I'm convinvinced that CEO-employee wage gap is due to this not-so-well known legal case from 1919: Dodge v. Ford Motor Co. [1]
Basically, in 1919, Henry Ford sought to reinvest the Ford Motor Company’s profits into raising employee wages and expanding hiring, arguing that sharing success with workers would strengthen the economy and the company’s long-term prospects. However, minority shareholders John and Horace Dodge (who also ran their own competing auto company) sued Ford, claiming that his actions violated the fiduciary duty to maximize profits for shareholders.
The Michigan Supreme Court ruled in favor of the Dodges, declaring that a corporation’s primary obligation was to serve the financial interests of its shareholders and not broader social goals or even the well-being of its employees. This decision established a legal precedent that continues to shape corporate law even today and reinforcing the doctrine of "shareholder primacy" and limiting the ability of companies to prioritize stakeholders (like workers or communities) over investor returns.
> Twenty-five years ago, Bill Clinton campaigned on an idea for limiting excessive pay for American CEOs: Cap the tax deductibility of top executives' compensation at $1 million, and companies, not wanting bigger tax bills, might reel in their pay. In his 1993 budget, advisers suggested a compromise: Companies couldn't deduct CEO pay over $1 million unless it was "performance-based."
> But many believe the loophole had the opposite effect, driving companies instead to pay more in stock options and certain performance-based bonuses, which actually supercharged the growth in CEO pay. In 1989, according to the left-leaning Economic Policy Institute, the median value of annual CEO compensation was $2.7 million. By 1995 it was $6.6 million, and it reached $13 million in 2016.
Bill Clinton made irreparable damage to the American workforce. He sold out America to move all manufacturing to China by giving massive incentives to companies to do so. The market boomed and all that money went to investors instead of workers.
prasadjoglekar · 6h ago
While partially true in hindsight, letting China into the WTO, removing tariffs and giving them MFN status was a bipartisan effort beginning in the 80s and 90s. The premise was that China's market would open for US goods and services as well.
It hasn't worked out like that for sure.
opo · 6h ago
>Basically, in 1919, Henry Ford sought to reinvest the Ford Motor Company’s profits into raising employee wages
I don't actually see any reference in the wikipedia article that Ford was saying he wanted to use the dividend money to raise wages:
>...Henry Ford, sought to end special dividends for shareholders in favor of massive investments in new plants that would enable Ford to dramatically increase production, and the number of people employed at his plants, while continuing to cut the costs and prices of his cars.
And as usual in these cases, there are other unstated reasons that might actually be more important to the decision maker:
>...Ford was also motivated by a desire to squeeze out his minority shareholders, especially the Dodge brothers, whom he suspected (correctly) of using their Ford dividends to build a rival car company. By cutting off their dividends, Ford hoped to starve the Dodges of capital to fuel their growth
andrekandre · 1h ago
> The Michigan Supreme Court ruled in favor of the Dodges, declaring that a corporation’s primary obligation was to serve the financial interests of its shareholders and not broader social goals or even the well-being of its employees.
i am not a legal expert but my laypersons' reaction to this is, how can a court just declare such a thing ... it seems even from the cited criticisms others agree... fta:
> Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization. This was not and is not the law. Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate.
al_borland · 6h ago
Having people who make enough money to buy stuff is in the best financial interest of all companies in the long term.
Companies and investors need to think further than 90 days ahead.
erikerikson · 22m ago
I'm sympathetic but the problem with this is that you are asking a discrete entity to optimize for the commons. There are more sophisticated solutions.
evilops · 6h ago
By the same argument shouldn’t CEO pay be reduced?
sershe · 2h ago
People always talk about shareholder value like it's some outrageous weird thing. Really, shareholders are just.. owners. And managers are their agents.
Let's say you hire a general contractor to remodel your house. How would you feel about him doing what's good for society without consulting you - e.g. buying sustainable material that is more expensive, or locally sourced material that is less durable or less safe? Or hiring more workers like they do on NYC construction projects cause it's good for labor? Especially if it's something you disagree with, like he's maga and refuses to hire cheaper immigrants, giving preference to disgraced former cops. When the bill comes with all the extra costs, hed just say he's not working for the owner value but for the good of society as he sees it :)
drewcoo · 3h ago
That's an example of trying to clean up Ford's image.
Ford didn't want to share with the employees. He was very strongly anti-union (granted, not a factor until post-WWII). He was a Nazi supporter and not just because he was a notorious antisemite, Nazis opposed organized labor, too. He is sometimes mistakenly acclaimed for being for civil rights because he hired so many black men (who were not unionized, in an attempt to defeat the unions).
The lawsuit wasn't about shareholders vs broader social goals. It was about shareholders vs the CEO. The article is not about shareholder vs CEO pay. This lawsuit is unrelated.
And before someone claims Ford paid his workers enough to be customers (the reason he still wanted to pay them more in 1918), consider that in the early days after he'd implemented an assembly line the work became incredibly monotonous and workers were leaving for other automakers, so Ford was forced to pay them better to stay with him.
humblebeekeeper · 7h ago
Workers should exercise their power more, imo. We need more folks willing to put tools down, collectively, over stuff like:
* RTO mandates that reduce productivity AND job satisfaction
* High CEO pay outstripping worker pay
* Loss of work autonomy and space (working without an assigned desk)
* Layoffs out of the blue for successful teams
* Weakening benefits
* AI being wedged into whatever task you are working on
I don't care if it's a union, I don't care if it's a guild, I don't care if it's just a group of folks deciding to take action together, whatever. It's time we (especially us in tech) to stop acting like "got mine" and start acting like "get ours".
taraindara · 6h ago
The hard part is these workers are doing the job to survive life. Without the job, the unsure future is terrifying.
I’m all for taking action. I just don’t know what action best suits my needs, other than finding a new job or starting my own business and hoping I don’t become one of the greedy ones too.
dietr1ch · 6h ago
It's even worse when under a work visa. You can't even defend yourself when figuring out the legal course takes longer than you can stay in the country.
gitremote · 6h ago
> I’m all for taking action. I just don’t know what action best suits my needs, other than finding a new job or starting my own business and hoping I don’t become one of the greedy ones too.
Tech workers shouldn't punch down against unions. We should be pro-union in general.
ryandrake · 5h ago
For some reason, too many tech workers think they are some kind of top 1% of tech workers, captains of their industry, and master negotiators: Each of them are a unicorn worker that unions couldn't possibly help.
bpt3 · 5h ago
US style unions generally require the above average workers to give up some form of compensation to benefit the below average workers.
While you could argue "too many tech workers think they are some kind of top 50% of tech workers" and be correct, that is very different than claiming unions help everyone but the top 1%.
UncleMeat · 2h ago
It is true that unions often have a leveling effect on wages across workers. But you are missing a big part of it. They also take a larger share of the pot from the owners. So while a particularly strong engineer might be giving up some earnings to less skilled engineers, the pot is larger to start with.
bpt3 · 1h ago
And because the stronger engineers are giving up some earnings to the less skilled engineers, the larger pot doesn't matter to them.
Unions basically buy job security for a fixed duration of time for their members by offering concessions related to compensation. Competent workers in a non-declining field (i.e. pretty much all of tech) already have job security via their skills, and don't need to explicitly guarantee it by giving up some compensation to offset that risk for the employer.
It makes even less sense for software development since it can be moved overseas so easily in most cases.
Henchman21 · 2h ago
I think you may have misread this: For some reason, too many tech workers think they are some kind of top 1% of tech workers
They’re saying too many erroneously believe they are part of the top 1% of their field. They’re thinking they’re better than they actually are. And so, mistakenly, it follows that unions are of no use to these top performers.
bpt3 · 1h ago
I did not misread it. My point is that you can fall well below the top 1% and still fail to benefit from a union.
clayhacks · 4h ago
What sources do you have for that?
Unionized employees make more than their non-unionized counterparts [0]. Even if the top earners to bottom earners gap shrank in relative terms, in absolute terms both would likely be higher.
The gap is much smaller for private sector workers, and it's somewhat self-selecting by the fields where a union exists at all.
If I'm one of many types of service worker, sure I very well might join a union because I'm pretty replaceable and my income has little to do with my individual performance. I'll do better by forcing my employer to collectively bargain on terms that are relatively favorable to me by law.
That doesn't mean that all tech workers should support unions entering their field.
bpt3 · 4h ago
Why? Assuming you're talking about a standard US union and not something like a guild, it would ultimately suppress wages for the top talent to provide job security to the other end of the bell curve.
gitremote · 4h ago
Why do you think this, other than "unions = communism"?
bpt3 · 2h ago
I have no problem with unions as a concept and if people want to join them that's fine with me.
However, unions in practice enforce mediocrity while also becoming an institution that exists to support itself (aka its leaders) rather than its members once it reaches a large enough size (which is not unique to unions at all).
Unions makes no sense for a top performer in a field where an individual can outperform other workers performing similar tasks by orders of magnitude. Software development is one of those fields.
What part of that do you take issue with?
recursivedoubts · 6h ago
tying healthcare to employment and making two-earner households the norm has been a disaster for labor power
now your employer holds you hostage via health care & if one spouse loses a job the other is not able to quickly replace part of that income
bobthepanda · 6h ago
i mean, the income replacement thing was a lot worse when there was only one breadwinner. at least with a two income household you have something.
recursivedoubts · 6h ago
No, now two (rather than one) incomes is required for a middle class lifestyle for most couples so there is no labor safety blanket available to temporarily allow the other couple to look for work.
echelon · 6h ago
> The hard part is these workers are doing the job to survive life.
Tech companies used to hire all the brilliant engineers because they were worried about startups eating their lunch.
Without antitrust enforcement, they've grown large enough that they can essentially bleed money in any of their non-core markets for decades without it impacting them. So this clearly isn't the case anymore.
We need to:
(1) get the DOJ/FTC/EU/ASEAN/etc. to slap the FAANG / Mag 7 hard. Bust them up into many companies. It would probably even result in greater market value being created as these companies are inefficiently sitting on gold mountains that they do not monetize and also making insane malinvestments that simply waste millennia of human engineering in stupid ways that have absolutely no potential of succeeding. But more than anything, this oxygenates the field for competition and provides greater upside to the financial / labor / innovation capital that are actually doing the work.
(2) start lots of startups that erode the key money makers of these companies. They're quite vulnerable right now. And they've laid off a lot of highly skilled labor.
Google should be four or five companies, at minimum. And it's time that the governments of the world demand it.
hollywood_court · 6h ago
I imagine we could get a lot of issues resolved if public school teachers went on a nationwide strike for only a few days. Not even a complete week.
The same could be said about back of house restaurant staff or caregivers like CNAs or daycare staff.
The two most vulnerable groups of people in our society are young children and the elderly. And the people who take care of those two groups are treated terribly and paid non-living wages.
Having them go on strike for a few days would at the very least bring a great deal of attention to the matter.
PaulKeeble · 5h ago
Never tell them when the strike is going to end, it ends when your demands are met not a moment before and they should never hear otherwise.
geodel · 6h ago
Yup, sounds very straightforward to me. At least ten days of mandatory strike should be mandated by law as it can resolve so many issues.
dgfitz · 6h ago
Not at all against the idea, thinking about it from the other perspective: people would just use leave, or WFH, or take LWOP for the teacher aspect to take care of their kids. Or form a commune where one parent takes care of ~10 kids and everyone else goes to work.
Elderly care, yes that would probably be more effective. However, I can see a scenario where people would pass away from a lack of care even if for a few days. This opens up a whole new can of worms.
nickff · 6h ago
Where is all this money going to come from? Labor is already the largest expense for most companies, and executive compensation is only a very small proportion of it. If the companies are have all their profits taken away (in the form of increased worker pay), their capital will vanish as well (either invested elsewhere or spent by the former investors on assets & services), and they won't be able to operate.
commandlinefan · 6h ago
Well, the time to take action was about 25 years ago when we were in demand. That horse has long since bolted.
No comments yet
shadowgovt · 6h ago
Worth noting is that in the United States, we passed laws to make it difficult to do multi-union collective action. Secondary strikes are generally illegal (workers of company B can't strike because A's employees are striking A to try and induce A to come to the negotiating table).
I'm sure the folks with legal power would try to use that law to tamp down on any full-on nationwide action.
basisword · 6h ago
I think life has gotten too expensive. People have zero leverage. Part of that is self-imposed in terms of unnecessary expenditure but the basics like food and housing are now so expensive people can't strike. They can't quit and try to find something new. You need an exceedingly strong union to get anything these days and even then most of the recent strikes in my country have achieved very little.
mrangle · 6h ago
So you want to work from home with top pay, top benefits, control over your assignments, control over Ai competition, and control over CEO salary. And you're couching this as the reasonable ask of oppressed labor and want to organize over it. Do I have that right? Last, I assume that the labor pool should be as large as possible.
The CEO pay issue is agitprop nonsense. It's purely political without proved mooring to worker interests. It's predicated on the same fallacy that more taxes will mean more appreciably more social benefits for the poor. Instead, the money gets routed everywhere else. The only metric that matters for workers is their own pay. You have no idea if higher CEO pay isn't linked to comparably higher worker pay, not less. No worker in their right mind would spite-lower CEO pay just to have their own be static or decline.
dgfitz · 5h ago
Agitprop: Agitprop, derived from the Russian "Agitatsiya i Propaganda," refers to the practice of using cultural and artistic forms to promote a political ideology. It's characterized by its overt and often forceful messaging, aiming to influence public opinion and behavior.
TIL
salawat · 5h ago
Said post you learned it from was also a shining example of agitprop.
bko · 6h ago
The question is often framed as "fairness" but the more interesting question, are the high salaries worth it? One person they cite as a high salary is the Starbucks CEO.
> The report listed Starbucks CEO Brian Niccol as making 6,666 times more than the company’s typical worker, the largest pay gap in the S&P 500. (Niccol took over the company’s helm last September. The AFL-CIO annualized his compensation, listing it as nearly $98 million, compared to the typical Starbucks worker’s pay of less than $15,000.)
But what happened after he was announced? The stock jumped nearly 25%, resulting in an increase market cap of 27.2 billion [0].
So the $98m per year compensation is a great bargain for Starbucks and all their shareholders. This at least suggests that CEOs are very important (or investors are stupid?). But the stock price today is about the same level post announcement, so the value of his leadership mostly matched expectations for now.
It would be great if the article had some of this context and nuance rather than a press release from the AFL-CIO.
Interestingly, I don't know why the investors thought this is such a great deal. Looking at the financials, he certainly did not have a significant impact on growth (it's been stagnating for the last 2 years it seems). So maybe the conclusion is, investors make decisions based on vibe much more than facts?
j_w · 1h ago
Your data point for the stock uptick is so cherry picked.
Aug 12th, 24: Stock price is 77.03
Aug 13th, 24: New CEO announced, stock price is 95.9
Sept 9th, 24: New CEO starts, stock price is 92.21
(Peak) Mar 3rd, 25: 117.46 (est)
(Trough) Apr 30th, 35: 75.5 (est)
Jul 23rd, 25: 95.92
In no way do I look at the starbucks stock price history and think "wow the new CEO really turned the ship around!" There was a huge spike when he was ANNOUNCED and no growth since. Vibes economy.
How is it cherry picked? The day the announcement was made the stock jumped 25%. That's the market digesting new information. Or do you believe that jump was just coincidence. And that level persisted so the CEO roughly met expectations or the market is still irrational. But that's a pretty long time to be at this elevated price
danlitt · 6h ago
Why is that the more interesting question? It seems obvious that the salaries are likely to be worth it. Our entire society is optimized to do nothing other than increasing shareholder value.
It seems surely more interesting to ask why the rest of us bother to go along with it.
bko · 4h ago
Starbucks is a business. If they can produce things we like and fork money over, it's valuable and creates value for society. If it can do the same thing with less resources, that also benefits society (efficiency).
I guess you go along with it because it's a proxy for using precious resources efficiently and creating things people want.
renewiltord · 6h ago
Because we are all shareholders and this has worked much better for us than all the shit other people have tried elsewhere.
BrawnyBadger53 · 6h ago
The current form of the system we practice is massively different from the one that put us so far ahead. We tried many things trying to push it to be more successful. This gap change is a result of some of that. We now need to evaluate whether that change was actually better. This gap may be short term worth it but with trends like quiet quitting, we probably should think about whether these changes will slowly cause larger long term losses in productivity at the lower ends of these hierarchies.
ryandrake · 5h ago
More than one third of Americans do not own any stock at all, even indirectly through mutual funds or retirement accounts[1]. Although admittedly, this number has been falling steadily (in 1989, more than two thirds of Americans did not own stocks).
No we aren't? Not even everyone on this forum is a shareholder, nevermind everyone in society?
TFYS · 6h ago
The bigger these pay gaps get, the more expensive for the average person those shares get. We are not all shareholders in any meaningful sense, and over time less and less of us will be. This works better than other things we've tried, but we've only tried about three things. There's plenty of ideas that we should look into.
BobaFloutist · 5h ago
You...you know you don't have to buy whole shares, right? VOO has a minimum investment of $1.00. While I won't argue that not a single person in the country is incapable of investing $1.00, the % of the population that couldn't stick a few bucks every now and again in a free account is probably single digit.
_DeadFred_ · 5h ago
'We' haven’t seen an economy like this since the Gilded Age. The 'this' you talk about is new territory for post-WW2 America, and the people at the bottom are pretty pissed about it. Not sure how long/how much force it will take to continue with it's making your life 'much better'.
The society whose foundations 'this' is built upon, the one that built the middle class, was built on very different rules. Marginal tax rates over 90%, strong(er) labor protections, and CEO-to-worker pay ratios today's CEOs would balk at.
'Income inequality' is really just a pyramid scheme with branding pretending it's still an extension of post-WW2 America that built the middle class. The American public isn't buying it anymore.
dvt · 6h ago
> So the $98m per year compensation is a great bargain for Starbucks and all their shareholders.
And their employees, too, actually, since they have something called the Bean Stock[1] program. But citing this wouldn't fit the article's narrative. Comparing salaries of a regular employee and a CEO (especially one of a public company) is like comparing apples to oranges; it has nothing to do with fairness. The two are fundamentally different in effort, incentive, and risk:reward structure.
> citing this wouldn't fit the article's narrative
Did you do any research at all into whether this makes a material difference to starbucks employees?
dvt · 6h ago
What do you mean by "material" difference? The stock literally went up 25%+, so of course every SBUX employee got to share in that rise. Or are you asking if it minted any new millionaires? Maybe a few, who knows.
wasabi991011 · 4h ago
Very quick and shoddy estimates:
$100m per year / $400k employees = $250 per employee per year.
Meanwhile, $ of stock per year is really hard to estimate, but one person online said ~$500 per year for a barista. A 25% increase in price due to a new CEO is then +$125.
buerkle · 6h ago
Sorry but the risk:reward narrative is tiring. Many of these CEOs walk away with millions whether they succeed or fail, there's little to no risk for them. In fact, even they fail in cases they end finding another well paying executive position. Meanwhile, many of their employees are living paycheck to paycheck.
ThrowawayR2 · 5h ago
> "Many of these CEOs walk away with millions whether they succeed or fail"
Surgeons walk away with their pay whether a high-risk patient lives or dies, aside from provable malpractice. Why? Because they made a good faith effort to do their jobs despite an uncertain outcome.
dvt · 6h ago
I don't necessarily mean financial risk (though tbh, even the golden parachutes you cite are often a drop in the bucket compared to the market cap of these companies), but there's a lot of legal risk involved: think testifying to Congress, embroilments with the FTC/FCC, etc., dealing with a board of directors, navigating potential hostile takeovers or activist investors, etc. My point is that it's just a different ball game and being a CEO of a public company simply isn't the same thing as being an accountant that works 9-5.
I personally have significantly more of a problem with Congress having no term limits and being able to trade on the very market they're regulating.
buerkle · 14m ago
I disagree with term limits. I'd prefer to see the number of representatives vastly increased (no increase since 1929) and gerrymandering removed. I do agree they should not trade on the market.
I think you misunderstand the risk that non-CEO employees are exposed as cycomanic pointed out. CEOs that make this much money are more capable of defending themselves than a regular employee, not only from their wealth but from their network. It's rare that a CEO has to testify to Congress, or deal with FTC/FCC, etc. And dealing with BOD, hostile takeovers, or activist investors pales in comparison to what many people deal with day to day. A CEO is not going to go homeless from a hostile takeover.
gitremote · 6h ago
Non-CEO employees like lawyers and corporate accountants have legal risks too and could be subpoenaed.
mattmanser · 5h ago
Where are these CEO convictions then? If there's this "risk"? And please don't cite deliberate fraudsters like Holmes or SBF.
And what conviction length do those tiny few who get convicted of aomething actually get?
dvt · 5h ago
> Where are these CEO convictions then?
Not sure if this is rhetorical, but there are Wiki entries, investigative articles, documentaries, and even entire books dedicated to corporate malpractice and its consequences over the past century.
cycomanic · 4h ago
But now you are talking about malpractice. I would argue a regular employee is just much exposed to legal risk. I would argue that their risk is actually higher, because they don't have a full office of corporate lawyers to defend them.
Take the VW Diesel scandal, several engineers went to jail over this. In contrast Winterkorn has been charged, but AFAIK the case has been suspended and I'm not sure if it will ever go forward.
wat10000 · 6h ago
Even if he got fired and had his entire pay package clawed back somehow, Brian Niccol would still be fabulously wealthy. His risk is basically zero.
There's something about the human mind that makes it feel worse for a rich person to lose insignificant-to-them millions than for a poor person to lose a thousand bucks.
ryandrake · 5h ago
People have trouble with orders of magnitude. A billionaire could lose 99% of his wealth, and still have $10M--set for life, never having to work again.
baron816 · 6h ago
Employee to CEO pay ratio is such a meaningless and distracting measure. Imagine there is a hedge fund that has only a handful of very highly paid employees. Compare that to a very large multi-national corporation that employs hundreds of thousands of low skilled laborers (something like Walmart). Let’s also imagine the CEOs of both companies have identical pay packages. All else being equal, the hedge fund that only employs a few people is much better for society than the company employing many many more people. I don’t think anyone here would agree with that.
One thing we absolutely don’t want to do is disincentivize companies hiring people at the lowest end of the socioeconomic ladder. If employing those people lowers how much executives are allowed to get paid, what do you think is going to happen?
WorkerBee28474 · 6h ago
Yes. If companies are told to minimize CEO-to-employee pay they will just externalize the lowest paid employees. This won't meaningfully improve those employees lives or wages, but will reduce the target ratio, and may make promotions more difficult as the employee would need to move between legal entities.
qualeed · 6h ago
In a complete vacuum, sure, it's not a great measurement.
But it can provide some information when you look at it in context and with other information. Practically any comparison between a 10-person hedge fund and walmart is going to be silly.
whatshisface · 6h ago
The statistic in the article compares average CEO pay to the median income, which is not driven by company-to-company differences in category of labor.
SideQuark · 5h ago
> The statistic in the article compares average CEO pay to the median income
No, it compares the top 500 CEO pay out of 250k+ CEOs to all workers, which is as ludicrous and misleading as comparing the top 500 worker pay to all 250k CEOs and thinking this is the useful metric to rage about.
fwip · 6h ago
Isn't this just an argument about Goodhart's law? (Yes, if this measure becomes a target, it will no longer be a useful measure.)
vaneri2007 · 7h ago
Are we back to monarchy where the few makes the most and the rest is there to watch?
recursivedoubts · 6h ago
no, we are back to an oligarchy, which is the natural state of human affairs in the post-reformation anglosphere unfortunately
goatlover · 7h ago
Technofeudalism where our tech lords rent out all the services we rely on. AI will only make it worse.
glitchc · 7h ago
Why not stop renting? As experts, we are in a unique position to be able to make that choice. Regular joes and janes don't have much hope, but we do.
Apreche · 6h ago
The one thing that wealthy people actually purchase is assets. They can’t possibly spend all their money. The extra money is managed by wealth managers. Those managers automatically use the money to purchase more assets. This drives the prices of assets ever upwards. Fortunate people like doctors, lawyers, and tech workers with high paying jobs might be better off than most, but they can not afford to purchase assets that the truly wealthy people desire.
I could afford a house, sure. In the boonies. Could I afford to buy the NYC apartment I live in? No chance.
hunter-gatherer · 7h ago
You must not be from around here. Most of us here on HN are lords, vassals, or nobles in this technofeudalist society. The technomonarch is currently giving us enough fiefs to behave appropriately.
bee_rider · 6h ago
I’m not sure of that. I expect most of the posters here are more like the equivalent of a skilled blacksmith.
I mean, it is a little weird because compensation these days usually includes stock, so, some ownership of the company. But not much real decision making power beyond the limited-scope decisions around we implement their will.
Maybe a consultant could be considered like a vassal?
vouaobrasil · 6h ago
Not really. Renting will be forced via iterations of the prisoner's dilemma, and all it needs is a proportion of people who will rent at some point to keep the system going. A few standouts that make a break from renting will just be a mantlepiece that gives us the illusion of choice.
shadowgovt · 6h ago
Yes, good idea. We should all go in together to build our own datacenter in The Dalles! Who's with me?
(More seriously though: the real challenge to this approach is that cloud compute resources are a game changer and they can be at best approximated with the high-latency connections of hundreds of distributed users. The problem to solve goes a bit past "everyone should host their own email..." And even that is a tall order if you want your email to actually be sent and received and to not drown in spam).
Workaccount2 · 7h ago
The media would probably lose 20% of their revenue if people learned that CEO's with those monster pay packages get paid out of shareholders pockets, whereas workers get paid out of company pockets.
To put it plainly - not paying the CEO wouldn't free up any meaningful amount of more money to pay the workers.
clipsy · 7h ago
I'm sure the workers would be happy to take substantial raises in the form of equity.
Workaccount2 · 6h ago
Probably not, since you can't pay rent or buy groceries with shares. If the company is private this is even more of a headache as you may not see any money for years and the actual value wouldn't be firm until the sale is finalized.
If the company is public...you can just buy shares like anyone else (well depending on your position you might need approval).
Equity isn't a magical thing that prints millions. There are ample people on this forum that could tell you endless stories about "equity" and "getting rich"...
clipsy · 46m ago
> Probably not, since you can't pay rent or buy groceries with shares. If the company is private this is even more of a headache as you may not see any money for years and the actual value wouldn't be firm until the sale is finalized.
Equity in a privately held company is certainly more complicated to deal with, but if -- as per my original post -- you offer someone a substantial raise in the form of equity I'm quite certain they won't turn it down.
> If the company is public...you can just buy shares like anyone else (well depending on your position you might need approval).
I can't help but suspect you are ignoring the substantial raise part of my post at this point, as otherwise this comment seems like a non-sequitur.
> Equity isn't a magical thing that prints millions. There are ample people on this forum that could tell you endless stories about "equity" and "getting rich"...
This is condescending and not conducive to a polite discussion. I did not ask for and do not need an explanation of equity compensation.
kyralis · 6h ago
Workers are paid out of shareholder pockets. Every dollar spent on worker salaries is a dollar not spent on dividends or stock buybacks. This isn't a useful distinction to make.
Workaccount2 · 4h ago
Sure, from the standpoint that the entire business is an investment owned by shareholders that's true. But it's not really helpful in any financial way to frame it like that. The entire business could be liquidated and paid out in a dividend if that's all shareholders wanted.
hnav · 6h ago
The company issues new shares to the CEO, it could just as well issue new shares to workers, issue new shares and sell them to the workers.
drowsspa · 6h ago
Why does it matter?
thrance · 6h ago
And where is that money shareholders give to CEOs coming from?
I'll one up your tautology: not paying shareholders would free up meaningful amounts of money to pay the workers.
vouaobrasil · 7h ago
Even if that were true, they should still get less on principle. Making the elite richer gives them even more power that they don't need.
bpt3 · 5h ago
On what principle? Why should anyone be barred from negotiating the best deal they can get in a fair exchange?
vouaobrasil · 4h ago
The keyword is fair. The have the power to influence the government through bribes so it's never fair. And they can use their wealth to take advantage of the commons as well. They should be sent to prison, the majority of them.
Kapura · 6h ago
damn, if only it were possible to pass laws that make rewarding individuals increasingly unattractive as the individual rewards increased. some sort of progressive taxation scheme, perhaps. if only such a thing could exist!
robocat · 4h ago
If you take away the incentive to work for an extra dollar, you break marginal incentives for high value workers.
Too much progressive taxation is as unbalanced as CEO pay is.
I am lucky enough to live in New Zealand and be taxed at 39% plus 15% sales tax. At some point I feel like the government is getting its pound of flesh. I just don't feel motivated to work hours to earn extra.
The incentive of the government should be to encourage me to earn more since it would get its cut. Every other citizen misses out on 39 cents when I feel it is not worth trading my time for less than 61 cents on the dollar.
Incentive systems matter. It isn't only about money - it is also about what feels fair.
Everybody complains about the people earning more than them. If you're in the US you are excessively rich compared with most of the rest of the world. How about we tax everybody in the US at 50% and spread some of that wealth down to the workers in Vietnam or Bhopal? Strange how so many people whine about fairness but those same people don't wish to share their wealth fairly.
SideQuark · 5h ago
US tax system is the most progressive in the OECD [1]
US top tiny amount of incomes pay vastly more, even per dollar earned, than in any other first world country, where middle and lower class pay a much larger share.
Around the bottom 50% of US taxpayers pay zero federal income tax, and after post tax transfers (aid, etc...) the lowest decent sized chunk get money back, i.e., negative federal income tax.
Then, after already covering the vast majority of US tax burden, the really wealthy end up paying another large chunk in estate taxes (and no, there isn't magic sauce where they all hide all assets in foreign lands - you can simply go over public IRS data, or CBO data and see).
How would that even change anything? The CEO would still "make" 100x more than the individual employees, but the government would take as much as the individual CEO couldn't figure out tax loopholes to offshore and use it to study the mating habits of macaque monkeys. The most brutal tax regime you can imagine wouldn't change the substance of the article.
m00x · 6h ago
You can't reap the rewards from a highly free market country while also interfering with the free market.
There are countries where that gap is lower where you can move to if you really care about this. Most of Europe is a lot more equal, but you'll take a significant pay cut.
hollywood_court · 6h ago
We do plenty of interfering with the free market. We just don't do it in ways that benefit the workers.
tartoran · 6h ago
> You can't reap the rewards from a highly free market country while also interfering with the free market.
Look deeper into who's reaping all the benefits and who's interefering with the market.
standardUser · 6h ago
Binary thinking like that is a rhetorical trick, and a lazy one, that ignores both the diversity of existing market-oriented nations and the reality that these systems are not static.
Not to mention that the American system is one of constant, frequent, and oftentimes contradictory forms of market interference, even if the manner of interference differs a bit from Western norms.
greedo · 6h ago
There's no such thing as a free market.
mattmanser · 5h ago
Those rewards are failing, so yes you can.
Your argument is just trickle down economics dressed up. But worse, we know that doesn't work. Not, we think. WE KNOW IT DOESN'T WORK.
In fact, once you realize it's just the same tired trickle down economics argument, then when you start asking why is growth stalling, why are living standards falling?
You can easily answer it. Because trickle down economics don't work.
Because too much value is being captured by a tiny minority, who use that capital poorly.
_DeadFred_ · 5h ago
Have you studied free markets? They ONLY work long term when you have a strong hand 'interfering' in them. By design, from their very first proponents, having a strong hand step in was expected/understood to be required to keep them working long term.
reliabilityguy · 7h ago
I suspect that lack of strong antitrust contributed greatly to what we have now.
vouaobrasil · 6h ago
That, and the government support of big business in many other ways as well.
paulddraper · 6h ago
What trusts do you see?
Apple?
carefulfungi · 6h ago
If you want to read about this, "industry concentration rate" is a good search term. In general, studies show that US industry concentration (percentage of the market claimed by the largest entrants) is increasing (indicating a decrease in competition).
My (perhaps moronic, but hey, I’m not an expert) metric is this: if a company X constantly buys other companies just for the sake of preventing competition —- it’s bad, and we risk to have a monopoly. Which, we almost do have with Google, Apple, and many others.
I mean, it’s a fine line to thread: companies should be able to do M&As, but at the same time, they should not be allowed to become monopolies.
adastra22 · 6h ago
> Google, Meta, MSFT, Apple, and many many others.
That's ... not how monopolies work.
arrosenberg · 5h ago
Antitrust law covers a broad range of anti-competitive corporate behavior. Don't be pedantic.
reliabilityguy · 6h ago
Thank you for a very insightful comment.
PS you do not have to have a monopoly to get no or minimal competition.
shadowgovt · 6h ago
It did. The shift from the manufacturing sector to the service sector also mattered; manufacturing had a well-understood "union culture" with clear benefits to employees and service-sector work was generally considered "white-collar" and not in need of the same protections.
... but ask nurses whether they feel "white-collar."
tschellenbach · 6h ago
AI is giving people endless freedom to start their own companies if they feel their skills are undervalued elsewhere. Very positive change for the world I think.
rimbo789 · 6h ago
What a wildly naive take. AI will be another force of centralization, de-skilling, and repression that will make more people more dependant and more precarious making it much harder for them to start any form of business
shkkmo · 6h ago
The edited headline "Employee – CEO pay gap historically wide" here is wrong. The Employee - CEO gap is higher (ratio 295) than last year (ratio 268) but lower than in 2021 (ratio 324).
If you're gonna make up a headline, don't make up one that is factually false.
e12e · 6h ago
Sorry about that - I tried to shrink the original to fit hn, but gave up after a few attempts.
I'd argue the gap is still atypically wide, these past few years, though.
shkkmo · 6h ago
The gap is atypically wide, perhaps "Employee – CEO pay gap rises" would have the same intent without the factual inaccuracy?
declan_roberts · 6h ago
Both blue collar and white collar wages are being dramatically depressed via legal and illegal immigration. I have no idea why this became a right-wing talking point. This is why big business is very pro immigration.
Your employer can at any time replace you with an H1b who MUST work at the company to even stay in the country.
As soon as we can reform immigration we are going to see much higher software salaries.
aaronbaugher · 5h ago
The immigration issue has been a crown lying in the gutter waiting for someone to pick it up ever since the 90s when the Clinton "It's the economy, stupid" Democrats teamed up with the Bush neocon Republicans to make corporate profits and Wall Street numbers their driving basis for economic policy. All the approved economists said making goods cheaper would make everyone richer, no matter how it happened, so they yelled "Smoot-Hawley hur hur" at everyone who disagreed, and invited the world.
declan_roberts · 5h ago
It's unnecessarily politicized and also the source of all of these fake job postings.
Employers put them up and everybody wastes their time applying. When the employer "can't find anyone qualified" they import an h1b for less money who can be worked harder because they have no choice.
They love that they can hire and train people who can't complain or even legally leave to join a competitor. Pound sand, Americans!
rimbo789 · 6h ago
Every CEO I’ve worked for could have been replaced with a bot that randomly spat out “yes” or “no” to questions and the company would have either been improved or stayed the same.
charlie0 · 6h ago
It's time to become a CEO.
thrance · 6h ago
Boss makes a dollar, I make the third of a cent.
mc32 · 7h ago
And it’s not only a problem at for profit organizations but also a problem for so-called NGOs and other non-profits —who you’d think would be different…
Screw it, tax them progressively for every multiplier above the average Jack and Jill’s pay —with adjustments for company size and whatnot.
wat10000 · 6h ago
Never mind the multiplier. Bring back 90% marginal tax rates.
bpt3 · 5h ago
The ones that had numerous loopholes causing the effective rate to be similar to what it is today? Sure, have at it, but it's not going to have the effect you want.
If you think anyone is going to pay an effective tax rate of 90%, I'm not sure what to tell you.
wat10000 · 5h ago
Of course they're not. In a progressive system that uses marginal rates, there's little point in giving someone a raise when they're in the 90% bracket, so nobody is going to be paying a 90% effective rate on all their income.
The point isn't to actually collect $90 million in taxes from a CEO paid $100 million, the point is to discourage that kind of ridiculous pay package in the first place.
bpt3 · 4h ago
In reality, the people who earn that much will do what it takes to avoid those taxes, including moving themselves or their business to someplace that won't confiscate their income if needed.
wat10000 · 2h ago
Somehow I don’t think Starbucks is going to move overseas.
Anyway, most CEOs don’t own a majority share in their company. I’d like to see a CEO try to argue for a massive transformation of the company just so they can personally be paid more. Shareholders should boot them out pretty fast.
bpt3 · 2h ago
Most CEOs do own a majority share in their company, because they are very small businesses.
But even talking about publicly traded companies and their private equivalents in scale, plenty of them move their HQ when it makes financial sense to do so and have non-US entities that could employ their CEO so he or she could do the same.
I have no idea why you think Starbucks, with thousands and thousands of locations outside the US, wouldn't consider employing their CEO out of a non-US location to let them avoid a confiscatory personal income tax rate.
wat10000 · 1h ago
I have no idea why a large company would consider such massive disruption just to save a single employee some money. The CEO works for the company, the board, and the shareholders, not the other way around.
_DeadFred_ · 4h ago
Also the 90% was only charged on income OVER a fairly high amount. I think it was the equivalent of income over $2 million.
Hikikomori · 7h ago
At some point do we need to make it a law to not compensate anyone more than x times the lowest worker salary?
navbaker · 7h ago
That will never happen in the US as long as the current iteration of the Republican Party has any power to stop it, which is given to them by people continuing to vote against their own interests and thinking that billionaires are what “makes America great”.
m00x · 6h ago
The democrats are just as guilty of this.
There was bi-partisan support for blocking congress from trading due to clear insider trading and the Democrats refused to support the bill.
Democrats were also the ones to move all manufacturing to China, which hurt the American worker more than anything we've done in the past 20 years. If the democrats were actually serious about the working class, they would've let Bernie compete against Trump.
ndrwdvvs · 7h ago
this would greatly diminish meta's ability to hire ai researchers
Analemma_ · 7h ago
I'm already sold, you don't need to sweeten the deal further.
michaelt · 6h ago
Their competitors like Google and OpenAI would also be subject to the same salary cap.
SirMaster · 5h ago
I mean there are only so many CEO positions available... Wouldn't we expect that the competition for so few top ranking positions would come with high pay?
fredfoobar · 7h ago
Looks like a cash grab before the AI meltdown
cyanydeez · 6h ago
Wonder if they included the acquahires ditching the dead weight
SideQuark · 5h ago
There are 211,230 CEOs with mean annual wage $258,900 [1]. Being the mean surely gives that the median is much lower.
There are 120,053,000 age workers with median weekly income of $1,159 = $60,258 annual income [2] (and this includes part time, people in college, semi-retired, many people who have had high incomes in the past or will in the future).
A story about a 4.3x of CEO to worker pay, which is the actual stats of CEO to worker, doesn't generate enough outrage.
Comparing the top 500 (ish) of them to all workers is simply bad analysis designed to rile up people.
Surely people here would call out the dishonesty of comparing the top 500 wage worker salaries (many millions/year each) vs all the CEOs (258k) as dishonest. It's funny seeing how many people eat this equally dishonest comparison up as indicative of all CEOs and companies...
As to all the theories as to this or that law being some culprit, or some evil intentions, note the pay of the top performers in nearly every category, from musician, to athlete, to lawyer, to top 500 CEO, to even employee, have seen pretty much the same growth over the same time. It's nearly impossible all these are driven by something as specific as a labor law, a union change, a stock market or money format change. It's almost a certainty these are all driven by an excess of accrued capital in the US (and other markets) allowing those paying these incomes to pay for what they see as talent, whether is a huge rise in middle class disposable income, a larger share of US money available for retirement accounts, etc. Many years ago chasing down this exact set of ideas revealed a ton of econ papers reaching the same conclusions....
In short, high (someone else) pay rarely is money taken from the poor, and in more cases the poor and middle get higher wages as the top get higher wages simply by econ effects like the Baumol effect. This is the effect that as some jobs pay more, it attracts more people, so for society to get older jobs done, they must now also pay more, even if productivity in the latter jobs have not increased. It's why the lowest labor in the US pays many, many fold over what you'd get for the same output in most of the world.
Note that this is mean wage not compensation, specifically it does not include stock bonuses [1]. Considering that the high CEO compensation is almost exclusively based on equity (there are several famous cases of CEOs taking only $1 of wage), arguments based on wage are pretty meaningless.
Also, I highly suspect that even if we take the ratio of top 1% CEOs compared to top 1% of non-executive employees the picture would not change dramatically (unfortunately I can't find easily accessible information).
The pay gap is a such a sad metric. I understand where it's coming from (a mix of envy and sense of unfairness) but I think it's just not the right number to look at if we aim to increase prosperity. Much more interesting, if we cared about the prosperity of people, is the average inflation adjusted compensation of a companies employees, and that is something we could measure CEOs by.
Basically, in 1919, Henry Ford sought to reinvest the Ford Motor Company’s profits into raising employee wages and expanding hiring, arguing that sharing success with workers would strengthen the economy and the company’s long-term prospects. However, minority shareholders John and Horace Dodge (who also ran their own competing auto company) sued Ford, claiming that his actions violated the fiduciary duty to maximize profits for shareholders.
The Michigan Supreme Court ruled in favor of the Dodges, declaring that a corporation’s primary obligation was to serve the financial interests of its shareholders and not broader social goals or even the well-being of its employees. This decision established a legal precedent that continues to shape corporate law even today and reinforcing the doctrine of "shareholder primacy" and limiting the ability of companies to prioritize stakeholders (like workers or communities) over investor returns.
It's been downhill for employees since.
[1] https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
> Twenty-five years ago, Bill Clinton campaigned on an idea for limiting excessive pay for American CEOs: Cap the tax deductibility of top executives' compensation at $1 million, and companies, not wanting bigger tax bills, might reel in their pay. In his 1993 budget, advisers suggested a compromise: Companies couldn't deduct CEO pay over $1 million unless it was "performance-based."
> But many believe the loophole had the opposite effect, driving companies instead to pay more in stock options and certain performance-based bonuses, which actually supercharged the growth in CEO pay. In 1989, according to the left-leaning Economic Policy Institute, the median value of annual CEO compensation was $2.7 million. By 1995 it was $6.6 million, and it reached $13 million in 2016.
Ref: https://www.washingtonpost.com/news/on-leadership/wp/2017/11...
https://fortune.com/2025/04/15/ceo-worker-pay-gap-problem-am...
It hasn't worked out like that for sure.
I don't actually see any reference in the wikipedia article that Ford was saying he wanted to use the dividend money to raise wages:
>...Henry Ford, sought to end special dividends for shareholders in favor of massive investments in new plants that would enable Ford to dramatically increase production, and the number of people employed at his plants, while continuing to cut the costs and prices of his cars.
And as usual in these cases, there are other unstated reasons that might actually be more important to the decision maker:
>...Ford was also motivated by a desire to squeeze out his minority shareholders, especially the Dodge brothers, whom he suspected (correctly) of using their Ford dividends to build a rival car company. By cutting off their dividends, Ford hoped to starve the Dodges of capital to fuel their growth
Companies and investors need to think further than 90 days ahead.
Let's say you hire a general contractor to remodel your house. How would you feel about him doing what's good for society without consulting you - e.g. buying sustainable material that is more expensive, or locally sourced material that is less durable or less safe? Or hiring more workers like they do on NYC construction projects cause it's good for labor? Especially if it's something you disagree with, like he's maga and refuses to hire cheaper immigrants, giving preference to disgraced former cops. When the bill comes with all the extra costs, hed just say he's not working for the owner value but for the good of society as he sees it :)
Ford didn't want to share with the employees. He was very strongly anti-union (granted, not a factor until post-WWII). He was a Nazi supporter and not just because he was a notorious antisemite, Nazis opposed organized labor, too. He is sometimes mistakenly acclaimed for being for civil rights because he hired so many black men (who were not unionized, in an attempt to defeat the unions).
The lawsuit wasn't about shareholders vs broader social goals. It was about shareholders vs the CEO. The article is not about shareholder vs CEO pay. This lawsuit is unrelated.
And before someone claims Ford paid his workers enough to be customers (the reason he still wanted to pay them more in 1918), consider that in the early days after he'd implemented an assembly line the work became incredibly monotonous and workers were leaving for other automakers, so Ford was forced to pay them better to stay with him.
* RTO mandates that reduce productivity AND job satisfaction
* High CEO pay outstripping worker pay
* Loss of work autonomy and space (working without an assigned desk)
* Layoffs out of the blue for successful teams
* Weakening benefits
* AI being wedged into whatever task you are working on
I don't care if it's a union, I don't care if it's a guild, I don't care if it's just a group of folks deciding to take action together, whatever. It's time we (especially us in tech) to stop acting like "got mine" and start acting like "get ours".
I’m all for taking action. I just don’t know what action best suits my needs, other than finding a new job or starting my own business and hoping I don’t become one of the greedy ones too.
Tech workers shouldn't punch down against unions. We should be pro-union in general.
While you could argue "too many tech workers think they are some kind of top 50% of tech workers" and be correct, that is very different than claiming unions help everyone but the top 1%.
Unions basically buy job security for a fixed duration of time for their members by offering concessions related to compensation. Competent workers in a non-declining field (i.e. pretty much all of tech) already have job security via their skills, and don't need to explicitly guarantee it by giving up some compensation to offset that risk for the employer.
It makes even less sense for software development since it can be moved overseas so easily in most cases.
They’re saying too many erroneously believe they are part of the top 1% of their field. They’re thinking they’re better than they actually are. And so, mistakenly, it follows that unions are of no use to these top performers.
Unionized employees make more than their non-unionized counterparts [0]. Even if the top earners to bottom earners gap shrank in relative terms, in absolute terms both would likely be higher.
[0]: https://www.bls.gov/opub/ted/2025/weekly-earnings-of-nonunio...
If I'm one of many types of service worker, sure I very well might join a union because I'm pretty replaceable and my income has little to do with my individual performance. I'll do better by forcing my employer to collectively bargain on terms that are relatively favorable to me by law.
That doesn't mean that all tech workers should support unions entering their field.
However, unions in practice enforce mediocrity while also becoming an institution that exists to support itself (aka its leaders) rather than its members once it reaches a large enough size (which is not unique to unions at all).
Unions makes no sense for a top performer in a field where an individual can outperform other workers performing similar tasks by orders of magnitude. Software development is one of those fields.
What part of that do you take issue with?
now your employer holds you hostage via health care & if one spouse loses a job the other is not able to quickly replace part of that income
Tech companies used to hire all the brilliant engineers because they were worried about startups eating their lunch.
Without antitrust enforcement, they've grown large enough that they can essentially bleed money in any of their non-core markets for decades without it impacting them. So this clearly isn't the case anymore.
We need to:
(1) get the DOJ/FTC/EU/ASEAN/etc. to slap the FAANG / Mag 7 hard. Bust them up into many companies. It would probably even result in greater market value being created as these companies are inefficiently sitting on gold mountains that they do not monetize and also making insane malinvestments that simply waste millennia of human engineering in stupid ways that have absolutely no potential of succeeding. But more than anything, this oxygenates the field for competition and provides greater upside to the financial / labor / innovation capital that are actually doing the work.
(2) start lots of startups that erode the key money makers of these companies. They're quite vulnerable right now. And they've laid off a lot of highly skilled labor.
Google should be four or five companies, at minimum. And it's time that the governments of the world demand it.
The same could be said about back of house restaurant staff or caregivers like CNAs or daycare staff.
The two most vulnerable groups of people in our society are young children and the elderly. And the people who take care of those two groups are treated terribly and paid non-living wages.
Having them go on strike for a few days would at the very least bring a great deal of attention to the matter.
Elderly care, yes that would probably be more effective. However, I can see a scenario where people would pass away from a lack of care even if for a few days. This opens up a whole new can of worms.
No comments yet
I'm sure the folks with legal power would try to use that law to tamp down on any full-on nationwide action.
The CEO pay issue is agitprop nonsense. It's purely political without proved mooring to worker interests. It's predicated on the same fallacy that more taxes will mean more appreciably more social benefits for the poor. Instead, the money gets routed everywhere else. The only metric that matters for workers is their own pay. You have no idea if higher CEO pay isn't linked to comparably higher worker pay, not less. No worker in their right mind would spite-lower CEO pay just to have their own be static or decline.
TIL
> The report listed Starbucks CEO Brian Niccol as making 6,666 times more than the company’s typical worker, the largest pay gap in the S&P 500. (Niccol took over the company’s helm last September. The AFL-CIO annualized his compensation, listing it as nearly $98 million, compared to the typical Starbucks worker’s pay of less than $15,000.)
But what happened after he was announced? The stock jumped nearly 25%, resulting in an increase market cap of 27.2 billion [0].
So the $98m per year compensation is a great bargain for Starbucks and all their shareholders. This at least suggests that CEOs are very important (or investors are stupid?). But the stock price today is about the same level post announcement, so the value of his leadership mostly matched expectations for now.
It would be great if the article had some of this context and nuance rather than a press release from the AFL-CIO.
https://www.forbes.com/sites/petercohan/2024/08/13/why-starb...
Aug 12th, 24: Stock price is 77.03
Aug 13th, 24: New CEO announced, stock price is 95.9
Sept 9th, 24: New CEO starts, stock price is 92.21
(Peak) Mar 3rd, 25: 117.46 (est)
(Trough) Apr 30th, 35: 75.5 (est)
Jul 23rd, 25: 95.92
In no way do I look at the starbucks stock price history and think "wow the new CEO really turned the ship around!" There was a huge spike when he was ANNOUNCED and no growth since. Vibes economy.
Edit: Data from NASDAQ https://www.nasdaq.com/market-activity/stocks/sbux/advanced-...
It seems surely more interesting to ask why the rest of us bother to go along with it.
I guess you go along with it because it's a proxy for using precious resources efficiently and creating things people want.
1: https://news.gallup.com/poll/266807/percentage-americans-own...
No we aren't? Not even everyone on this forum is a shareholder, nevermind everyone in society?
The society whose foundations 'this' is built upon, the one that built the middle class, was built on very different rules. Marginal tax rates over 90%, strong(er) labor protections, and CEO-to-worker pay ratios today's CEOs would balk at.
'Income inequality' is really just a pyramid scheme with branding pretending it's still an extension of post-WW2 America that built the middle class. The American public isn't buying it anymore.
And their employees, too, actually, since they have something called the Bean Stock[1] program. But citing this wouldn't fit the article's narrative. Comparing salaries of a regular employee and a CEO (especially one of a public company) is like comparing apples to oranges; it has nothing to do with fairness. The two are fundamentally different in effort, incentive, and risk:reward structure.
[1] https://www.starbucksbenefits.com/en-us/home/stock-savings/b...
Did you do any research at all into whether this makes a material difference to starbucks employees?
$100m per year / $400k employees = $250 per employee per year.
Meanwhile, $ of stock per year is really hard to estimate, but one person online said ~$500 per year for a barista. A 25% increase in price due to a new CEO is then +$125.
Surgeons walk away with their pay whether a high-risk patient lives or dies, aside from provable malpractice. Why? Because they made a good faith effort to do their jobs despite an uncertain outcome.
I personally have significantly more of a problem with Congress having no term limits and being able to trade on the very market they're regulating.
I think you misunderstand the risk that non-CEO employees are exposed as cycomanic pointed out. CEOs that make this much money are more capable of defending themselves than a regular employee, not only from their wealth but from their network. It's rare that a CEO has to testify to Congress, or deal with FTC/FCC, etc. And dealing with BOD, hostile takeovers, or activist investors pales in comparison to what many people deal with day to day. A CEO is not going to go homeless from a hostile takeover.
And what conviction length do those tiny few who get convicted of aomething actually get?
Not sure if this is rhetorical, but there are Wiki entries, investigative articles, documentaries, and even entire books dedicated to corporate malpractice and its consequences over the past century.
Take the VW Diesel scandal, several engineers went to jail over this. In contrast Winterkorn has been charged, but AFAIK the case has been suspended and I'm not sure if it will ever go forward.
There's something about the human mind that makes it feel worse for a rich person to lose insignificant-to-them millions than for a poor person to lose a thousand bucks.
One thing we absolutely don’t want to do is disincentivize companies hiring people at the lowest end of the socioeconomic ladder. If employing those people lowers how much executives are allowed to get paid, what do you think is going to happen?
But it can provide some information when you look at it in context and with other information. Practically any comparison between a 10-person hedge fund and walmart is going to be silly.
No, it compares the top 500 CEO pay out of 250k+ CEOs to all workers, which is as ludicrous and misleading as comparing the top 500 worker pay to all 250k CEOs and thinking this is the useful metric to rage about.
I could afford a house, sure. In the boonies. Could I afford to buy the NYC apartment I live in? No chance.
I mean, it is a little weird because compensation these days usually includes stock, so, some ownership of the company. But not much real decision making power beyond the limited-scope decisions around we implement their will.
Maybe a consultant could be considered like a vassal?
(More seriously though: the real challenge to this approach is that cloud compute resources are a game changer and they can be at best approximated with the high-latency connections of hundreds of distributed users. The problem to solve goes a bit past "everyone should host their own email..." And even that is a tall order if you want your email to actually be sent and received and to not drown in spam).
To put it plainly - not paying the CEO wouldn't free up any meaningful amount of more money to pay the workers.
If the company is public...you can just buy shares like anyone else (well depending on your position you might need approval).
Equity isn't a magical thing that prints millions. There are ample people on this forum that could tell you endless stories about "equity" and "getting rich"...
Equity in a privately held company is certainly more complicated to deal with, but if -- as per my original post -- you offer someone a substantial raise in the form of equity I'm quite certain they won't turn it down.
> If the company is public...you can just buy shares like anyone else (well depending on your position you might need approval).
I can't help but suspect you are ignoring the substantial raise part of my post at this point, as otherwise this comment seems like a non-sequitur.
> Equity isn't a magical thing that prints millions. There are ample people on this forum that could tell you endless stories about "equity" and "getting rich"...
This is condescending and not conducive to a polite discussion. I did not ask for and do not need an explanation of equity compensation.
I'll one up your tautology: not paying shareholders would free up meaningful amounts of money to pay the workers.
Too much progressive taxation is as unbalanced as CEO pay is.
I am lucky enough to live in New Zealand and be taxed at 39% plus 15% sales tax. At some point I feel like the government is getting its pound of flesh. I just don't feel motivated to work hours to earn extra.
The incentive of the government should be to encourage me to earn more since it would get its cut. Every other citizen misses out on 39 cents when I feel it is not worth trading my time for less than 61 cents on the dollar.
Incentive systems matter. It isn't only about money - it is also about what feels fair.
Everybody complains about the people earning more than them. If you're in the US you are excessively rich compared with most of the rest of the world. How about we tax everybody in the US at 50% and spread some of that wealth down to the workers in Vietnam or Bhopal? Strange how so many people whine about fairness but those same people don't wish to share their wealth fairly.
US top tiny amount of incomes pay vastly more, even per dollar earned, than in any other first world country, where middle and lower class pay a much larger share.
Around the bottom 50% of US taxpayers pay zero federal income tax, and after post tax transfers (aid, etc...) the lowest decent sized chunk get money back, i.e., negative federal income tax.
Then, after already covering the vast majority of US tax burden, the really wealthy end up paying another large chunk in estate taxes (and no, there isn't magic sauce where they all hide all assets in foreign lands - you can simply go over public IRS data, or CBO data and see).
Here's historical effective rates by quintile. Bottom two were 9.3% and 15.0%, top 27.1% in 1979, in 2019 they were 0.6%, 8.9%, 19.3% top 1% remains over 30%. https://taxpolicycenter.org/statistics/historical-average-fe...
How much more progressive is enough?
https://www.cbpp.org/research/what-do-oecd-data-really-show-...
There are countries where that gap is lower where you can move to if you really care about this. Most of Europe is a lot more equal, but you'll take a significant pay cut.
Look deeper into who's reaping all the benefits and who's interefering with the market.
Not to mention that the American system is one of constant, frequent, and oftentimes contradictory forms of market interference, even if the manner of interference differs a bit from Western norms.
Your argument is just trickle down economics dressed up. But worse, we know that doesn't work. Not, we think. WE KNOW IT DOESN'T WORK.
In fact, once you realize it's just the same tired trickle down economics argument, then when you start asking why is growth stalling, why are living standards falling?
You can easily answer it. Because trickle down economics don't work.
Because too much value is being captured by a tiny minority, who use that capital poorly.
Apple?
Here's an example: https://www.federalreserve.gov/econres/notes/feds-notes/a-no....
And another: https://bpb-us-w2.wpmucdn.com/voices.uchicago.edu/dist/7/129...
This doesn't seem like a topic with an irrefutable answer, though, due to the complexity of measuring. Here's an interesting paper on that complexity and a contrary point of view: https://www.nber.org/system/files/working_papers/w32762/w327...
My (perhaps moronic, but hey, I’m not an expert) metric is this: if a company X constantly buys other companies just for the sake of preventing competition —- it’s bad, and we risk to have a monopoly. Which, we almost do have with Google, Apple, and many others.
I mean, it’s a fine line to thread: companies should be able to do M&As, but at the same time, they should not be allowed to become monopolies.
That's ... not how monopolies work.
PS you do not have to have a monopoly to get no or minimal competition.
... but ask nurses whether they feel "white-collar."
If you're gonna make up a headline, don't make up one that is factually false.
I'd argue the gap is still atypically wide, these past few years, though.
Your employer can at any time replace you with an H1b who MUST work at the company to even stay in the country.
As soon as we can reform immigration we are going to see much higher software salaries.
Employers put them up and everybody wastes their time applying. When the employer "can't find anyone qualified" they import an h1b for less money who can be worked harder because they have no choice.
They love that they can hire and train people who can't complain or even legally leave to join a competitor. Pound sand, Americans!
Screw it, tax them progressively for every multiplier above the average Jack and Jill’s pay —with adjustments for company size and whatnot.
If you think anyone is going to pay an effective tax rate of 90%, I'm not sure what to tell you.
The point isn't to actually collect $90 million in taxes from a CEO paid $100 million, the point is to discourage that kind of ridiculous pay package in the first place.
Anyway, most CEOs don’t own a majority share in their company. I’d like to see a CEO try to argue for a massive transformation of the company just so they can personally be paid more. Shareholders should boot them out pretty fast.
But even talking about publicly traded companies and their private equivalents in scale, plenty of them move their HQ when it makes financial sense to do so and have non-US entities that could employ their CEO so he or she could do the same.
I have no idea why you think Starbucks, with thousands and thousands of locations outside the US, wouldn't consider employing their CEO out of a non-US location to let them avoid a confiscatory personal income tax rate.
There was bi-partisan support for blocking congress from trading due to clear insider trading and the Democrats refused to support the bill.
Democrats were also the ones to move all manufacturing to China, which hurt the American worker more than anything we've done in the past 20 years. If the democrats were actually serious about the working class, they would've let Bernie compete against Trump.
There are 120,053,000 age workers with median weekly income of $1,159 = $60,258 annual income [2] (and this includes part time, people in college, semi-retired, many people who have had high incomes in the past or will in the future).
A story about a 4.3x of CEO to worker pay, which is the actual stats of CEO to worker, doesn't generate enough outrage.
Comparing the top 500 (ish) of them to all workers is simply bad analysis designed to rile up people.
Surely people here would call out the dishonesty of comparing the top 500 wage worker salaries (many millions/year each) vs all the CEOs (258k) as dishonest. It's funny seeing how many people eat this equally dishonest comparison up as indicative of all CEOs and companies...
As to all the theories as to this or that law being some culprit, or some evil intentions, note the pay of the top performers in nearly every category, from musician, to athlete, to lawyer, to top 500 CEO, to even employee, have seen pretty much the same growth over the same time. It's nearly impossible all these are driven by something as specific as a labor law, a union change, a stock market or money format change. It's almost a certainty these are all driven by an excess of accrued capital in the US (and other markets) allowing those paying these incomes to pay for what they see as talent, whether is a huge rise in middle class disposable income, a larger share of US money available for retirement accounts, etc. Many years ago chasing down this exact set of ideas revealed a ton of econ papers reaching the same conclusions....
In short, high (someone else) pay rarely is money taken from the poor, and in more cases the poor and middle get higher wages as the top get higher wages simply by econ effects like the Baumol effect. This is the effect that as some jobs pay more, it attracts more people, so for society to get older jobs done, they must now also pay more, even if productivity in the latter jobs have not increased. It's why the lowest labor in the US pays many, many fold over what you'd get for the same output in most of the world.
https://en.wikipedia.org/wiki/Baumol_effect
Just some thoughts....
[1] https://www.bls.gov/oes/2023/may/oes111011.htm [2] https://www.bls.gov/cps/cpsaat39.htm
Also, I highly suspect that even if we take the ratio of top 1% CEOs compared to top 1% of non-executive employees the picture would not change dramatically (unfortunately I can't find easily accessible information).
[1] https://www.bls.gov/oes/oes_ques.htm