EuclidIt is not outrageous if the board is willing to pay it. It is no more outrageous than a unionized worker’s hourly rate.
Well, it is outrageous if the board is willing to pay 300 times the pay rate of the people who actually do the work for them. That's the point. Especially when the CEO brings little more than a name to the game. "Wow - we hired Fred Smith as our CEO!"
And it's long been my opinion that because of our country's myopic view of itself as an industrial monolith in the fifties and sixties that we were paying the guy who put the lug nuts on new cars thirty dollars an hour (in the 1960's). When off-shore automakers found someone willing to do it for a buck or two an hour, it took just that much off the price of their finished product, to the detriment of US industry.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
tree68IMHO, CEO's are asking for outrageous pay, and the boards are willing to pay it.
It is not outrageous if the board is willing to pay it. It is no more outrageous than a unionized worker’s hourly rate. Pay is not determined by limiting it to what seems to be outrageous. What this is really advocating is that the rich are taking more than their share because there is a finite pie and it should be divided equally among all those who participated in making the pie. That is socialism which is always at war with capitalism.
This complaint about executive pay rising faster than worker’s pay seems to include an assumption that the company is a sort of collective in which everyone’s wages should be synchronized in proportion, if not actually matched. So if executive pay goes up 10% and workers’ pay goes up at only 7%, that means something is wrong. We have inequality.
Pay is determined by supply and demand, and companies are going to pay as little as they can while still having an adequate supply of workers. And every worker category may have different rates of supply and demand. So you could easily have one class of workers surging ahead in pay while other classes fall behind. That is not unfair. If a job is offered and a person takes it, it is just a contract between the person and the employer. The job does not come with an entitlement to the same pay as someone else doing the same work.
There is no way to draw a just and equalized comparison between a line worker and the CEO, no matter how outrageous you can make it appear by giving the ratio. The premise of that outrage is that everyone shares the bounty of the collective effort equally. Why should that be the case? Some worked harder than others. And if everyone knows they will get the same share no matter how hard they work, they won’t work as hard.
Psychot Euclid Psychot Destabilizing the capitalist system in the myopic pursuit of efficiency and profits is neither efficient nor profitable in the long run. I do not believe the capitalist system is being destabilized by the pursuit of efficiency and profits. I think that is a talking point of those who want to replace the capitalist system for other reasons. The capitalist system is defined by the pursuit of profits. What is wrong with that? Profit is not wrong or unfair. In a capitalist system, profit is a necessary component to make it work. ........ So the people who complain about companies making a profit and not dividing it up fairly between the workers are actually calling for an end to capitalism. Far from wanting capitalism to be replaced by something else, I want it to survive. I've spent much of my life in eastern Europe and the former Soviet Union, and therefore I have a great deal of personal experience with the ravages of communism. I don't want to go there. The people who will end up killing capitalism are those who hide their heads in the sand and pretend that all is well, while gainful employment for humans is steadily eroded by technological advances, not to mention the blind pursuit of profit without consideration for the long-term effects of excluding humans from the value chain.
Euclid Psychot Destabilizing the capitalist system in the myopic pursuit of efficiency and profits is neither efficient nor profitable in the long run. I do not believe the capitalist system is being destabilized by the pursuit of efficiency and profits. I think that is a talking point of those who want to replace the capitalist system for other reasons. The capitalist system is defined by the pursuit of profits. What is wrong with that? Profit is not wrong or unfair. In a capitalist system, profit is a necessary component to make it work. ........ So the people who complain about companies making a profit and not dividing it up fairly between the workers are actually calling for an end to capitalism.
Psychot Destabilizing the capitalist system in the myopic pursuit of efficiency and profits is neither efficient nor profitable in the long run.
I do not believe the capitalist system is being destabilized by the pursuit of efficiency and profits. I think that is a talking point of those who want to replace the capitalist system for other reasons. The capitalist system is defined by the pursuit of profits. What is wrong with that? Profit is not wrong or unfair. In a capitalist system, profit is a necessary component to make it work.
........
So the people who complain about companies making a profit and not dividing it up fairly between the workers are actually calling for an end to capitalism.
+1
Capitalism was saved from its own excesses twice before in US history: first in the progressive era, when leaders like the capitalist TR introduced needed regulations; second in the New Deal, when cousin FDR introduced other tempering influences.
JPS1So, what is it? CEO’s are setting their pay? Or corporate boards are setting it?
As I noted in my post, I believe the answer to this question is "Yes."
IMHO, CEO's are asking for outrageous pay, and the boards are willing to pay it. And the boards, looking for their next "golden boy" CEO, are offering it during their searches.
A quick review of information garnered by a search for "CEO Salaries" showed that the average CEO salary is between $150K and $200K, although a few sites gave numbers approaching $1M.
That doesn't square well with the other numbers bandied about as the multiple of worker pay, however.
A CEO getting a $1M a year whose workers got 1/286 of that would be paying his/her employees $1.66 an hour, if that were the case.
From Marketwatch.com • Pay ratios of Fortune 500 company CEOs to their employees range from 2 to 1 to nearly 5,000 to 1. The average CEO/worker ratio is 339 to 1. • At 188 of the 225 companies analyzed by the researchers a single CEO’s pay could be used to pay more than 100 workers. • Median-salaried employees in all but six companies would need to work for 45 years to earn what their CEO makes in one year.
• Pay ratios of Fortune 500 company CEOs to their employees range from 2 to 1 to nearly 5,000 to 1. The average CEO/worker ratio is 339 to 1. • At 188 of the 225 companies analyzed by the researchers a single CEO’s pay could be used to pay more than 100 workers. • Median-salaried employees in all but six companies would need to work for 45 years to earn what their CEO makes in one year.
• At 188 of the 225 companies analyzed by the researchers a single CEO’s pay could be used to pay more than 100 workers.
• Median-salaried employees in all but six companies would need to work for 45 years to earn what their CEO makes in one year.
So, f'rinstance, in the one example these companies could hire 18,800 workers for what they pay their CEOs. Of course, some companies could hire two workers...
In the end, though, I would opine that it comes down to the same question folks probably ask about those in pro sports - what the heck do you do with that much money? Does anyone really need five Rolls Kanardlys? A house on both coasts and one in the mountains, etc? Is a head of lettuce that much more if you're rich?
Euclid What would you conclude about this statement from the following link?: https://www.epi.org/publication/ceo-compensation-2018/ “Importantly, rising CEO pay does not reflect rising value of skills, but rather CEOs’ use of their power to set their own pay. And this growing power at the top has been driving the growth of inequality in our country.”
What would you conclude about this statement from the following link?:
https://www.epi.org/publication/ceo-compensation-2018/
“Importantly, rising CEO pay does not reflect rising value of skills, but rather CEOs’ use of their power to set their own pay. And this growing power at the top has been driving the growth of inequality in our country.”
Well said!
I'm completely with you and recommend better and more education as a step in the problem's solution.
jeffhergertI'm sure the executives and shareholders of International Acme Brick and Paving Company (if there was such a company) feel they pay their bricklayers too much and their executives not enough.
Their CEO probably goes by Wile. Wile E. Coyote...
I suspect the CEO compensation issue has devolved into an endless circle, and that circle is running amok.
Company A thinks their CEO is doing a great job, so they give him/her a modest raise. If Company B wants to hire that CEO away, they need to up the ante. I think you see where this is going.
Of course, the CEO's get part of the blame for asking for the sky. Companies who want to hire said CEO candidate too often gladly give them what they ask.
Eventually, you end up where we are - outrageous salaries with equally outrageous compensation packages, and golden parachutes.
Unfortunately, I have no idea how to reel it in. Perhaps the stockholders (across the board - in all industries) need to say "you're taking money out of our pockets. We're going back to that 20:1 wage ratio whether you like it or not. Sorry you can't afford the new Bentley this year."
jeffhergertI think the inequality stems from the fact that executive compensation at major companies has took off while compensation for the average worker at those companies has more or less stagnated over the last 20 or 30 years. I believe it's because many types of work are valued less today then years ago. Many have bought into the notion that if your job doesn't require a 4 year degree or is blue collar, that job is valueless. Even many of those holding those types of jobs have come around to that line of thinking, too. When many think certain jobs are beneath them, or their children, it's easy to devalue work. I remember watching the local TV news many years ago. One of the anchors was reading a report done by the State of Iowa on jobs that were being outsourced to other countries. The reporter gave a visible sigh of relief when she said it was only blue collar jobs (at that time) being outsourced. I'm sure the executives and shareholders of International Acme Brick and Paving Company (if there was such a company) feel they pay their bricklayers too much and their executives not enough. Jeff
I remember watching the local TV news many years ago. One of the anchors was reading a report done by the State of Iowa on jobs that were being outsourced to other countries. The reporter gave a visible sigh of relief when she said it was only blue collar jobs (at that time) being outsourced.
I'm sure the executives and shareholders of International Acme Brick and Paving Company (if there was such a company) feel they pay their bricklayers too much and their executives not enough.
Jeff
Those at the top levels of company management have no respect for the employees that are actually doing the work of the company - viewing all of them as a drain on the bottom line and replaceable at will - they are just a number.
Such management will espouse all kinds of false platitudes about their work force 'for company moral' all the while talking among themselves about how to cut more employees.
Never too old to have a happy childhood!
I think the inequality stems from the fact that executive compensation at major companies has took off while compensation for the average worker at those companies has more or less stagnated over the last 20 or 30 years. I believe it's because many types of work are valued less today then years ago. Many have bought into the notion that if your job doesn't require a 4 year degree or is blue collar, that job is valueless. Even many of those holding those types of jobs have come around to that line of thinking, too. When many think certain jobs are beneath them, or their children, it's easy to devalue work.
OvermodI do wonder, though, whether if you want someone's private opinion before others 'chime in', you should PM the matter to the person involved before making a general post. Just a thought, certainly not a 'requirement'.
I understand, however, I was not seeking a private opinion. I was simply addressing a question to one particular person. And the question stands as a complete message to which any other person with an interst in it is free to chime right in with an answer or comment of their own. I have my own opinions about the question, but I chose not to state them at that time. It is no different than any other case of simply addressing someone with a question, such as me saying:
"Overmod,
What do you think the reason is for..."
On the previous page, after posing that question to JPS1, I did actually continue my thoughts about that statement from the link about rising inequality.
Maybe in a few sentences someone could explain how you measure inequality of income while factoring in the corresponding inequality of the value of work performed for income. Inequality of income seems to be cited as an injustice, but certainly that cannot mean that there can only be justice if all working people are paid the same wage.
In fact, I don’t see how you can draw conclusions about inequality in comparing the average wages of different types of jobs. If you could do that, you might find that a bricklayer is being overpaid while a CEO is being underpaid. And yet most of the grievance about inequality seems to point to higher wage earners being paid too much.
So maybe we could just get a couple sentences about what the general issue that is intended to be resolved by this massively complex calculation of inequality. If we could wave a magic wand, what would society look like if there were no objectionable inequality?
EuclidWell, I did reply to your post as you can see at the top of this page. The reason I did not state that I disagreed with the statement from the link is that I wanted to show it to JPS1 first and ask him what he thinks of it. That is what I said I was doing. I was not posting it to exlain it. I was showing it to someone else and asking for his reaction to it. And I think I made that 100% clear in my post.
That's fine.
I do wonder, though, whether if you want someone's private opinion before others 'chime in', you should PM the matter to the person involved before making a general post. Just a thought, certainly not a 'requirement'.
EuclidI am replying to your post above, which for some reason, I am unable to quote since the "add quote" function is formatted in a strange way.
That post has been extensively redacted, as upon review of your prior post I see there is no issue with it now. You may have had problems with quoting it because it was actively being revised at the time.
I have no effective objection to the post as it is now constituted, although I do think it would be 'better' to state directly if you, yourself agree or disagree with a piece of material you quote, rather than just throwing it up for discussion.
Overmod Euclid If you look at the context that you failed to quote, you can see that I did not post the quoted point saying that I agreed with it. I just cited it to ask JPS1 what he thought of it. The fact is that I completely disagree with it. Why, then, did you not so state explicitly that you disagreed with it in the original context? NOTE: I have deleted the balance of what I originally wrote in this post, as I see the original appears to have been redacted so my objections are largely solved. Note that Brian screwed up the original TOS when he wrote the sticky with
Euclid If you look at the context that you failed to quote, you can see that I did not post the quoted point saying that I agreed with it. I just cited it to ask JPS1 what he thought of it. The fact is that I completely disagree with it.
Why, then, did you not so state explicitly that you disagreed with it in the original context?
NOTE: I have deleted the balance of what I originally wrote in this post, as I see the original appears to have been redacted so my objections are largely solved.
Note that Brian screwed up the original TOS when he wrote the sticky with
Well, I did reply to your post as you can see at the top of this page. The reason I did not state that I disagreed with the statement from the link is that I wanted to show it to JPS1 first and ask him what he thinks of it. That is what I said I was doing. I was not posting it to exlain it. I was showing it to someone else and asking for his reaction to it. And I think I made that 100% clear in my post.
Also: The reason I was asking JPS1 about the quote about CEOs setting their own pay is that he had just previously posted a detailed explanation of how the pay is set for CEOs.
Anyway, I think freight is continuing to slump.
Overmod,
I am replying to your post above, which for some reason, I am unable to quote since the "add quote" function is formatted in a strange way.
But anyway, to answer your question asking why I did not say I left something out of the original context, I think you are looking at something other than the orginial context post. In that, I left nothing out. I said this:
Thanks JPS1
As you can see, I quoted something from a link posted by Mr. Hebdo, and asked JPS1 what he thought of it.
The issue of leaving something out of context is with Lithonia Operator copying my orginal post and leaving out the context of me asking JPS1 what he thought of the views I quoted in my orginal post. L.O. omitting the context of me posing a question to JPS1 leaves the false impression that I merely posted a link and a statement with no explation of why I posted the statement or who said it.
That is the reason I made this reply to L.O.:
Here's a reasonable succinct and clear discussion of various inequalities and their various metrics.
https://en.m.wikipedia.org/wiki/Income_inequality_metrics#Common_income_inequality_metrics
Note that Brian screwed up the original TOS when he wrote the sticky with FORUM RULES UPDATED 8-31-17. In the section of the the original, and still valid, Kalmbach Media TOS that deals with 'forums', the #1 provision is simply
Please keep discussions on topic
and it was clearly understood, for years, that this meant 'keep them on the original topic' -- in part, to prevent the kind of trolling thread drift that so marred threads started by certain participants over the years. (I think it was tacitly assumed that topics would be 'railroad-related' on a railroad-specific forum, or that off-topic posts would either be ignored or removed by moderator action.)
Those with longer participation may remember that an older version of the forum software explicitly gave the OP of a particular thread the ability to delete posts in it that the OP thought were 'off topic'. I remember a couple by Juniatha where she wielded this with some zeal; some of you might, too. Apparently interpretation of 'intellectual property' law has removed the ability for moderators to redact posts, only to delete them; I don't know if the ability for the OP to delete posts was removed in the current version, or only disabled by Kalmbach.
I thought it was amusing that I had a link to the TOS itself in the original version of this post, and got a terrifying 'virus download prevented!' warning when I tried to post it...
Lithonia Operator It does refute your point, and I don't care why you posted it. I just wanted to be neighborly and thank you. And "inequality in our country" refers to inequality on our country.
It does refute your point, and I don't care why you posted it.
I just wanted to be neighborly and thank you.
And "inequality in our country" refers to inequality on our country.
I interpret the source as meaning that inequality in our country is a bad thing, and it is even worse if someone is using their power to increase inequality. What would you even include in a measure of equality? Should all wages be equal? If they were, would that get rid of all inequality?
But if you made all wages equal, what if some people were less happy than others? Maybe we could adjust their wages so the happiness challenged could buy a little more happiness. What about health? What can we do to insure equality of health?
What if some people are happier than they need to be? Does that mean that they are taking more than their fair share of happiess, and making the rest of is a little less happy?
Lithonia Operator Euclid https://www.epi.org/publication/ceo-compensation-2018/ “Importantly, rising CEO pay does not reflect rising value of skills, but rather CEOs’ use of their power to set their own pay. And this growing power at the top has been driving the growth of inequality in our country.” Thanks for posting a link to info which refutes your point.
Euclid https://www.epi.org/publication/ceo-compensation-2018/ “Importantly, rising CEO pay does not reflect rising value of skills, but rather CEOs’ use of their power to set their own pay. And this growing power at the top has been driving the growth of inequality in our country.”
Thanks for posting a link to info which refutes your point.
It does not refute my point. If you look at the context that you failed to quote, you can see that I did not post the quoted point saying that I agreed with it. I just cited it to ask JPS1 what he thought of it. The fact is that I completely disagree with it.
There is no question that CEOs get paid more than workers. That is normal. They do not use their power to set their own pay. The fact that their pay has been rising faster than the pay of workers does not prove anything about "the growth of inequality in our country," whatever that is supposed to mean.
Euclidhttps://www.epi.org/publication/ceo-compensation-2018/ “Importantly, rising CEO pay does not reflect rising value of skills, but rather CEOs’ use of their power to set their own pay. And this growing power at the top has been driving the growth of inequality in our country.”
MikeFFHomework assignment: Read Factory Man by Beth Macy to inform this discussion.
And follow it with a careful study of Nickeled and Dimed by Barbara Ehrenreich, translating some of the examples and discussion to the wider context of a post-corporate economy involving a large number of small manufacturers or providers.
Homework assignmnent: Read Factory Man by Beth Macy to inform this discussion.
Mike
JPS1 Euclid If the compensation of CEOs is not a function of a free labor market, what then determines how much CEOs are paid? The compensation packages of the CEOs of most large corporations are approved by the Compensation Committee of the Board of Directors. The committee usually engages a national or an international consultant to structure the packages. They have large comparative data basses showing what similar positions command. In the three Fortune 200 companies that I worked for they always adopted the consultant’s recommendations. The bulk of a typical Fortune 500 CEO’s compensation package usually is represented by stock options. It is usually deferred for at least two years. Whether the options can be exercised advantageously depends on the financial performance of the corporation. Incentive based compensation options are subject to abuse, although the incidents of it, I suspect, are over blown. Persons with the skills to manage a large organization, irrespective of its mission, are few and far between. Whether they are over compensated is a legitimate question. In the case of the two corporations where I reported to the CEO and the Board Audit Committee, they earned every dollar. The sacrifices made by them and their families are beyond what most of us would accept. It amuses me that so many people get upset over the compensation packages of CEOs but seem to be OK with the large amounts of money paid to entertainers, sports figures, etc. It strikes me that the CEO of CSX, as an example, creates a lot more value than a guy that throws a football around on Sunday afternoons or Monday evenings.
Euclid If the compensation of CEOs is not a function of a free labor market, what then determines how much CEOs are paid?
I think it’s important to realize the role of modern mass communication technologies in combination with demonstrating unique skill that make possible the high incomes of entertainers in their various forms.
As for the criticism of top leadership pay levels, I think a lot of it is envy, one of the 7 deadly sins. Certainly there are abuses, but overall, the demands of those jobs are extensive. I know that you couldn’t pay me enough to take one of those jobs. I want a life.
Overmod You forgot the soundtrack. (Fittingly, supplied courtesy of Warner Brothers corporate.)
You forgot the soundtrack.
(Fittingly, supplied courtesy of Warner Brothers corporate.)
This soundtrack should have been playing when I missed my train back to Michigan this past June...
EuclidWe find new and better things to do and move ahead with investment and creativity. Enough already with this stinking service economy. Our population is growing and everyone needs things. Just satisfying that need is enough to put everyone to work in a productive, meaningful, and rewarding way. I understand that it takes gdp growth of 5% just to produce enough jobs to keep up with population increase. So what are we doing in low gear dragging along at 1-3% year after year? Rather than cry about what China is doing to us, let's just roll up our sleeves that get going ... We replace the service economy with determined intent to grow in new product development, innovation, and manufacturing. Obviously we have the capability to excel in that. We are not in this manufacturing malaise simply because we have run out of things to manufacture. But as long as we blame CEOs and corporate “greed” for all our problems it is no wonder that manufacturing is at a standstill. The idea that we should all be satisfied with the service economy is like saying that we have had it too good and now we must repent by offering service. We have been told to get used to lower wages because this is the way of the future. No, that is the way of those who say this country has taken more than its share, and must now atone or its sins. That is the kind of attitude that hands us a service economy.
We replace the service economy with determined intent to grow in new product development, innovation, and manufacturing. Obviously we have the capability to excel in that. We are not in this manufacturing malaise simply because we have run out of things to manufacture. But as long as we blame CEOs and corporate “greed” for all our problems it is no wonder that manufacturing is at a standstill. The idea that we should all be satisfied with the service economy is like saying that we have had it too good and now we must repent by offering service. We have been told to get used to lower wages because this is the way of the future. No, that is the way of those who say this country has taken more than its share, and must now atone or its sins. That is the kind of attitude that hands us a service economy.
EuclidWe replace the service economy with determined intent to grow in new product development, innovation, and manufacturing. Obviously we have the capability to excel in that. We are not in this manufacturing malaise simply because we have run out of things to manufacture. But as long as we blame CEOs and corporate “greed” for all our problems it is no wonder that manufacturing is at a standstill. The idea that we should all be satisfied with the service economy is like saying that we have had it too good and now we must repent by offering service. We have been told to get used to lower wages because this is the way of the future. No, that is the way of those who say this country has taken more than its share, and must now atone or its sins. That is the kind of attitude that hands us a service economy.
More hollow words have yet to be written. Great buzz word BS!
chutton01 Euclid The country needs to find new and better things to do and move ahead with investment and creativity. Enough already with this stinking service economy. Our population is growing and everyone needs things. Just satisfying that need is enough to put everyone to work in a productive, meaningful, and rewarding way. I understand that it takes gdp growth of 5% just to produce enough jobs to keep up with population increase. So what are we doing in low gear dragging along at 1-3% year after year? Rather than cry about what China is doing to us, let's just roll up our sleeves that get going. The service economy is estimated as over 67% of the US economy, and I am not certain what you would plan to replace it with. Actually, a lot of economists are not certain with what to replace it with as well.
Euclid The country needs to find new and better things to do and move ahead with investment and creativity. Enough already with this stinking service economy. Our population is growing and everyone needs things. Just satisfying that need is enough to put everyone to work in a productive, meaningful, and rewarding way. I understand that it takes gdp growth of 5% just to produce enough jobs to keep up with population increase. So what are we doing in low gear dragging along at 1-3% year after year? Rather than cry about what China is doing to us, let's just roll up our sleeves that get going.
The service economy is estimated as over 67% of the US economy, and I am not certain what you would plan to replace it with. Actually, a lot of economists are not certain with what to replace it with as well.
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