Well, in that case “worker” includes the CEO, too (unless he/she owns the company). The article says those at the very high end have had rising wages, but never defines what “the very high end” is. So, at the very least there is ambiguity about whom the article is focussed on.
That may or may not be true, but has nothing to do with the isuses addressed in the OP’s article. If you want to open a thread on that subject, I’ll be happy to discuss it with you.
IANAC, but for economic purposes that label is not too off the mark, so I’ll give you my answer: Depends. How long are we talking? If it’s one or two years (which is the timeframe in this artilce, btw) I wouldn’t worry so much. If it were a decade, yes, I would consider it a social problem. (Just to be clear, I’m much more of a libertarian, and to the extent that “conservatives” favor laws that grant special favors to busniess, then IANAC.)
No , I would not agree to that. It’s often the case that the more you have, the more you lose. It certainly helps a lot to start off with money, and the more you have the more it’s possible for you to make, but that’s no guarantee.
I don’t see why not. The change to a system where the wealth of the highest precentiles began to soar relative to everyone else began shortly after the top marginal rates began to be lowered ( which began under Carter and not Reagan as is often stated. ) Correlation doesn’t equal causation but the link is easy enough to explain. Those at the top of the economic pyramid increase their own wealth by pushing more of the tax burden onto everyone else.
And also there is the effect of corporate welfare. The government, paid for increasingly by the lower, middle, and lower upper classes, showers largess upon the corporations and thus redistribute wealth upward. This is strikingly similar to the funding/taxation scheme propounded by Alexander Hamilton. He proposed internal taxes be raised ( such as the Whiskey Tax and Direct Tax which lead to the Whiskey and Freis’ Rebellions respectively ) which would fall disproportionately on freeman and freeholders in order to fund the huge war debt which was held by wealthy speculators. The purpose was expressly to expand the wealth division to differentiate the common folk from the gentry. It seems to me this is yet another example of how Republicans can be seen as the new Federalists.
Not that the Democrats haven’t done their share of damage. And I’m not saying that this explains the entire phenomenon. Free trade shouldn’t be ignored and can be laid at the feet of the Clinton Administration. Without them selling out on NAFTA the Democrats might have kept up their principled opposition to deregulated trade. Those who run and own corporations offshoring labor have increased their profits at the expense of working people. Whether this deserves the term “plunder” can be debated but it certainly has happened.
I think the fundamental disconnect here is that some people feel that ‘the middle class’ are entitled not only to a job but to continually rising wages. Why this would be the case I don’t know. Labor is simply another element in the market after all, the price of which is set by its necessity to drive the success of the companies who hire that labor. If a company, through automation or investment is able to make workers more productive while having less workers, or less skilled workers, then its not further obligated to maintain the old levels of either salary or numbers of workers…in fact, it CAN’T do that if it wants to remain competetive. A lot of folks in this thread however SEEM to be saying that companies should do this, disregarding the potential that said company will go out of business…thus depriving ALL the workers in that company of employment (and perhaps having a negative effect on yet other companies).
The trend in business has certainly been toward automation, both physical and in the embedded software systems that drive business. In my own industry, I’ve noticed this trend for years, as expert systems and more detailed and automated processes make things like configuring a router or a firewall, adding VLAN’s or even designing an IP address scheme are nearly rote operations…as opposed to how things were in the old days when I first started. What does this mean? It means that you can use less skilled engineers or even technicians to do what once demanded a high level engineer to do…and that that less skilled engineer or technician can actually do the work 2 to 3 times faster, with less errors or problems to debug later.
Should companies then pay that less skilled engineer or technician the salary that a high level engineer once commanded? Should they maintain engineering staff or technicians at the old levels, even though less are needed now? Should they maintain high level engineers at high salaries even though the job no longer demands them?
There are too many posts for me to dig through them all (besides, I think John Mace has done a good job of keeping up the fight…pearls into the mud though for the most part John), and I don’t want to get into a bunch of ‘yeah, I agree’ with him (he doesn’t need it :)), but I wanted to address this one post as it seems relevent to the OP and the question at hand:
No, this is incorrect. If you agree to hire yourself at $25k then this IS the market price…because you have agreed to it for whatever reason. Maybe you are desparate for a job, maybe you wanted the benifits, or the fact that the job was closer to your home so entailed less of a commute. Whatever your reasons, obviously the company in question was correct for setting the price at $25k…because you took the job at that rate. Q.E.D. this IS the market rate for tht job in the circumstance. If the rate is too low then no one would take the job and thus the company would be forced to up its offerings if it expected to fill that position, either by increasing the anual compensation, adding benifits or a combination of both.
This seems to be the part that folks in this thread aren’t getting. Your compensation is based on your skill set combined with how competetive things are in your area for your target job. If you are a check out clerk at 7-11 then obviously your skill set is low, and you are replaceable. In addition there are plenty of folks (mostly young) who are willing to take that job at those wages. If you are a network engineer, then you have a higher skill set obviously, and can demand higher wages/compensation. However, unless there are very few network engineers (and after the 90’s this is certainly not the case anymore), or you have something unique to offer, then you can’t demand ANY wages/compensation…especially if the company looking at prospective workers has a large pool to choose from. If you however have unique skills or abilities (like some professional atheletes or CEO’s with proven track records to increase company profits) then the sky is the limit…because at that point companies have to compete with each other for YOU.
The point though is the market sets the value on your labor depending on where you live, your skills and abilities, the needs of the company, and the available pool of individuals that CAN do the work in your target job. There is (and IMHO shouldn’t be) obligation on the part of companies to pay more than they can get for a given position, or hire more people than they need to do the job at hand. If companies are paying too little, then they won’t get workers…if they DO get workers to work at the wages/benifits offered, and if those workers are productive and the company profitable at those levels, then by definition the said company HAS payed the market price for the labor it seeks. If they aren’t paying enough then they will not be able to get workers of the abilities and with the skills they seek to fill the positions needed…and so will be forced to increase their offer.
Just going to leave this post with a final though. A lot of folks in here seem to want it the other way…for companies to be forced to maintain a work force at a certain level both of pay, benifits and numbers, regardless of the economics of the companies. If the company is profitable, they feel that the workers should benifit directly from this…but if the company falls off, I don’t get the feeling that many on that side feel its cool to drop pay and benifits, numbers of workers, etc. I’d like to use the example of the US auto industry to illustrate why this isn’t such a wise course…and also to illustrate that though a company today might be profitable (even extremely profitable) right NOW, this isn’t a law of nature that it will remain so indefinitely. Look at the US auto industry for the past few decades laboring under Union restrictions on wages and numbers of workers (yes, I realize that recently some of these have been relaxed…in a desparate attempt to keep those companies in operation at all) and you can see why this kind of plan may not be the best for a company…or for the workers in the long run.
Thanks for responding. And for the record, when I use the term conservative, I mean it in the true sense (more libertarian) than what today’s politicians have turned it into.
You make a good point in reference to the time line, but I might be a bit more inclined to look at shorter time periods than a decade
Your final statement has me a bit perplexed. How is it easier to lose money when you have more of it?
I didn’t say it was easier, I said it can and does happen. Did you not know anyone who participated in the dot-com bubble? I do. I know guys who were driving around in fancy cars, buying fancy houses who ended up having to sell it all and go back to living with their parents (no exageration).
I’m not so much concerned with how easy it is for rich people to stay rich (as long as they don’t get special favors form the gov’t), as I am concerned with whether there are structural barriers in the economy that prevent poor people from bettering themselves. By and large, I don’t see those barriers today. The challenges are different than they were a generation ago, but the opportunitites are different, too.
That speaks more to personal choices and responsibility than it does to the system and wether or not wealthy take advantage of middle and lower classes. Though something should have been done to stem the rampant speculation during that period and I view that as a failure of the Clinton admin.
I’m saying that the system in and of itself is a bit of a barrier. The fact that it gets easier to become even more wealthy, the wealthier you are is a reflection of this.
If those 3% made 50% of the money, would it still be so horrible? They don’t, but the point is that throwing out numbers like yours without also telling how much money those people make is misleading and dishonest. And calling progressive taxation socialist went out of style sometime about the time of the Haymarket Riolts.
Obviously it’s both. Unless you’d care to offer a cite that the tax cuts maximized tax revenue as compared to other strategies - not just increased it.
Yup, Bill Gates spends the same percentage of his income on consumer goods as Joe Public making $60K a year who needs a new car. :rolleyes:
You think the only problem with middle and lower income people who have been experiencing declining real wages is envy? Maybe they’d like to get rewarded for their work to a fair level, like they’ve been throughout the last 60 years or so, up until the time the Bushies took power. Wanting fairness has nothing to do with envy.
OK, I see what you’re saying. But it’s still unlcear how the article is breaking down the data. It starts off by saying:
Now, you can’t compute an hourly wage for exempt employees (or you can’t do it accurately), so I assume they must be talking about non-exempt hourly workers.
But then they quote someone:
So, they do seem to be a bit all over the map.
Anyway, I just can’t get too worked up over data that only covers 2 years. The fact remains that many jobs that used to pay a pretty decent wage just don’t do that anymore. And those jobs are not the engineers, managers, and other knowledge workers out there. They certainly may come under more pressure as China and India works it way up the value-added ladder, which is probably inevitable. No one claims that it’s “unfair” that we have to compete against Frech, German or even Japanese knowledge workers, but somehow there is a sense that is unfair for India and China to want to play in that sanbox. Why shouldn’t they?
So, what do we do about it? Frankly, I think the only thing we can do is jump on the next wave and try to stay ahead of the curve as long was can. Maybe the next wave is biotech, or alternative fuels or something else. But sooner or later we are going to lose that special position we as a country were in after WWII when all the industrial economies of the world except for ours were singificantly destroyed and countries like China and India weren’t even in the rear view mirror. And by “sooner or later” what I really mean is “sooner”.
This would be an excellent point - if corporate profits were down and/or productivity is down. The issue is that both profits and productivity are up, and workers (skilled and unskilled) are not sharing in it.
Why would a worker vote for a politician who would lower business taxes? The argument would be that businesses doing well implies that the worker will do well also - lower unemployment, etc. What’s happened during the past five years is that this connection has been broken. If someone votes for a pro-business candidate, and gets screwed as a result, they’re going to abandon the pro-business party. If the Democrats come in and start raising taxes on business, and start eliminating all the nice stuff the Republicans have given to them, don’t start complaining. You’ve told the workers they don’t deserve anything, and you can’t blame them if they respond in kind.
It is just one more example of the Bush mindset of arrogance, then wondering why the people you’ve been arrogant to respond in kind.
Let’s hope the reaction won’t really hurt business, but if it does, they have only themselves to blame. When even the Fed Chairman is noticing the increasing income gap, you know it’s a problem.
Not to be callous here, but so what? Companies aren’t obligated to share their profits with the workers after all. They hire workers with the intent to make profits and be successful. Workers take work with the intent to make money for themselves and their families. If the companies in question are paying too little then they won’t be able to attract the workers they need and will be forced to pay more of their profits to entice them. This happened a lot in the 90’s when there was a shortage of good IT workers and companes were forced to compete for the few there were, with enticements of money, signing bonus’s (I kid you not) and benifits. This was a case where the workers, being in extreme demand, had the upper hand. I didn’t notice people saying basically the converse of your arguement, i.e. that workers shouldn’t gouge companies for extra money, perks or benifits simply because there were so few of them and companies were forced to compete. It would be silly to say that in fact. Just like its silly to expect companies to pay more for workers than they have too to get the work done. The fact that companies (right this minute) are making huge profits has no bearing on things in the real world…nor should it. Labor markets itself at its best price…if a worker feels that the company is making its profit directly from his work, he is free to market himself to another company for higher compensation if he can…and that other company is free to evaluate his potential for earning them more profits and bring him on if they feel the match is good.
You seem to be saying that companies should be obligated to paying more to employee’s because they are doing better (and in fact, many companies do this)…do you feel that when companies are not doing better its ok to cut salaries and benifits then? Why or why not?
I won’t get into the rest of your post which seems to revolve around things I didn’t say, with the Bush is a poopy pants™ thrown in for spice.
I’ve seen statistics on average hours worked, so you could compute effective hourly wages based on this, or you could assume a 40 hour week. This of course overstates the hourly wage, as we both know, but it would be useful for purposes of comparison. Likewise, I don’t know if productivity numbers are based on theoretical hours or real hours.
But this phenomenon does not only apply to those at the bottom of the scale.
I read that quote as distinguishing those who do well more or less directly based on corporate profitability vs. everyone else. CEOs and investors count. Hourly workers don’t. I’m not sure what bucket I fit into - I get a bonus based on profitability, and my stock and options are worth more, even if my salary is compressed. (I’m actually not complaining, but I’d guess the salary bucket is a bit smaller than it used to be.) I’d guess that a medium level engineer with few options and a small bonus falls into the screwed category.
One way we screwed up is limiting H1Bs. None of the H1Bs whose salary I’ve. ever seen was underpaid. We were doing an excellent job hollowing out the economies of China and India by importing the best ones here.
Like I said, most MW jobs are not going overseas. Raising the MW (which is at the lowest level of purchasing power in 50 years) would increase consumer confidence and help the economy.
From what I’ve read outsourcing is often not nearly as good an idea as people think - but the market will work that out. Some of the increased profits from this needs to be reinvested. It’s absurd to think that people whose real wages are going down are going to have the resources to retrain themselves. Support for NSF is down also (except for military and short term stuff.) Let’s get some more assistantships, and let’s get some support in colleges and high schools so US natives can get them. Some companies are stepping up to this, but what I see is a lot of complaints but no action for the most part.
Because prices rise continually. If wages don’t rise, we eventually won’t have a middle class.
You are deluding yourself; social mobility in modern America is very low. I’ll see if I can find a cite, but IIRC the Economist and the Wall Street Journal both had stories on that in the last year or two.
Which shows how one sided and predatory the relationship between corporation and employee is; employees should always keep in mind that their employer is their enemy.
People say that all the time, whenever they complain about the evil unions squeezing money out of the companies. Funny how it’s horrible and destructive for the workers to want more money, but perfectly OK for the CEO to rake in huge profits while drivng the company into the ground.
They do that all the time, for the commoners, anyway. Fascinating how the workers are expected to lose wages when the company suffers, but not supposed to share when it prospers.
Same argument can be applied to the top 10% of earners. The executives and managers aren’t any more entitled to share in the profits that the workers. But they are. So why aren’t the workers?
This is what I always wonder. There’s a sort of paradox inherent in the whole outsourcing/cheap labor concept. In order to make a profit, Wal*Mart definitely needs for there to be better paid workers in the system–just not employed by them.
Yes? That sounds like a social problem, if anything. It also sounds like a vast overstatement and exaggeration…who’d a thunk it coming from you?
The point is that people market their labor. If the wage offered is not enough to live on, or if the worker does not feel that he is being adaquately compensated for his labor, he is free to take his labor elsewhere, to move to a more advantageous area where he can get a better price on his labor (or where prices are lower), or to modify his skill set or job target. Again, its not BUSINESS’S responsibility to ensure that the wages they pay are optimal for all their work force…only to offer wages that draw in acceptable candidates to do the work.
I’d say it shows the real world, not whatever fantasy land you WISH the world resembled. Employees should keep in mind that employers are the eneym? Such fantasy lands have been tried in the past…how have they worked out so far? I note the Euro’s (with a few exceptions) seem to be moving back toward the dark side lately.
Have you noticed how well the US auto industry is doing lately? Granted, its not ALL the unions fault, but they have certainly played their part.
BTW, I certainly DON’T think its ok to pay a CEO huge salaries if they aren’t producing. If companies do this then more the fool them…they deserve to fail IMHO. But thanks for trying to paint my position for me…
‘Commoners’, ehe? Its not funny at all…its how the market works. Again, labor markets itself to the best of its ability, demanding whatever is the highest wage it can get…just like companies attempt to pay the minimum they can while still getting the number and quality workforce it needs to succeed. Its as simple as that. If a company makes more they aren’t obligated to share those profits with their employees…after all, the employees ALREADY negotiated their salaries. Many companies of course do share their profits with employees when they are doing well (thus ensuring that those productive employees hang around and don’t take their skills elsewhere)…but companies are OBLIGATED to do so, except through necessity. Conversely, when things go bad, of course companies must cut their expenses…otherwise the company goes bankrupt and no one has a job anymore.
Also, note that not ALL companies CAN do such. Companies (like those US auto manufacturers) with a heavy union presence can’t respond rapidly to changing conditions and cut either their workforce OR wages/hours easily…and so they have major problems.
Not obligated - but if they don’t, they can’t complain of the consequences, which was the part of my post you didn’t seem to get. As for what happens when companies don’t do well? Plenty of people in the airline industry got salary cuts. There have been plenty of layoffs. There have been plenty of salary freezes and benefit cuts. I don’t think there is any problem with taking the bad, so long as a company gives some benefits when things get better. If I were working for a company that didn’t reward me when things went well, I sure as hell would split when things didn’t do so well, even and especially if I was in a critical position. We’ll see how turnover is at companies like this when their profitiability goes down, especially if the general market was good.
Now for the free market stuff. Salaries, as you should know, are usually set based on surveys of like companies - so we don’t have a totally free salary market. (All perfectly legal.) As we’ve seen throughout history individual workers, unless they have unique skills, can’t command extra money singly, only collectively. The only way to do that is through unionization, or through political action. Which brings me back to the main point of my response - if political action increases the MW and increases taxes on corporate profits, the companies have only themselves to blame. No fair being all for the side in which companies have an advantage and against the side where the workers do. If workers don’t have rights to participate in the profits, companies don’t have the right to keep them against the will of the majority of the people.
Because your comparison is incorrect. Executives and managers DO have a more direct impact on the profitablility of a company (in many cases) than do most workers. Its a compensation pyramid, with unskilled workers (easily replace-able) at the bottom, more skilled workers (not as easily replace-able, but not unique) in the middle, and management at the top (with guys like CEO’s and VP’s bringing unique skills or abilities to make companies profitable). Of course, this isn’t always the case…but it usually IS the case in successful major companies. They aren’t successful because of luck, nor are they successful because the fat cats at the top are incompetent while the hard working peasants at the bottom are doing all the work.
Think of it this way if you like. Lets look at pro sports for a minute (not a subject I have a great deal of knowledge in, but the analogy is understandable). There are all the support guys, the guys who set up the lockers, the water boys, towel boys (I assume), equipment handlers, the guys who string the communications, etc. They are paid a fairly low wage. Why? Well, because they are easy to replace, and in the greater scheme, while there efforts are important, they as individuals aren’t VITAL to the success of the team. Really, even if you are an excellent water boy, you could be replaced with no noticable difference to how the team performs.
Next we have the players. All are paid well (compared to the water boys), but some are paid well, and some are paid VERY well. Why? Because some players bring skills to the team that more directly impact the overall performance of the team as a whole than others do…individually. You take the back up tackle or guard for instance. Oh, he brings skills to the game that the average joe doesn’t have, and he’s paid accordingly…but his realistic impact on the team is lower than a star running back or quarterback (I’m starting to strain my knowledge of football at this point). Thats why the star running back or quarterback are paid more than a backup lineman. Then there is the coach (I assume coaches make a lot)…he ALSO brings unique skills to the game. And if the team does poorly, then its a reflection on him directly…and could put his position in jeopardy eventually if the trend continues.
THen you have the owners. They make the lions share of the money. Why? What do THEY bring? Well, they are the one’s who are putting up the initial capital, who are taking the risks. Without them there IS no team. The players, coaches and water boys aren’t taking the risks…if the team is a financial flop they will move on. It will only be the owners who are left holding the bag.
How long are we talking? If it’s one or two years (which is the timeframe in this artilce, btw) I wouldn’t worry so much. If it were a decade, yes, I would consider it a social problem. (Just to be clear, I’m much more of a libertarian, and to the extent that “conservatives” favor laws that grant special favors to busniess, then IANAC.)