This is not loss sharing. As a business owner, I can go bankrupt or lose my house. If I suffer a “loss,” an employee who takes a pay cut is still doing better than me. Even an employee who worked for free would be better off than me.
I’m all for showing my appreciation in a monetary way when things are going good, but any employee who insists on profit sharing as some type of moral imperative is simply not seeing the whole picture unless he or she wants to become a shareholder in my company and put his money on the line.
First of all, one can structure the business to make the house not be at risk for debts. If it is at risk for not being able to pay the mortgage, the laid-off worker’s house is just as much at risk, and many foreclosures were from job loss, not bad mortgages.
Second, the owner has upside benefit, while the worker typically does not. If one asks workers to work harder to make the company more profitable - a reasonable request - this extra work won’t last long of more profitability does not lead to more rewards.
Third, bonuses and profit sharing were not introduced on top of raises, they were introduced instead of raises. When that is done, the employee’s money is on the line.
And of course an employee buying a lot of stock in his company is a really bad idea.
The company allocates a “bonus amount” depending upon how much profit they made.
Each employee is allocated bonus based on their salary times a multiplier based on their job performance as assessed in 6 monthly performance reviews.
For some jobs your ability to improve the company is relatively open-ended, and it makes sense to reward these employees above the usual rate for helping the company succeed above the usual rate - a commission paid to salespeople, for example.
It does not really make sense where your only real opportunity to change the success of the company is if you fuck up. You can still do it as a Christmas bonus sort of thing, but a bus driver is contractually and legally obligated to get his passengers from point A to point B without breaking any laws or causing a crash and is largely incapable of doing more than that, so the “Thanks for not fucking up” rate of pay should be the baseline, not something given out as bonuses or profit sharing.
Well, the idea is more that people have a little skin in the game, no matter how small, with profit sharing. In my experience, it tends less to take the shape of greater internal motivation, as it does greater peer pressure to not slack off and be lazy… because everyone else’s profit sharing is dependent on you in some small degree.
That said, I do agree that basic salaries and bonuses ought to be wholly dependent on someone’s performance, since that’s something they have a great deal more control over than the profitability of the company. Profit sharing ought to be more of a literal bonus, applied to everyone regardless of performance.
Tying profit sharing to performance doesn’t do anyone any favors- they may bust their asses, and then due to market factors or bad weather or whatever, the company makes a tiny profit, or even a small loss, and tiny or no profit sharing happens. Similarly, if the company does really well, then even poor performers may get a fairly high bonus, which sends the wrong message as well.
Better to just apply the profit sharing evenly and without regard for performance- EVERYONE gets $521.32 more this year for example.
Good point. How would a bus driver “exceed expectations”? Getting the passengers to their destinations quicker is pretty much right out, because the schedules are set based on safety and speed limits already. Should bus drivers be allowed to have X number of fuckups per year and they then get a bonus for having fewer? “Congratulations, you only crashed the bus once out of an expected three times, here’s your bonus!”
Again, I think you might falsely equating “fair and just” with “market wage”. The market is largely amoral in that it doesn’t care about what people perceive as “right or fair”. It only cares about the perceived value for a good or service.
Think of it this way. if you are renting a condo to someone, you want to rent it out for as much as possible. If you have to potential renters, one of which is prepared to pay $2000 a month while the other is prepared to pay $2,200, why would the first renter be in a morally superior position?
That only works if the company is so perfect that it can’t get any better based on employee performance and input, just worse. Maybe a driver who is friendly inspires more ridership than a driver who glowers. Maybe drivers A and B both get to the next stop on schedule, but driver A gives a smoother ride.
On an assembly line the job of the worker is quite specific. But isn’t the worker who says something about crap getting to her station worth more than the one who just lets it go because it is not his job?
I don’t disagree with that, but that’s not the argument we were having. I was originally objecting to the other poster’s assertion that “…‘Deserve’ is what workers would get in a market free of government regulation”. This seems to imply, as I read it, that government regulation only gets in the way of the best possible outcomes, and a word like “deserve” certainly implies a value judgment about fairness. In point of fact, if we didn’t have government regulation we’d still have small children working 12-hour days in coal mines for ten cents a week. Our track record of exploitation is plain and it’s reprehensible, and what we were doing 100 years ago many developing countries are still doing today.
Secondly I was disagreeing with your characterization of job mobility and choice which for many people simply do not exist as realistic options. It’s true that free markets are intrinsically amoral, but for that reason, they can sometimes result in outcomes that are unquestionably immoral.
I agree that there’s potential for debate around the world “deserve”, but to me a free market establishes fair results. You can disagree.
I find the second part of that highly unlikely. Illegal immigrants, who naturally work in a vacuum free of government regulation, make around $5/hour from what I’ve read. That strongly indicates that equilibrium wages for unskilled labor would be around $5/hour, and skilled labor would earn more. Rather than increases in the minimum wage and regulation independently raising working conditions, and equilibrium prices being unchanged for the past century, I find it far more likely that legal standards have remained marginally above equilibrium standards that have tracked upwards on their own. Countries are doing now what we did back then because that’s how far behind our development they are.
I don’t know if that last statement follows. I think it’s better to say that free markets sometimes result in better and sometimes in worse outcomes for different people. If we want to increase job mobility, ending regulations such as occupational licensing would be a very good way to go about it.
I don’t think that’s quite a true comparison. Government regulation means that illegal immigrants can only pursue jobs at employers who do not check immigration status. That means government regulation has limited them to a small sub-set of employers, who are actually taking a legal risk by hiring them. Lower mobility, higher risk = lower wages.
On the other hand, I do agree with your general point. I also believe that the free market establishes reasonably fair wages, though some government regulation is necessary. A totally free market without any regulation is likely to have slavery, indentured servitude, and/or monopolistic practices that can actually prevent people from being truly free agents in the market.