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  • What are your thoughts on income inequality?

    WARNING: This is NOT a political thread. Please do not make it one. Blatantly political posts will be deleted. If you want to discuss policies, that's fine, but not politics.

    I am by no means an economist but I hear and read so much about income inequality. Is it truly a problem? Does the CEO's pay really influence or affect the hourly worker's pay? Could companies get top quality leadership today without paying what they are currently paying? There have recently been stories in the news from companies such as Disney and Uber among others. Are shareholders and top executives exploiting their workforce?

    I honestly am not sure what to think about all of this. Part of me thinks it's ridiculous when some CEO is making tens of millions of dollars per year because what could they possibly be doing to justify that? But at the same time, if the company is booking record profits year after year, and those profits are in the billions, is that CEO pay really that unreasonable? As for the hourly employees, should they be making more or are they getting a fair price for what their job, training, and duties warrant? What about a company like Uber that actually has yet to generate a profit? Should things be different there than with a company like Disney that is wildly profitable?

    Should there be a scale of some sort that dictates the maximum multiple of average salary that the CEO can earn? Or would that just limit the talent pool and stifle innovation and growth?

    I suppose minimum wage plays into this too. If a company claims that it can't "afford" to pay a higher minimum wage at the same time that their executives are taking home 7-figure salaries, is there a problem there that needs fixing?

    I'm curious to hear your thoughts. And again, let's not make this political or partisan. Please keep it civil.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

  • #2
    Greater risk, greater reward.

    I work for a company where the CEO is well rewarded.

    Comment


    • #3
      Originally posted by Jluke View Post
      Greater risk, greater reward.

      I work for a company where the CEO is well rewarded.
      Do you, or your coworkers, feel that the CEO's pay is out of line? Do folks on the lower end of the compensation scale feel they are being exploited to help support that well-rewarded CEO?

      Steve

      * Despite the high cost of living, it remains very popular.
      * Why should I pay for my daughter's education when she already knows everything?
      * There are no shortcuts to anywhere worth going.

      Comment


      • #4
        The C-suite is a whole other level of the company that very few even interact with.

        The company has tens of thousands of employees worldwide.

        CEO compensation is mainly company stock.

        Comment


        • #5
          hard to say, i get both sides points. if you work hard, save hard, work smart, etc you should keep most of your profits and be subject to a fair tax rate.

          BUT in recent decades, the gap between haves and have nots has drastically widened, much of which was due to politicians systematically lowering tax rates on the very wealthy. A 5% tax reduction on someone making 1 mil/year is very different than a 5% reduction on someone making 50k. And the real life tax reductions went far beyond my little example, where most passive investment activity tax rate was reduced to 15% from the marginal tax rate of 30-40%. This effectively ensures that people with large amounts of wealth would gain more wealth that much quicker.

          A return to the old tax rates, which would never happen, would go a long ways towards reducing so called income inequality without artifical caps on income or whatever. it'll never happen though. If the tax rates were never changed through the decades, the disparity would also be a lot smaller.
          Last edited by ~bs; 05-13-2019, 06:31 PM.

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          • #6
            I'm generally a believer in market forces driving most economic factors, to include employee pay. If a company won't pay it's low/mid level workers a suitable wage, they'll talk with their feet. This is like the protests lately of workers demanding $15/hr base pay. The companies that feel their people are worth it will pay that. But a company who doesn't will either attract people not meriting $15/hr, or they won't be able to hire anyone at all.

            Likewise, if a CEO turns around a company, or consistently grows strong profits, they're likely worth at least a fair chunk of those profits. If a CEO is paid too richly and isn't worth it for the benefit of their leadership, the board of directors will be able to replace him/her with someone else on a lower salary. But if the CEO is worth every penny, they'll keep the person on board and pay a handsome salary.

            I recognize that's a simplistic viewpoint, but in general terms, I find market forces to be fairly reliable. As a federal employee, I can tell you with certainty that more regulation does not assure better results... It just guarantees more regulation.
            Last edited by kork13; 05-13-2019, 08:20 PM.
            "Praestantia per minutus" ... "Acta non verba"

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            • #7
              I think one of the problems is that a lot of skilled labor jobs (such as in the manufacturing sector) that used to bring more income have disappeared in the US. And, more and more jobs are being taken over by automation--driverless cars and trucks, for example. I've thought about this from a historic view. For example, what if you were a buggy whip manufacturer just as cars started to roll out? How about a lock operator on the C& O canal? Both, DH and I saw our original career fields become obsolete mid career. (Lucky for us, we were able to transition to something else.)
              I wonder what the forecasts are for good jobs in the future?

              Comment


              • #8
                Originally posted by kork13 View Post
                This is like the protests lately of workers demanding $15/hr base pay. The companies that feel their people are worth it will pay that. But a company who doesn't will either attract people not meriting $15/hr, or they won't be able to hire anyone at all.
                I think the push for a $15 minimum wage is inane. You can't just suddenly raise everyone's pay with no consequences. Some folks seem to think the companies can afford it by lowering executive pay but anybody who actually believes that is delusional. What will actually happen is layoffs, more automation, and higher prices. The people actually earning $15 will find that their money doesn't go any further than when they earned less.
                Steve

                * Despite the high cost of living, it remains very popular.
                * Why should I pay for my daughter's education when she already knows everything?
                * There are no shortcuts to anywhere worth going.

                Comment


                • #9
                  Originally posted by Like2Plan View Post
                  I think one of the problems is that a lot of skilled labor jobs (such as in the manufacturing sector) that used to bring more income have disappeared in the US. And, more and more jobs are being taken over by automation--driverless cars and trucks, for example. I've thought about this from a historic view. For example, what if you were a buggy whip manufacturer just as cars started to roll out? How about a lock operator on the C& O canal? Both, DH and I saw our original career fields become obsolete mid career.
                  Jobs and entire careers have become extinct throughout history. That is nothing new, as you pointed out. How many blacksmiths do you know? And really, automation isn't all that new either. And still, we have historically low unemployment so people are working doing something. Our economy is much more service oriented and less manufacturing oriented than it once was for sure but there are still plenty of jobs out there. Maybe the service jobs overall pay less than the manufacturing jobs so that could be part of the issue.
                  Steve

                  * Despite the high cost of living, it remains very popular.
                  * Why should I pay for my daughter's education when she already knows everything?
                  * There are no shortcuts to anywhere worth going.

                  Comment


                  • #10

                    Many of the employees I have worked with simply do NOT see what a CEO/or other executive does or is responsible for,
                    They see them maybe doing a tour through a plant/ store etc and simply think that is it they just have catered meetings and shake a few hands.
                    .
                    When I look around at many examples of employees on many levels not adding enough value to justify their OWN pay let alone make decisions about what others job requires.

                    NOT enough people take the RISK to go for other jobs and opportunities when they feel they are not being paid fairly. Instead they complain about what others are making but they want to change nothing about their contribution to the workplace.
                    Some want some regulation or government interference to make the stocking person make equal money as the CEO.

                    I have also seen many examples that are simply not qualified for management or promotion yet they feel just because of time employed means they should make more.

                    I would suggest all those wanting to advance their income should work on skills needed to either be promoted where they are OR take their skills to the next place that may see their value.

                    I NEVER understood those whom think for example raising minimum wage solves all.
                    I watched interviews of a person expecting to do amazing things with the NEW higher minimum in her city. The ideas seem to defy math and then found herself cut back in hours and making less then she was at old wage.

                    When those who talk about TAX rates to even things out it is in my opinion worthless.
                    SO many simply do not understand the tax system and they think that a higher % rate is all that is needed ( it is proven that the higher the rate creates creative tax avoidance) .

                    Maybe a FLAT tax but if you want to see people go NUTS try eliminating or limiting a deduction,

                    I saw a recent interview saying this income disparity is why so many can not come up with $500 for an emergency, not the fact that many without an EF are not the lowest income level and some regardless of income simply spend every cent or more.
                    IT is simply TABOO to say that more often then not the EF / savings issue is a personal responsibility issue.

                    Comment


                    • #11
                      Interesting question.

                      It's said that there are two types of people. Those who are underpaid, and those who are overpaid.
                      Whether you agree with the system or not it's your choice as to which type you want to be in life.
                      Brian

                      Comment


                      • #12
                        My husband was a movie theatre manager at one time. Nearly all other employees under him were paid minimum wage, and most were high school students. One young man was told by his father to ask for a raise. When he did he explained his worth and value, to which my husband said, "You and your skills may be worth more than minimum wage, but the skill set of this job is not to this company."
                        My other blog is Your Organized Friend.

                        Comment


                        • #13
                          Originally posted by creditcardfree View Post
                          My husband was a movie theatre manager at one time. Nearly all other employees under him were paid minimum wage, and most were high school students. One young man was told by his father to ask for a raise. When he did he explained his worth and value, to which my husband said, "You and your skills may be worth more than minimum wage, but the skill set of this job is not to this company."
                          That's a great point and speaks to what Smallsteps said above:
                          NOT enough people take the RISK to go for other jobs and opportunities when they feel they are not being paid fairly.
                          If you think you have skills that are worth more than what you're making, seek out a job that will pay you what you're worth.

                          When you're working at some entry level job, there are probably 100 qualified applicants for every available spot. The company has no incentive to pay you more because you are easily replaceable at the same price. If you want to earn more, you need to do more and make yourself more valuable to employers.
                          Steve

                          * Despite the high cost of living, it remains very popular.
                          * Why should I pay for my daughter's education when she already knows everything?
                          * There are no shortcuts to anywhere worth going.

                          Comment


                          • #14
                            I work for one of largest companies in the world, founded by one of the 10 richest people in world history. Our C suite is well compensated.

                            Here is what I think
                            1) risk and reward should justify pay.
                            CEO can be replaced for bad performance quickly- their shelf life could be 3 years or less... if they do bad...
                            in addition, much Cxx compensation is not liquid (stock and stock options), and their lives are public. My life is not public, so an executive making 10x as me seems justified. I don't want a public life.

                            2) the downfall of unions and the rise of Cxx pay are likely correlated. I read this a few years back, and think its worthy of a good discussion.
                            The primary issue here is that unions protect blue collar more than white collar (by stereotype). However to me if income equality were to be addressed, the engineering white collar employees need to make 2-3X more than the blue collar type- I have more risk for decisions I make than a line worker does.

                            3) the amount of money a person makes does NOT determine the quality of person they are
                            4) if someone at lower end of income scale wants more money, they need to assume a risk to obtain the money
                            if we just gave everyone raises, the first people to complain will be the people in the middle, not the people at the top

                            5) people which make good money as a whole have many traits like these
                            a) they take on more risk than 90% of the population.
                            b) they are more accountable for their decisions than 90% of the population
                            c) they create ideas which they or others make money on
                            d) they are good at what they do. Good is relative to others which do the same thing
                            e) their time is taken up by work more than 90% of the rest. Work life balance is for poor people.

                            To rephrase #5 into a questionaire/interview, it would look like this...
                            so you want to make more money...
                            are you willing to work longer hours? Can you demonstrate you are better at what you than the people around you? How do you measure and quantify those results?
                            in what way have you improved on an already existing idea to make it better? Have you ever had an original idea your company made money on?
                            When you make a decision, do others follow you or question it? How do you handle people which question your ideas?
                            Explain a risk you took which failed. Explain a risk you took which succeeded. what is the same about both examples?

                            that is the type of interview you want to hire someone which could make more money later than they do now.



                            Comment


                            • #15
                              Originally posted by jiM_Mi View Post
                              if we just gave everyone raises, the first people to complain will be the people in the middle, not the people at the top

                              I've had that conversation with people who currently earn $15/hour when talk comes up about them raising the minimum wage to $15. "What happens to me? Will my pay go up too? Or will I now be making the same as the people with less training and experience than me?" Great question that nobody ever talks about. You can't just raise entry level to $15. You them need to raise everyone else to keep the pay scale intact.
                              Steve

                              * Despite the high cost of living, it remains very popular.
                              * Why should I pay for my daughter's education when she already knows everything?
                              * There are no shortcuts to anywhere worth going.

                              Comment

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