It's more like using the power of government to ensure the company has no alternative to the union.
Company leaders have no actual power over the workers. They cannot force anyone to come to work. They cannot have you arrested. They cannot confiscate your property. They cannot beat you. They cannot prevent you from accepting a job at another company. They cannot prevent you from leaving. They cannot extort, libel, slander, blackmail, or threaten you. They cannot put a hit on you.
All they can do is offer you money in exchange for your labor. That's it.
@ Monday, September 18th 2023 by whatshisface | Open
My econ 101 talked about the difference between commodity and illiquid markets which explains the difference between worker and CEO pay. The CEOs are coming from a restricted group of insiders and can't be replaced because of their relationships which make them unique. Workers in the sectors most often unionized have few distinguishing characteristics from the perspective of the company and are thrown around by the same laws as the price of corn. The black death is a well-documented example of a restriction in the labor supply raising the price of labor and improving the wellbeing of laborers. There is no indication anywhere that supply and demand is wrong about the job market.
@ Monday, September 18th 2023 by listless | Open
This is so obviously the right answer, I can’t believe its not upvoted more. To be clear, I stand with the union on the principal of their argument. However, the principals of economics itself, much like gravity, do not care about the nobility of your cause.
It seems to me that what the union is asking for is that the corporation act more like a benevolent force than one that is restricted by market pressures. Of course, you could use the power of government as one poster mentioned to force this issue, but those violent delights have violent ends.
@ Tuesday, September 19th 2023 by noizejoy | Open
>The CEOs are coming from a restricted group of insiders and can't be replaced because of their relationships which make them unique.
Wouldn’t that be simply favouritism/cronyism rather than a free market?
@ Tuesday, September 19th 2023 by whatshisface | Open
Favoritism, cronyism or more like it would actually be described by the people who do it, a preference for trusted associates you've worked with in the past over strangers to run your stuff for you isn't a violation of your "market freedom" but rather an expression of a set of preferences that make all your choices incommensurable. P.S. it is not in the interest of investors for one employee to make way more money than normal it's just that nobody knows how to avoid it when that employee is the center of decision-making. The kids of yesterday's owner-operators have an entirely different set of preferences from their parents due to being real, "classical" capitalists... Which makes the focus on CEOs kind of ironic! Technically they're workers who escaped the cruelty of a liquid market.
@ Tuesday, September 19th 2023 by ytoawwhra92 | Open
>it is not in the interest of investors for one employee to make way more money than normal it's just that nobody knows how to avoid it when that employee is the center of decision-making
See "A Principled Approach to Executive Pay", Chapter 1.F in The Essays of Warren Buffet, arranged by Cunningham.
The issue I take with your line of reasoning is that executive compensation is often at odds with investor interests in more ways than just its amount. Buffet describes "heads I win, tails you lose" executive compensation plans in an essay from the 80s/90s. He describes how they do things at Berkshire Hathaway - they're doing very well and I doubt have any issue recruiting good executives.
Despite this, and decades later, we see terrible compensation plans being approved by boards. We see executives exiting failed businesses with enormous paychecks. We see boards offering those same executives new management positions with terrible (for investors) compensation plans. What gives?
It certainly looks like cronyism to me, but maybe I ought to be applying Hanlon's Razor.
@ Monday, September 18th 2023 by kwar13 | Open
More like the CEO pay is a cushy symbiotic relationship with the board, which sets their pay. This is not a line worker job when there's competition.
@ Monday, September 18th 2023 by lumost | Open
What we choose to value as society is entirely subjective. While supply and demand influence the change in the mid point of the bid/ask spread - it doesn’t set the absolute clearing price.
@ Monday, September 18th 2023 by MuffinFlavored | Open
Stellantis has 270,000+ employees across 16 brands. I'm not saying their CEO does or doesn't deserve $20m in compensation but at some point you're going to run into a problem where... nobody wants to do that job for $1m/yr and they wouldn't be qualified or very good at it.
@ Monday, September 18th 2023 by kibwen | Open
>nobody wants to do that job for $1m/yr
I invite everyone here to raise their hand if they're just as hard-pressed as me to think of any job that they wouldn't do for a million per year.
@ Monday, September 18th 2023 by CraigRo | Open
Nobody who is qualified to do it... I've worked with executives at that level, and let's face it-- most of us don't have the single-minded devotion to do it, nor the experience to manage thousands of people.
@ Monday, September 18th 2023 by ZephyrBlu | Open
I do not understand people that believe all executive are useless and do nothing.
@ Monday, September 18th 2023 by anigbrowl | Open
Maybe if a company gets so big that finding people to manage it becomes disproportionately expensive, it's time to break it up.
@ Monday, September 18th 2023 by colordrops | Open
Are you being rhetorical, or are you actually positing that CEO pay is driven purely by supply and demand?
@ Monday, September 18th 2023 by randomdata | Open
>Why has the supply of CEOs not kept up with the demand for them?
Why would it?
@ Tuesday, September 19th 2023 by jcranmer | Open
CEOs are an illiquid market, and demand for CEOs is pretty inelastic (companies need but one CEO after all). It's not a market which can reach price equilibrium.
If you expand your horizon somewhat to C-suite in general, it seems that demand for C-suite has tended to increase over time. If you also consider that C-suite is to some degree a Veblen good (demand increases as price goes up) [1], that makes sense under economic laws. Worker pay, unlike executive pay, is going to be considered a significant cost center, and business will higher fewer workers if individual pay is growing too quickly, making worker pay act like regular goods and not Veblen goods.
[1] The framework for setting CEO salaries tends to be "take the median CEO pay, add a little extra because our CEO's clearly better than average..."
@ Tuesday, September 19th 2023 by oneTbrain23 | Open
CEO pay is adjusted based on another CEOs in the market. Since every board members has already markup their CEO pays higher and then higher, the increases are what you see today for CEO pay. Not every CEO skills at Steve/Tim/Jensen but they all delude themselves by paying high, hoping they will eventually get Elon-quality CEO into their company and make their stock the next Tesla-NVIDIA-Netflix. Most of the time, they get Stephen Elop type of CEO, unconsciously destroying company in the name of strategic stakeholder value maximization (MBA lingo). Now what about workers? The good one will just hop away. They then will tell everyone "no one is replaceable" and then go on to mis-hire even more incompetent or noob staff in. Or they will outsource it just like Dell and others during Bush Jr time.
What they need to do is to publicly disclose the performance of their CEO. Have CEOs rated by staff and publicly distribute this info worldwide. They also need to implement clawback dating as far as a decade depending whatever products they in charge during their tenure. And lastly, always put full jail offenses directly on CEO without any plea bargain. Not doable? Then workers need to get retrenched as they rightly deserve it when they didnt bother to hop away.
@ Tuesday, September 19th 2023 by fallingknife | Open
There are two determinants of your pay. One is supply and demand, and the other is how much could your potential replacement screw things up. For most workers the supply/demand is the only part that matters because if you are a line worker, you don't really have the potential to do much damage if you screw up. So if Ford needs to replace a competent line worker, their potential bad replacement won't be able to cost the company much even in the worst case, so this does not grant the worker any leverage.
CEOs are much different. A bad CEO can cost a large company 10s of billions in stock valuation. If you have a decent CEO, and you fire and replace him with a poor replacement, the damage to the company will be tremendous, so the board won't want to risk it. This gives good CEOs the leverage to demand massive compensation. A CEO can basically hold the company hostage by saying "I want a $10 million raise this year, and if I don't get it I'll quit. Have fun rolling the dice with my replacement!" (Though they would never actually say it that way) And the company will basically have to choose to pay an extra $10 million or roll the dice on potentially losing billions. This is why they almost always pay CEOs a massive amount.
@ Tuesday, September 19th 2023 by AndrewKemendo | Open
It's actually hard to find people who will reliably break unions, and generally do whatever it takes to de-prioritize line workers and eliminate "cost centers" - while also showing pure allegiance to the board without defecting.
That's the entire process of creating the professional corporate managerial class - you have reliably shown that you care more about the financial success of the company, and yourself, than you care for your employees and coworkers.
I mean how many movies and characters have we made that are precisely calling out this exact behavior:
Gordon Gekko
Bill Lumburgh
Mr "Coffee is for closers" Blake
Richard Chesler (Fight Club boss)
etc...
Like...we've been roasting this precise kind of corporate myopic psychopathic forever as what precisely not to be yet it's like an entire generation used them as pathfinders
@ Tuesday, September 19th 2023 by jandrewrogers | Open
The fact that terrible CEOs obviously exist is what drives up the prices for the ones that are not obviously terrible. It is an extremely high leverage role (see also: Microsoft).
What separates the good CEOs from the poor CEOs isn't something you can readily teach. Some of the best ones have a preternatural ability for the role in the same sense that Lionel Messi has a preternatural ability at his sport, and are equally rare. The majority of CEOs are journeymen with the skills to do the job but not to be great at it. This doesn't mean that average employees are fit to be CEOs; you don't have to look further than startup CEOs, which are pulled from an above average pool of semi-random people, to discredit that notion. It is a highly specialized skill set that is difficult to acquire and most people aren't mentally cut out for what is required to be good at it. The experiment of promoting rando employees to CEO has been tried on occasion across industry with almost universally poor results.
This is true of most professions that command a high wage. Thinking that anyone could be a CEO is like thinking any dev can be Fabrice Bellard. Even if that turned out to be the case in a specific instance, no one should expect it to generalize.
@ Tuesday, September 19th 2023 by cft | Open
During the same time, the US automakers worldwide market share shrunk from 30% to about 10%.
@ Tuesday, September 19th 2023 by gus_massa | Open
That's almost a x100 increase.
If you ignore Pelé, the top soccer player had a similar increase in the same period. https://www.expensivity.com/soccer-salary-inflation/ Compared with the median income, they went from 10x in 1979 to 1300x in 2020. Why has the supply of Messis not kept up with the demand for them?
@ Tuesday, September 19th 2023 by TuringNYC | Open
>From 1978 to 2021, CEO pay grew by 1,460%, adjusted for inflation, versus just 18.1% for the typical worker.
We should remember that CEO pay is often equity linked, and thus can vary. Not sure if workers want large portions of pay equity linked. I remember I was once in discussion with a hedge fund for a job and they offerred a sliding scale of pay that was cash vs equity. The more equity I opted for, the greater the pay, since of course there was risk involved.
@ Thursday, September 21st 2023 by hollerith | Open
Because the board and the investors don't want just any MBA to be their CEO: they want a person with a record of success in leading organizations (or at least collaborating closely with such a leader).
@ Monday, September 18th 2023 by tysam_and | Open
There is an equation with an equilibrium:
CEO's pay rate = (some multiplier) * median salaried worker's pay rate
OR
CEO's pay rate = (some multiplier) * minimum salaried worker's pay rate
We've been conditioned to think it's not fair somehow, but the discrepancy is just....engorgingly terrible. I'm not arguing for how this metric would be enforced, only that it would be a good one to have. Especially in a time when greed is the lowest common denominator in the race to the bottom for some of these large corporations.
It wouldn't fix the stockholder "value" chase, but at least it would shore up one part of the system weak to corruption.
@ Monday, September 18th 2023 by hinkley | Open
It's also been suggested that Congressional salaries be a fixed multiple of minimum wage, and for similar reasons.
Honestly I think that would probably fix things a lot faster.
@ Monday, September 18th 2023 by astrange | Open
If you underpay elected officials then 1. they just start taking bribes 2. only rich people will run in the election.
This is why Singapore pays them even more than we do.
Anyway, minimum wages (despite being ok policies) aren't what people are actually paid, and of course aren't especially what non-working people are paid. And remember that non-working people, namely children and the elderly, are poorer than workers.
@ Monday, September 18th 2023 by hinkley | Open
THEY ALREADY DO
Nobody said the multiple has to be 5. It could be whatever the current ratio for Singapore is.
@ Monday, September 18th 2023 by lnxg33k1 | Open
I am always suprised at how people think that elected official then have to get bribes in order to survive like its a doctor prescription, and how it seems that when they do we can’t do anything about it ffs
@ Monday, September 18th 2023 by hermannj314 | Open
America's GDP allocated per congressperson is like $50 billion each.
Salaries wont fix bribes for someone with that much to command and even the already rich can make a lot of money getting into politics. Their salary means nothing to them.
@ Tuesday, September 19th 2023 by dfadsadsf | Open
You need to pay congressmen enough money so they can have upper middle class lifestyle - without that pressure to take bribes is dramatically higher. You have nice 5bdrm house in good school district and enough money for nice vacation + savings? Refusing bribes is easy - you are comfortable. Kids are taken care of. Wife does not have to work. This lifestyle requires 300-600k in DC.
You live in shitty 2bdrm apartment with wife and two kids in poor school district? With no savings and vacation? Your life is hell and you are that much more likely to take bribes.
It’s all about incentives.
@ Monday, September 18th 2023 by Alupis | Open
>suggested that Congressional salaries be a fixed multiple of minimum wage
That's insane no matter how you look at it.
Minimum wage is paid by individuals, private businesses and their owners. Congressional pay is paid for with your money - an effective infinite of your money, or they'll just poof new money out of nowhere to continue to pay themselves.
Correlating the two is plain wrong.
@ Monday, September 18th 2023 by cj | Open
IMO an equation like that would be fine as long as you made it possible for CEOs of larger companies to make more money than CEOs of small and medium sized companies.
There’s a job market for C-Suite employees (whether we care to admit it or not). At a certain point you won’t get qualified candidates if you can’t reward them enough, same as engineers or any other role.
The answer for how much CEOs should be paid is the amount of money you would need to pay to employ the most optimal person to run the company. Figuring out what that number is is difficult.
@ Monday, September 18th 2023 by skyyler | Open
Well that's simple, larger companies that want to pay their CEO more can pay their lowest paid employees more.
@ Tuesday, September 19th 2023 by burnerburnson | Open
That's moronic. A good CEO at a fortune 500 company could have a $100M revenue impact. That same CEO could never be worth $100M to a local restaurant. The idea that the bigger company can't offer more to attract a better CEO just because both businesses employ janitors that make market rate is mind-numbingly stupid.
@ Tuesday, September 19th 2023 by nateburke | Open
>There’s a job market for C-Suite employees
And it can sometimes be VERY illiquid. Headhunters help to provide this liquidity and get paid for it.
Sometimes C-suite career people can go years without a job. Not every CEO or CFO makes fortune 500 comp and many people falsely assume low compensation volatility as e.g. a "career CFO". It can be extremely stressful, especially with family/dependents.
@ Tuesday, September 19th 2023 by amrocha | Open
No. There is no financial stress in a CEOs life. The CEO that can't afford private yacht lessons for their daughter is not the same as the single mom working 2 jobs to feed her children. Stop drawing a false equivalency.
@ Monday, September 18th 2023 by pizzafeelsright | Open
What about CEO pay * Widgets shipped?
I always think "I can clock out at 5pm" or "If I screw up it'll only cost me my job and not 1,000 people their jobs"
C levels deal with stuff I am not interested in and the while the pay is appealing the added life complexity is not. Thus I W2 while seeing my kids 90+ hours a week.
@ Tuesday, September 19th 2023 by ryukoposting | Open
I would love it if my brokerage would show me that multiplier for the companies I invest in.
@ Tuesday, September 19th 2023 by chadash | Open
The problem with this is that the CEO of Walmart is a much more important job than the CEO of McKinsey but under this formula they would get paid a fraction of the amount, no matter how well they did for Walmart workers.
The end result of this situation would probably be a mad dash to automate away any blue collar work, which may not be such a great thing.
It’s a tough problem.
@ Monday, September 18th 2023 by throw0101b | Open
Good episode of Bloomberg's Odd Lots podcast from a little while ago on the topic:
>On September 14, the contract between the United Auto Workers and the Big Three carmakers (GM, Ford and Stellantis) is expiring — and the possibility of a strike is real. This comes at a delicate time for multiple reasons. The labor market is tight, which means workers have other options. Inflation is high. And the auto industry is undergoing a major shift to the electric vehicle market, which may change the composition and pay of the labor force. The stakes are high. So what does the union want and how does it fit into the goals of the broader labor market? To understand more, we speak with Dan Vicente, the director of UAW Region 9, as well as Alex Press, a labor reporter at Jacobin magazine.There were some items that the unions conceded in 2008 when the US automakers were going bankrupt that have still have not been restored.
- https://omny.fm/shows/odd-lots/what-the-uaw-wants-from-its-f...
- https://www.youtube.com/watch?v=LBP8_8_S7Ls
@ Monday, September 18th 2023 by aaronbrethorst | Open
Alex Press also appeared on last week's episode of the podcast Why Is This Happening, hosted by Chris Hayes. https://www.msnbc.com/msnbc-podcast/why-is-this-happening/un...
@ Tuesday, September 19th 2023 by jdpedrie | Open
Glad to see such a range of views, all the way from labor unions to communist magazines!
@ Monday, September 18th 2023 by JKCalhoun | Open
>“Obviously, CEOs should be the highest-paid person in an enterprise, but then the question is exactly just how much higher than everyone else,” Josh Bivens, chief economist at EPI, told NPR.
I thought I read that at Japanese companies the CEO doesn't make 300 times what the workers make. Maybe the CEO made 10 times at most?
@ Monday, September 18th 2023 by hinkley | Open
Why should the CEO be the highest paid person in an enterprise?
Why is that obvious? This foregone conclusion stuff is just notes cribbed from the aristocracy. You're not aristocrats, you're citizens.
@ Monday, September 18th 2023 by astrange | Open
This is true, but they also tend to get free use of things like homes and cars owned by their company.
@ Tuesday, September 19th 2023 by umeshunni | Open
https://www.japantimes.co.jp/news/2023/06/30/business/top-au...
...Akio Toyoda, was paid ¥999 million ($6.9 million) last fiscal year...
"Owing to culture or corporate structure, the salaries of American executives and foreign executives in Japan have historically been much higher,” a Toyota spokesperson said Friday. "We’re aware of the gap and we’re working to fix it.”
Nissan, which has just shuffled its leadership, also published salaries Friday, showing that former Chief Operation Officer Ashwani Gupta was paid ¥726 million last fiscal year. CEO Makoto Uchida made ¥673 million.
Honda said last week that its CEO Toshihiro Mibe was paid ¥348 million and Chairman Seiji Kuraishi got ¥138 million.
@ Tuesday, September 19th 2023 by ElevenLathe | Open
I'm not sure why it's obvious that the CEO should be the highest paid? Why should everybody's boss make more than them? I know that isn't the case for many line managers of highly-paid programmers, for example, and I assume the same is true of other similar professions, at least sometimes.
Wages are theoretically a market, and probably it's often easier to replace a skilled manager/business bro than it is a skilled engineer/artist/salesman, and often it's more important to your business.
@ Monday, September 18th 2023 by bradleyjg | Open
I think they should get it and it should be in out of the money stock options. I don’t understand why so many dinosaur companies restrict equity based comp to the C suite.
@ Monday, September 18th 2023 by toomuchtodo | Open
Profit sharing is common, especially amongst employee owned companies. Base wages are behind inflation and cost of living, so of course it needs to catch up to the current macro. Fast food worker minimum wage is now $20/hr in California, for example, and healthcare worker minimum wage will be $25/hr (SB525).
https://news.ycombinator.com/item?id=37558256[Here]
@ Monday, September 18th 2023 by callalex | Open
It’s generally a bad deal for the worker compared to cash. An assembly line worker has absolutely zero say in the direction of the company, their work will never meaningfully move the needle on stock price, so it makes no sense to tie their income to something they have no control over.
@ Tuesday, September 19th 2023 by ryukoposting | Open
Stock options are complicated. On a factory worker's salary, you probably don't have the money to throw at a financial advisor who will know how to handle those options competently.
@ Monday, September 18th 2023 by ARandomerDude | Open
Next year’s headline: Auto Makers Hike Prices 40%, Leaving Buyers Stranded
@ Monday, September 18th 2023 by astrange | Open
Does it work the other way round?
@ Monday, September 18th 2023 by chiefalchemist | Open
Next year's other headline: More industries seeing more interest in unionizing.
@ Monday, September 18th 2023 by clipsy | Open
Amazing how the people who are so "concerned" that raising working class wages will result in higher prices never seem to consider that outsize executive compensation, massive stock buybacks, etc are responsible for higher prices. Almost like they aren't concerned with the prices at all!
@ Monday, September 18th 2023 by babyshake | Open
They can't do that, because there are plenty of other car makers including from Japan, Germany, etc. This is why competition is good.
@ Tuesday, September 19th 2023 by webworker | Open
Buyers are already stranded. I should know, my car got totaled a few months back and a 1:1 replacement with current model year was about $15k more than my last one. Worse, the value of my totaled car was only $8k less than the original sticker.
The car market is extremely ugly right now.
@ Monday, September 18th 2023 by SeanAnderson | Open
I've heard a counter-argument to this before and I'm curious to get other's take on it.
Basically, the story goes that when an individual rises into a significant leadership position at a large enough company that the economic calculations become different. There's still an element of domain expertise, but, for the most part, leadership is leadership wherever you go. This implies that a leader could (potentially) move across sectors and still be effective which results in a wider pool of companies that are interested in competing for this person when contrasted to the ICs. Since some sectors are very profitable they end up "bidding up" quality leadership. The combination of this effect along with the fact there are objectively fewer CEOs than ICs results in a mismatch in salaries.
I think there's an element of truth to this, but probably not to the extent that it justifies the widening pay gaps everywhere?
@ Monday, September 18th 2023 by fallingfrog | Open
I’d like to see one of these guys use their magic leadership mojo to lead a platoon of marines into battle. I think he’d find that domain knowledge does, in fact, matter.
To the extent that it truly doesn’t matter, the ceo is a glorified mascot.
@ Monday, September 18th 2023 by vasco | Open
It's more likely that it is the only role that tends to be in the room when the board is deciding salaries. Turns out it's great to be able to decide how much your own compensation should be.
@ Monday, September 18th 2023 by elcritch | Open
Though this argument falls apart with evidence that CEOs of big firms do need to deeply understand their companies domain. It may work to a degree, but doesn’t seem to coincide with the most valuable companies.
It’s why when Intel was floundering a few years back they got rid of CEO and brought on a CEO with deep engineering expertise.
Tim Cook is a wizard of supply chain, and in many ways that’s a large part of Apples current success, IMHO. The list goes on.
@ Tuesday, September 19th 2023 by MuffinFlavored | Open
>leadership is leadership
what is leadership other than being stern, following up, driving projects to completion or up/down the org chart as needed (escalation, etc.)?
@ Tuesday, September 19th 2023 by mwbajor | Open
I think the MBA mantra that specific product expertise is not important: a widget is a widget, died with Jack Welch and Carly Fiorina (her career). Its still around but not nearly as much as 15-20 years ago.
@ Tuesday, September 19th 2023 by abdullahkhalids | Open
HR people and accountants also have the same sort of domain independence. Their salary has not particularly risen faster than the average worker salary.
@ Tuesday, September 19th 2023 by thewileyone | Open
"leadership is leadership wherever you go"
Not all CEOs are built the same. Only a minority are able to cross industries successfully, the majority fail miserably. This is because elements that drives success are different between industries. Most of the time, if the CEO is successful one way in one industry, he/she would pursue the same path in another industry, without acknowledging that the second industry is different. What's worse if when they bring their previously successful team. Now you've got a bunch of people doing more the wrong things at the same time.
@ Tuesday, September 19th 2023 by Turskarama | Open
I think the whole thing falls apart when you get to the point of a CEO making so much money, regardless of their performance, that they can just retire after a single year.
So what if I don't get my contract renewed if I have $50 Million, that's more than most people make in their entire lives. See you at the beach!
@ Monday, September 18th 2023 by 71a54xd | Open
This kind of logic doesn't help anyone - yes, CEO pay is insane but its that way because of how much risk they take ownership of and shoulder day in day out. If one line worker forgets to tie a wire-harness it's not like the entire company will end up in financial ruin... However, the CEO making serious mistakes can and has cost GM millions.
@ Monday, September 18th 2023 by hinkley | Open
Do they take ownership though? That hasn't been that way in a while.
Used to be the best warrior had skin in the game. We have them resources so when the lions came or the boars got into the crops, they were ready to kick some ass, even if the rest of us were undernourished due to a drought.
Now they just "take full responsibility" where that just means they have to announce that something dumb happened on camera. Truly a gruesome fate. So brave.
@ Monday, September 18th 2023 by jezzamon | Open
That's why the pay rates are different, but that doesn't explain why the pay rates should increase by different percentages
@ Monday, September 18th 2023 by dymk | Open
A failed CEO of a large company almost never ends up bankrupt, and they almost always remain a multi-millionaire. What exactly is the risk they're taking on?
@ Monday, September 18th 2023 by fallingfrog | Open
Yeah but these guys typically fail upwards such that they are immune to failure, and take almost no personal risk at all.
@ Monday, September 18th 2023 by yunohn | Open
>CEO making serious mistakes can and has cost GM millions
So despite GM paying the CEO millions, they couldn’t prevent him from making mistakes?
@ Monday, September 18th 2023 by NicuCalcea | Open
CEOs make mistakes all the time and often face few consequences.
We should all be lucky enough to have the chance to earn in a few months what we'd normally make in a lifetime. I'll gladly accept the extra risk that goes with that.
@ Monday, September 18th 2023 by MisterBastahrd | Open
Are we supposed to pretend that most CEOs don't have an entire fleet of people at their disposal to ensure that they aren't making incredibly boneheaded decisions?
@ Tuesday, September 19th 2023 by FireBeyond | Open
>because of how much risk they take ownership of and shoulder day in day out
What? The CEO of any substantial company is going to have a golden parachute in their contract. Literally the opposite of putting everything on the line, just merely "Will only make X, not 10X, where X may well be more than median lifetime earnings, even if the company completely collapses."
@ Monday, September 18th 2023 by cratermoon | Open
How about this compromise: cut the CEO's pay by 40% and give an 80% raise to the workers.
@ Tuesday, September 19th 2023 by MuffinFlavored | Open
her pay was $29m40% is $11.6mthere’s 160,000 employees
$72.50 a year per employee
a $1/hr raise for a full time employee is $2,080/year
they makes $17/hr and UPS makes $21/hr on the low end part time wise
lots of employees want at least $8k/yr raise ($4/hr on the low)
a bit different from $72.50
@ Monday, September 18th 2023 by lazzlazzlazz | Open
I don't follow why workers' pay should increase at the same rate as their CEOs' pay. They're subject to entirely different labor markets with accompanying risks, opportunity costs, supply, demand, cost of replacement, etc.
@ Monday, September 18th 2023 by nerdponx | Open
"Should" is a loaded word here. Market equilibrium is not always the best thing for society as a whole, morally or practically.
@ Monday, September 18th 2023 by Alupis | Open
Settle in for a wild propaganda-filled fall season.
Between UAW Strike, SWG Strike, barely avoided UPS Strike, and probably a few I'm leaving out, we're going to be inundated with half truths, misdirection, selective statistics and even the occasional outright lie.
UAW opening demand isn't just a 40% pay hike - but also a four day workweek (when combined is ~70% increase in pay). Nobody expects for UAW to get everything they demand (that's not how negotiations work of course) but still, it's a particularly unreasonable starting position and is likely demonstrating just how far apart both parties are.
It's become a sort of meme to bag on C-Suite salaries - with a lot of folks fundamentally believing C-Suiters don't earn their pay or at the very least don't earn the extreme pay gap between them an your average line worker.
Anyone thinking a C-Suiter clocks out at 5pm and doesn't work after hours has no experience in the C-Suite (or even upper management for the matter). There isn't really a such thing as "off hours" for these folks on average. Correspondingly, decisions made by your C-Suite can earn a company huge returns, or doom the company and all of it's employees and stake holders.
Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.
@ Monday, September 18th 2023 by aaomidi | Open
4 day work week has been successful in most places. As a world we should move towards it.
Other benefit: less environmental impact, more time for people to improve themselves and their mental health, etc.
@ Monday, September 18th 2023 by Alupis | Open
Successful or not is not the point.
If met with the 40% pay increase it's another huge pay raise. There is no reality where line workers screwing in the same 3 door bolts all day long are getting what amounts to an effective ~70% pay increase.
Additionally, the 4 day work week is yet unproven in an industrial setting, such as are UAW member's jobs.
@ Monday, September 18th 2023 by Minor49er | Open
When picking candidates for employment, why would an employer choose someone who is willing to work five days over someone willing to only work four? A stressed-out employee who is at work is going to outperform a well-rested employee who isn't present
@ Monday, September 18th 2023 by bugglebeetle | Open
I’ve worked with “c-suiters” and in an auto parts factory. In no instance did the former work harder than the latter and in some instances the “c-suiters” were far below a factory worker in terms of ability and intelligence. I have, however, never met an auto worker that was born into a rich or well-connected family, which seems to be the primary differentiator between the two groups.
@ Monday, September 18th 2023 by ocdtrekkie | Open
I'm not sure how you hope coming out justifying the ridiculous state of CEO pay is going to go for you, but the problem is the incentives are not aligned.
CEOs make big decisions... but they get paid more money than they'll ever need even if they do doom the company. In fact, many CEOs against union workers are torching their own companies to avoid a fair deal which would cost their businesses less.
The only way CEOs would justify their high pay is if we were able to hold them responsible for their company's misdeeds and throw them in jail. But since Sundar Pichai is still a free man, we clearly definitely don't do that either.
CEO is a completely zero-risk, massive return job that you get largely for knowing the right people and having a deeply flawed moral fiber that enables you to sleep at night after doing unusually cruel things to everyone else. That's really all there is to it.
@ Monday, September 18th 2023 by ajross | Open
>Anyone thinking a C-Suiter clocks out at 5pm and doesn't work after hours has no experience in the C-Suite
That's not the standard, though. The criteria is cost above replacement, and quite frankly modern executives show up extremely mediocre on that measure. Companies flip executives all the time, and it almost never results in significant changes to revenue (and when it does, it's down as often as up). In fact there's almost no measurable meritocracy among salaried executives.
The reason executive salaries got so high is simply that the class the makes up the C-suite residents (the major investors and board members) got jealous that the outgoing founders of these companies got so rich, and wanted to play in the same sandbox. It's only fair, right?
But that's exactly the moral argument UAW is making: these companies got fabulously wealthy over recent decades owing to GDP growth and stock market booms, and they should share that wealth with their employees and not just keep it for the owners. The only difference is in how you define "employee".
@ Monday, September 18th 2023 by Alupis | Open
Flipped on it's head - 2 thoughts:Inflation is putting a squeeze on everyone, and it just so happens your average worker is feeling it the most. It's no coincidence all these labor issues and strikes are happening right now.
- You cite cost of replacement - yet these companies are unable to replace their C-Suite with anyone costing less. Therefore, they can command the compensation levels they do (not to mention compensation != in pocket pay).
- UAW employees are indeed readily replicable with little or no training on average. Offshoring is very realistic, and there is no shortage of high-school educated folks willing to work in a factory/plant for current levels of pay.
@ Monday, September 18th 2023 by faeriechangling | Open
>Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.
Why? Why is it that CEO pay reflects company performance but not the line workers? It seems incoherent. How does the collective performance of line workers, which we can predict somewhat from salary, not impact company performance? Where did this idea that only in upper management does salary correspond to company performance? What research was done?
Aside from the rare company built by the CEO wholly or largely, CEOs just seem to come from wealthy families, are tall handsome men, and have all the right connections. These are not brilliant geniuses. Being a c-suite executive is not a meritocratic thing most of the time, it’s an inherited privilege.
Compensation is not a function of their performance, it’s a function of their ability to hold their businesses hostage and threaten to tank their companies unless they’re paid high salaries. Rotating out the c-suite will at least temporarily tank company profits. It’s about power not merit. So why uh, doesn’t the union do the same thing and also hold the business hostage? 40% is not wild at all, it’s a drop in the bucket for shareholders because salaries are so low to begin with.
@ Monday, September 18th 2023 by lolinder | Open
>Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.
For everything besides growth rate I can see arguing that they can't be compared—I don't agree, but I can understand where you're coming from—but why should a CEO's salary go up dramatically faster as a percentage than line workers'? Is the CEO somehow working 40% more hours than they did last year? Working 40% harder? What is that 40% tied to that line worker salaries shouldn't be tied to?
@ Monday, September 18th 2023 by sgarland | Open
A bad SRE team can destroy your company. Yet, even at the best places, you’re lucky if you get a small per diem when you’re on-call.
I’m not saying SREs are poorly paid, but they often are keeping entire companies afloat, and their pay is nowhere near that of the C-Suite.
If the entire SRE team quit / went on strike, there is a non-zero chance the next incident would utterly break the company.
If the entire C-Suite quit, uh… what exactly would happen? People would continue doing what they had already been doing?
Executives are overpaid. Period.
@ Monday, September 18th 2023 by Alupis | Open
>A bad SRE team can destroy your company.
Ah, and the SRE team assembled themselves, hired themselves, decided what to work on, direction, technology, plans, etc all on their own?
Or is there a C-Suite running the SRE team, even if indirectly?
>If the entire C-Suite quit, uh… what exactly would happen? People would continue doing what they had already been doing?
This is beyond naïve, I'm not sure what to call it. Yes, things hum along for some duration... and then what?
C-Suite are not laborers, as you've queued into. They provide direction, guidance, goals, identify problems, etc.
Take a human being without any of that in their personal life. What becomes of them? Nothing good... it's similar for a company. The wrong leadership dooms a company before any of the line workers even notice.
@ Monday, September 18th 2023 by kahnclusions | Open
Of course they can and should be compared. They’re human beings, and I don’t care how much additional “value” you brought to the company (you know that’s BS they tell to justify being overpaid) or how many late hours you worked, in my eyes you’re not deserving to earn 1000x more money than your ordinary workers.
@ Monday, September 18th 2023 by atleastoptimal | Open
So those with the least leverage to earn more just so happen to deserve to be paid just as little as they are, and those who have severely disproportionate influence on their earnings just happen to be making exactly what they deserve?
Trying to justify exorbitant C-suite salaries because they often work hard (in conditions significantly easing working hard due to having a litany of assistants to handle boring stuff, private jets, drivers, Michelin starred meals with regulators, lawyers an executives counting as "work") is silly when you look at how hard so many working class people work. But I know you know this, so it seems you're just blaming them for being born poor, unconnected and not having the "big business brain" that all C-suite executives must have.
@ Monday, September 18th 2023 by whynotmaybe | Open
Jeff bezos has something to say about the 5pm thing :
"By 5 p.m., I'm like, 'I can't think about that today. Let's try this again tomorrow at 10 a.m,'" he told the Economic Club of Washington, DC.
https://www.businessinsider.com/jeff-bezos-daily-routine-201...
@ Monday, September 18th 2023 by dfiohnio | Open
>it's a particularly unreasonable starting position and is likely demonstrating just how far apart both parties are.
Their demands are only unreasonable if they lose. This is a strike. It's fight, not a discussion. The goal is to give the company no choice but to give in. The strikers are under no obligation to be fair. They can make whatever demands they want. They don't have to give an inch if they don't want to.
>They cannot be compared, nor should they.
Comparing them is pretty simple, actually.
$ units
You have: 21 million USD / year
You want: (28 USD / hour) * (40 hours / week)/ 0.0027827977
- 359.35059
@ Monday, September 18th 2023 by the_third_wave | Open
Defending the excessive remuneration for C-suite inhabitants by saying they're never off work falls flat when you realise there are many other professions where this is the case. Whether this be a veterinarian who gets called out at night, a farmer who stays up all night because one of his cows is about to give birth, a mechanic on board a fishing boat with the responsibility for keeping the thing running or any of the other professions where responsibility is combined with unpredictable and/or uncontrollable event timing.
"Yes, but the C-suite is responsible for $zillions"...
Are they personally responsible? If they fail in their job do they get to reimburse the investors for money they lost? Hardly, they tend to get a golden handshake and move on to another company whereas that vet, the farmer or the mechanic tend to be punished for failure in some way - by loosing their accreditation, livestock or livelihood.
C-suite remuneration has far outgrown its justification.
>Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.
Why should they not be compared? Why should it not be discussed whether an hour of a systems engineer's life is worth far less than an hour of a CFO's life? What great sacrifice does the CFO make which the farmer does not to explain the disparity in remuneration? An hour in a life is an hour in a life no matter your profession, you won't get it back when it is gone.
@ Monday, September 18th 2023 by IgorPartola | Open
The point isn’t to compare CEO and factory worker salaries dollar for dollar. The point is to compare growth rates of both over years. If the company grows 3x, CEO salary grows 10x, and worker salary grows not at all, how does that make sense to you?
@ Tuesday, September 19th 2023 by no_wizard | Open
>Anyone thinking a C-Suiter clocks out at 5pm and doesn't work after hours has no experience in the C-Suite (or even upper management for the matter). There isn't really a such thing as "off hours" for these folks on average. Correspondingly, decisions made by your C-Suite can earn a company huge returns, or doom the company and all of it's employees and stake holders.
you're ignoring the contributions of people in the company that make the C-suites job possible. Why should the C-suite be entitled to this just because they work long hours?
I work long hours. I've had jobs - salaried, mind you - where I worked past 5 PM, well into the evening, and no stock options are not the same. At any rate, one of those jobs the stock options weren't worth anything anyway.
CEOs get golden parachutes and gobs of money and for what all, exactly? What do they actually contribute?
I'd love for there to be an experiment where you take a senior operations person, for instance, and put them in the CEO role, and see, if given the same support and onboarding, if they can't make good or possibly better decisions than the someone with "CEO experience"
I've met alot of CEOs, and they don't tend to be very in touch with their workforce, they simply see what they want to see, most of the time, few exceptions.
@ Monday, September 18th 2023 by meindnoch | Open
"Obviously, CEOs should be the highest-paid person in an enterprise"
Hold on there chap! How is this obvious?
@ Monday, September 18th 2023 by lr4444lr | Open
They have the highest accountability.
@ Tuesday, September 19th 2023 by ftxbro | Open
they are at the top of the hierarchy and the top dog eats first
@ Tuesday, September 19th 2023 by grecy | Open
For a fun thought experiment:
If the CEO go on strike and don't come to work for a month, how many cars will not be built, and how money will the company lose?
If the union factory workers go on strike and don't come to work for a month, how many cars will not be built, and how much money will the company lose?
Therefore, who is actually more important to the earnings and success of the company?
@ Tuesday, September 19th 2023 by burnerburnson | Open
That's not an interesting thought experiment at all. The workers in aggregate are clearly more valuable than the CEO alone. That's why their cumulative salary is way higher than the CEO's.
@ Tuesday, September 19th 2023 by grecy | Open
But why did the CEO's salary increase more than the workers?
To keep the equation in check, surely they need to increase at the same rate
@ Tuesday, September 19th 2023 by jmye | Open
Why? No individual assembly line worker has any particular value - so if the aggregate increases then the equation, in your example, is “in check”, whatever that means.
Alternatively, if assembly workers were difficult to effectively replace, they would get paid more. Simply doing some unit of work neither makes that unit of work valuable, nor does it make the person doing it valuable.
@ Tuesday, September 19th 2023 by burnerburnson | Open
It's obviously wrong. NBA teams are a good counter-example. Nobody talks about the team's president/CEO/etc when prognosticating which team will be the best.
@ Tuesday, September 19th 2023 by a_f | Open
Do NBA CEOs get paid less than the highest paid players? I would expect them to get paid more.
@ Tuesday, September 19th 2023 by randomdata | Open
I would have thought the owner would be the highest paid person in an enterprise.
So much for that whole capitalism thing.
@ Monday, September 18th 2023 by nemo44x | Open
Why does LeBron James make so much more than the ball boy and concession stand workers and ushers?
A CEO that delivers alpha deserves a big cut of that. The board exists to hire leaders that can deliver alpha. A good deal fail to. But the ones that do are more than worth their compensation.
And btw you have 0 chance of attracting the kind of CEO that can deliver alpha by offering peanuts. It doesn’t always work out and there’s plenty of snake oil CEOs, but the good and great ones are worth every cent to stock holders.
@ Tuesday, September 19th 2023 by ken47 | Open
My understanding is that the CEO's in question are not even remotely comparable to Lebron James's stature in basketball.
@ Monday, September 18th 2023 by MuffinFlavored | Open
The only person losing out is going to be the consumer. What's to stop executives at Ford, GM and Stellantis from saying "sure, 40% pay increases, no problem" and then just passing it along to consumers one way or another?
There isn't enough margin in the R&D + logistics of producing cars as is.
Ford's stock is up 25% in 5 years, vastly underperforming the index
GM stock is -5.6% over 5 years
Stellantis stock is +3.55% over 5 years.
Where is the argument that the greedy capitalist meanies at the top are doing nothing but buybacks with the millions in profits inflation the stock?
@ Tuesday, September 19th 2023 by massysett | Open
“and then just passing it along to consumers one way or another?”
The consumer will buy a car from a non-union automaker that charges less.
@ Tuesday, September 19th 2023 by mulmen | Open
Ford jumpstarted the middle class by increasing compensation to a level that created more customers. This is consistent with the idea that value is created.
@ Monday, September 18th 2023 by abeppu | Open
Just to point out a demonstrated, viable, successful reality achieved under different values and assumptions, the Mondragon Corporation/cooperative produces car parts, among many other things, and has pre-agreed ratios for wages for executives relative to the lowest wages paid to workers, and this tops out at 9:1. Studies have found that worker-owned coops have a greater survival rate than conventional businesses, and that they have higher productivity.
https://en.wikipedia.org/wiki/Mondragon_Corporation#Wage_reg...[Here]
https://en.wikipedia.org/wiki/Worker_cooperative#Longevity_a...[Here]
@ Tuesday, September 19th 2023 by reddozen | Open
Mondragon is not a worker cooperative. They have a three-tiered worked system[0] with clear hierarchical structures and differences in voting power. The temporary worker tier (largest) having no voting power whatsoever.
[0] https://www.researchgate.net/publication/290978631_The_Mondr...
@ Tuesday, September 19th 2023 by boppo1 | Open
How is equity comp factored in?
@ Tuesday, September 19th 2023 by nataliste | Open
The paradox of worker-coops is that workers capable of successfully running businesses together are also capable of running businesses independently, so why create more failure points?
@ Monday, September 18th 2023 by 1970-01-01 | Open
Imagine a FAANG software union asking for 40% more pay for devs, to match the CEOs'.
@ Monday, September 18th 2023 by Mistletoe | Open
I’m assuming auto workers don’t make 400k a year already.
@ Tuesday, September 19th 2023 by umeshunni | Open
I got an average 20% annual TC increase every year of the decade I worked at a FAANG, so 40% over 4 years would be well below average.
@ Monday, September 18th 2023 by ftxbro | Open
imagine a line worker comparing themselves to a ceo. tim gurner is right the workers really are becoming arrogant
@ Tuesday, September 19th 2023 by Exoristos | Open
The word you're looking for is "uppity." "Arrogant" is the CEO assuming he's worth hundreds of times more than a different man.
@ Tuesday, September 19th 2023 by refurb | Open
The average CEO at a top U.S. company was paid $27.8 million in 2021, including stock awards — 399 times as much as the typical worker — according to research published by EPI. From 1978 to 2021, CEO pay grew by 1,460%, adjusted for inflation, versus just 18.1% for the typical worker.
Auto workers aside, this is always a crappy stat that is thrown about.
"Top US companies" is rife with survivorship bias. It's like saying "the CEOs of the most successful companies had their pay increase..." Well yeah, when a company is successful, compensation rises.
Average CEO pay across all companies in the US is like $250,000.
Honestly, if the union wants similar compensation as the CEO, they should have the same pay structure as the CEO - 10% in cash salary and 90% in options or stock. When the car company does really well, they make a ton of money, when it does poorly, they make almost nothing.
But I would guess they wouldn't go for that.
@ Tuesday, September 19th 2023 by mulmen | Open
>Well yeah, when a company is successful, compensation rises.
Only for the C-suite apparently.
>When the car company does really well, they make a ton of money, when it does poorly, they make almost nothing.
That’s already how it works. Workers took pay cuts in 2008 to keep the companies going. It worked and now the UAW is asking for the same pay recovery that the C-suite already received.
@ Tuesday, September 19th 2023 by lostlogin | Open
>“Obviously, CEOs should be the highest-paid person in an enterprise, but then the question is exactly just how much higher than everyone else,” Josh Bivens, chief economist at EPI, told NPR.
Are there any examples where this isn’t true?
I know someone who works as an engineer cleaning up nuclear waste. The workers who do the job he engineers are paid more than him. He is ok with that but did pass the comment that it’s an unusual situation.
@ Tuesday, September 19th 2023 by marricks | Open
"Of course they should be paid more, cause they are."
I think NPR does a lot of damage not questioning assumptions like this. Or, often times, putting them out there themselves.
@ Tuesday, September 19th 2023 by chadash | Open
The football coach is often the highest paid employee at the university. I wouldn’t be surprised if many rockstar doctors made more than some of their hospital CEOs.
@ Tuesday, September 19th 2023 by wincy | Open
I’d imagine Linus Sebastian (of YouTube Linus Tech Tips fame) is taking home more money than the recently appointed CEO of the Linus Media Group. But that’s also a weird situation because he basically hired the CEO to free himself up to do the parts of the job he likes.
He said someone offered to buy the company for $60M cash I think it was? Which is astounding.
@ Tuesday, September 19th 2023 by lz400 | Open
In banks and financial companies it's relatively common that some rock star trader or quant that has an exceptionally good year might make more than the CEO.
@ Tuesday, September 19th 2023 by screye | Open
I have to wonder. What percent of Tesla's success is attributable to not having legacy union baggage. Unions are the tech debt of the manufacturing world.
It starts with a good idea, but if you let it fester, then it quickly becomes more of a drag than a productive addition to your organization.
@ Tuesday, September 19th 2023 by mortureb | Open
It’s a balance. Tesla employees are not having a good time, I can tell you from first hand experience. You’ll make reasonable money but it’s not really a life worth living with 12 hour days and extreme stress. Atleast the options made me rich so maybe it was worth it?
@ Tuesday, September 19th 2023 by mulmen | Open
Unions don’t serve the company. They serve the workers. The real irony here is that Henry Ford jumpstarted the middle class by increasing pay to match increased productivity. That new middle class then bought his cars. A company that doesn’t serve workers and thus society has no right to exist.
@ Tuesday, September 19th 2023 by bagels | Open
People get really fixated on CEO pay. Its only of symbolic importance.
Google says: 167,000 GM employees
Mary Barra salary: $29M
Distribute that salary across the whole workforce: $174 per employee
They should really be talking about it in terms of inflation or profit margin. GM profit for 2022 was $21B
@ Tuesday, September 19th 2023 by pests | Open
I always see people show this equation and it never made sense to me.
No one is saying the CEO is taking money the employees would have otherwise earned. When you divide it out like that of course its a pittance per employee.
The statement is about the relative scale of the CEO pay to one employee. I don't care about the difference applied to all employees.
An absurd parody I always imagine: John is 7ft tall. His group of 6 other other friends are only 6ft tall. Wow John is really tall! Nah, if you distribute his tallness between his friends they would only gain 2 inches! That has nothing to do with John being 12inches taller than any one of them.
@ Tuesday, September 19th 2023 by bagels | Open
It frequently doesn't matter how much the CEO makes. It's not why the other employees aren't making more money. It's just a distraction. It boils down to "it's not fair". If what is important is the ratio between CEO pay and employee pay, then the board can cut CEO pay, and call it a day. That doesn't improve employee pay.
If the employees really only care about that ratio, then they should accept that outcome from their strike. That's not why they are on strike, they also want to be paid more, just like the CEO.
@ Tuesday, September 19th 2023 by thisgoesnowhere | Open
This is a super bizarre argument.
I suppose I should be paid 167,000 more per year as a software engineer at GM because it's only 1 dollar per employee?
@ Tuesday, September 19th 2023 by randomdata | Open
>Mary Barra salary: $29M
$2 million, actually. The $29 million is total compensation; mostly stock awards.
@ Tuesday, September 19th 2023 by AndrewKemendo | Open
This is great. Add this to SAG-AFTRA, Waffle House workers and Starbucks walkouts and we have real movement toward a general strike
If both Wal-Mart and Amazon drivers strike we might actually have a shot a taking a bite out of capital finally.
@ Tuesday, September 19th 2023 by MuffinFlavored | Open
serious question: say everyone you described gets a 20% raise
what do you think will happen to the cost of goods? what companies do you think are operating with enough margin that they can just afford a 20% rise in their payroll costs?
@ Tuesday, September 19th 2023 by pc_edwin | Open
I remember getting downvoted then flagged for making a reasonable argument against a bunch of employees from Tesla unionising.
While its not exactly a vindication, I feel super vindicated right now and I'm not gonna be reasonable this time.
These companies have no way out, they are going to die! All these people will lose their livelihood and worse their options to monetise their skillset/experience will be next to zero. Is this your utopia?!
I've been researching Ford for a while, they have so much debt and an extremely small margin for error for the EV transition. It was gonna be so tight and now their fate is sealed.
I'm not proud of this but a part of me find a bit of joy in what comes next. There is this Thanos side of me that feels like a grave injustice have been done here. These people have no right to have this much power over a company.
You really think a CEO isn't worth 300-400x more than a line worker? Honestly I can't fathom that level of ignorance/cognitive-dissonance.
Replace CEO with any sort of leadership role in any kind of organisation/entity with skin in the game (where outcomes can hurt). Whether if its football coaches, generals, head of state etc.
I know nobody (sane) disputes the difference between a c-suite employee vs a line worker but what I'm talking about is the exponential nature.
These people are barely human. Imagine the stakes, the leverage, the consequences and the sheer amount of context you need. Being in the top percentile of IQ, EQ, competence, industriousness etc are just tablestakes. You need to be ruthless while at the same time have an immense capacity for empathy. You need to be extremely conscientious/industrious while at the same time having a large reservoir of creativity. Its like the infinity stones, you can't just be a galaxy brain or just have the gift of the gab or be a psycopath. You need it all and more while competing against people just like you for rarified roles.
To top it off, all of this just gets you into the ring, you also need to actually win and win consistently over period of time. Usually this requires sacrificing your entire life. Btw this where the barely human part comes in, these people thrive on this. All these CEOs have enough money to retire on a beautiful ranch or oceanfront mansion, instead they work 70 hour weeks.
And you think these people are somewhat similar to the guy who screws in car parts? You think society should value these people in somewhat the same realm? like a linear nature (50% or 300% more).
This kind of thinking is what leads to the end of civilisations. These people should be revered. We should be grateful.
I still can't accept there are people in the world who think its somewhat similar. This is not an IQ thing, its not even a being well read thing.. This is common sense.
We all have met people in our lives where we go "oh there are level to this game", like freaks of nature.
How can you not think its the same for you know, leading a multi billion dollar public corporation with hundreds of thousands of employees.. Its mind boggling. How can people no see the asymmetry!
@ Tuesday, September 19th 2023 by mlsu | Open
Some executives are as you say. In general, those companies which are lead by executives like that are leaders and produce high quality and innovative products that people love.
But many execs are not. They work just as obsessively as the first type, but only to increase their own power inside of the organization, at the expense of the organization's cohesion, trust, productivity, and quality. They live in a bubble, totally disconnected from the organization's purpose. They make strategic mistakes over and over again. They fail to truly understand why even a single dollar of revenue happens; instead they take it as a given that the money is coming in and only think of ways their unit can siphon off more of it, at the expense of all the others.
If just one of these type 2's enters your organization, you can typically get by, as long as you recognize them quickly enough. If even a small handful enter your C-suite, they will metastasize, cause your type 1's to leave, and put your org on a death spiral.
Many execs are of the second type. You can tell: if you use a product or service, and it sucks, that's probably what's going on at the top.
@ Tuesday, September 19th 2023 by doctorwho42 | Open
Yes the CEO should make more, but where do you get off that a single individual can possibly do 300-400x more work than another individual. It is sheer absurdity of an opinion to hold.
In a civilized society I would say maxing out the top paid employee of a company to 20-30x of the average of the salaries of the bottom half of all salaries in the company is what should be done. Anything more than that creates a system of perverse incentives to take action that is against the greater good of the community.
@ Tuesday, September 19th 2023 by mullingitover | Open
I'm surprised unions don't throw their weight around more via equity ownership in the company. Controlling the company directly is really the endgame move, once they control a majority stake, they're literally just negotiating with themselves for their labor contracts.
Even better, if they're managing their pensions via investment houses, why not just build their own investment house and leverage their negotiating position that way?
@ Tuesday, September 19th 2023 by mr_toad | Open
If they could afford that they wouldn’t need jobs. They’d need to hire a bunch of new workers.
It would be interesting to see what happened when the shoe was on the other foot.
@ Tuesday, September 19th 2023 by gen220 | Open
I always thought the same. Bargaining for some minimum amount of cash is important (food on the table, gas in the car, etc.).
But beyond that, meaningful equity in the hands of labor should surely be the goal — it aligns interest in a way that cash can’t.
@ Tuesday, September 19th 2023 by ryathal | Open
US unions are notoriously anticorporate, they generally despise the idea of stock based compensation.
@ Tuesday, September 19th 2023 by seanmcdirmid | Open
Just wondering, but are any of the American car companies doing well besides Tesla? Every year they seem more irrelevant, even Texans will buy Japanese pickup trucks these days. I just don’t see them rich enough to pay their CEO or workers 40% raises, and that increase is just going to be temporary as their business become less viable and layoffs or insolvency follows.
@ Tuesday, September 19th 2023 by bufferoverflow | Open
Best-selling cars in the US are
• Ford F-series(F-150 being the most popular car in the US)
• Chevy Silverado
• RAM Pickup
• Tesla Model Y
• Toyota Rav4
• Honda CRV
• Toyota Camry
• GMC Sierra
• Nissan Rogue
• Jeep Grand Cherokee
So 6 out of 10 are American.
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