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Comment by heydonovan | Hacker News Reader

You share the company's wealth by offering stock as part of compensation. This works well for the high earning tech employees, who can pay their bills with their first 100k and save the rest or invest it. It doesn't work as well for middle/lower class employees who need immediate cash instead of stocks that they can't always hold until it's worth more. Imagine working for Amazon back in the day for $30k, and come time for a raise, you're offered an extra $2k bonus or 10 shares. I'd wager most lower income folks would take the money, since that's food on the table.

I've always wondered what it would look like if were were paid in multipliers instead of salaries. The lowest would get 1x, middle folks 5x, and CEO maybe 20x. The usual "a rising tide lifts all boats" mindset.

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This is how pay on whaling ships worked, so you have historical precedent

https://www.whalingmuseum.org/learn/research-topics/overview...

"I've always wondered what it would look like if were were paid in multipliers instead of salaries. The lowest would get 1x, middle folks 5x, and CEO maybe 20x. The usual "a rising tide lifts all boats" mindset."

I like that idea!

We know from behavioral economics that tying salary to performance for mentally engaging pursuits typically leads to poorer outcomes

Then you would get small companies and lose a lot of economies of scale. Would you rather be a CEO of a retailer of 100 employees or 1000000 employees? Your pay is going to be the same because cashiers in both companies will be paid roughly the same, meaning that maximum CEO pay will be the same.

I guess it would be neat to see an immense amount of small companies though.

I too think it would be neat to see how it plays out.

I'd also like to propose in this scenario that the ownership of such companies could also apportioned out to staff, and that the government should create an environment where access to startup capital is cheaply available in all regions.

Consider how much more tax and local spending might occur. The problem with a lot of those economies of scale is that the companies and extremely wealthy individuals get quite good at reducing their tax burdens in inventive ways, especially once large enough to leverage international org structures.

And as you rightly point out upper management, are good at taking small cuts of profit from a much larger number of people, and the political leverage imbalance that this creates also really affects things (surely not one person believes an honest billionaire who gives frequent large donations to a party expects nothing in return).

Also a good chunk of that efficiency turns into lobbying and marketing budget.

I'm sure that there will still be companies that find a way to make extreme profit without large staff, and there would likely be other problems. But it's hard to believe it would be dramatically worse than the current state of extreme wealth imbalance.

I think that's exactly the problem today. Companies have gotten too large and too centralized. It's not clear whether they are still getting economies of scale (they're usually highly inefficient -- lots of places to hide), or rather "succeeding" as monopolies.

Oh pooh, I as a lower/middle class employee got a lot of stock options. They were worthless because the company stock sank, but I liked getting the options, and if the company had been managed better I would have made much bank.

> I'd wager most lower income folks would take the money, since that's food on the table.

Instant gratification is a large reason why lower income folks stay poor. (As for "food on the table", lower income people "invest" in lottery tickets. They clearly do have discretionary income.)

>(As for "food on the table", lower income people "invest" in lottery tickets. They clearly do have discretionary income.)

Low income people are desperate to get out of their situation because in a lot of cases, it's barely livable.

The information in the article shows that they're largely correct; A disproportionate amount of compensation goes to a small number of people - and that amount is so skewed that it can't possibly be based on performance.

If the system they're in appears illogical, you can't fault them for acting illogically.

It's not so much about performance, but their impact (responsibility). If the CEO of a small mom and pop shop says something racist online then few people will care, but when the CEO of Papa John's said something racist 11% of the valuation of the company disappeared. That's on the order of $100 million. People might've been laid off because of this or more likely, people didn't get hired because of this.

> that amount is so skewed that it can't possibly be based on performance.

Of course it can be. I'll give another example - Microsoft under Gates/Ballmer/Nadella. As an MSFT shareholder, I am very, very happy with Nadella's results and he's worth whatever he's paid.

Passing up a salary increase for stock options will occasionally pay off big, and if you have good confidence in the company go for it... but a lot of companies fail and those options become worthless.

You got no money out of your options, if you were asked about the options and could have declined them for a modest wage you would have made more.

(Also, your post needlessly and illogically attacks lower income folks, just give it a rest. Rich people buy fancy cars that are equally worthless instead of responsibly investing their money.)

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