Striking auto workers want a 40% pay increase–the same rate their CEOs’ pay grew | Hacker News Reader

Striking auto workers want a 40% pay increase–the same rate their CEOs’ pay grew

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370 pointsheavyset_go589 comments

Just to point out a demonstrated, viable, successful reality achieved under different values and assumptions, the Mondragon Corporation/cooperative produces car parts, among many other things, and has pre-agreed ratios for wages for executives relative to the lowest wages paid to workers, and this tops out at 9:1. Studies have found that worker-owned coops have a greater survival rate than conventional businesses, and that they have higher productivity.

https://en.wikipedia.org/wiki/Mondragon_Corporation#Wage_reg... https://en.wikipedia.org/wiki/Worker_cooperative#Longevity_a...

Mondragon is not a worker cooperative. They have a three-tiered worked system[0] with clear hierarchical structures and differences in voting power. The temporary worker tier (largest) having no voting power whatsoever.

[0] https://www.researchgate.net/publication/290978631_The_Mondr...

"cooperatives don't have to treat everyone exactly the same. You can have different "classes" of members.

some ideas about how to offer "founder incentives" in workers cooperatives."

From a recent HN comment: https://news.ycombinator.com/item?id=37304911

If you want to come up with a different word sure, I would just call whatever you defined there as traditional a corporation.

But worker cooperatives is known as "one worker, one vote" and anarcho syndicalists like Richard Wolff wouldn't consider that a worker cooperative anymore.

I don't think that's a sensible line to draw really. Permanent employees get to vote, that seems obviously more a cooperative than a classic organisation, where votes are based on the quantity of shares bought.

I think this the least constructive kind of unhinged purity-based framing. You're right about one thing -- Mondragon isn't a cooperative; it's a federation of cooperatives. I note that the paper you linked to by Kasmir points out what the author sees as failings, but from my quick reading it does not say that Mondragon co-ops are not co-ops. I think you're on that branch alone.

But also, Kasmir seems to be faulting co-op members for some lack of ideological purity, and frankly, for failing to live up to the aspirations that others have built around them, which aren't their responsibility.

> Many academics and social justice activists alike — maintain that co-ops promise a more democratic and just form of capitalism and even sow the seeds of socialism within capitalist society.

> Co-op members voted to pursue an international strategy to open these firms, and, thus, to employ low-wage laborers. Hence, we are confronted with a complicated permutation of a familiar state of affairs whereby the privilege of one strata of workers depends upon the exploitation of another.

> Compared with workers in the standard firm, co-op members were less involved in and showed less solidarity with the Basque labor movement, which at the time was part of an active leftist coalition for socialism and independence for the Basque country.

But the point of a co-op is not to further the goals of academics and activists, nor is it the responsibility of any co-op to maintain allegiance to whatever movements or institutions that the author admires. If Richard Wolff wants people to vote in the workplace, and wants those votes to mean something, doesn't that power and autonomy also necessarily mean they have the power to disagree with his views and pursue their own success and flourishing? And its success should be measured by the degree to which co-op members benefit, not by the extent that they're an ideological tool for outsiders.

Yes, one might have wanted Mondragon co-ops to create other worker-run co-ops in other countries, rather than subsidiaries. But it's hard to see how that would have actually worked. Frankly, starting factories in China by talking to workers about how important democracy is could have gotten people hurt. And these firms do still need to be able to compete and succeed in a global marketplace in which most of their peers are operating from a purely capitalist playbook. If you draw your ultra-orthodox definition of what a co-op too narrowly, you risk adopting a definition which excludes successful firms of any significant scale.

How is equity comp factored in?

The paradox of worker-coops is that workers capable of successfully running businesses together are also capable of running businesses independently, so why create more failure points?

This comment seems ignorant of basic economics - you might as well ask why mergers/acquisitions happen at all.

Corporations under a board and a CEO staffed by hired labor have very little in common with worker-co-ops and workplace democracy. My point is that a person competent enough to successfully run a business will almost certainly do so solo. The value-add of worker co-ops is moot if you already have the knowledge and capacity to run and staff a business, whereas the drawbacks and risk are monumental.

I've been in and started several worker cooperative businesses. I don't try to do it anymore because of what I perceive as a fundamental issue: the people that are the most explicitly attracted to worker co-ops are also the least business saavy or willing to put the business's existence ahead of ideological values. In my experience, it is a recipe for almost certain failure.

In the same way that anarchists point to Revolutionary Catalonia, workplace socialists point toward Mondragon, ignoring that these are both statistical aberrations rather than the normal state of affairs. The normal state of affairs is a bunch of naive ideologues that hand-wave away planning critical details. This isn't unique to worker co-ops; founders do it all the time, but the difference is that new ventures require flexibility and leanness, but worker-co-ops are exceptionally rigid and fragile.

Generally if worker co-ops "succeed" it's directly because they are being subsidized by similar ideologues rather than business efficiency. The actual product they sell is good feelings rather than products or services.

people are more annoying than anyone. you need a good set of rules for the game.

My funniest attempt involved 2 friends of mine who are both in a league of their own in their field. both of them kept sticking their nose in what the other was doing endlessly moaning that it couldn't be done. Eventually they just got angry that some noob would question their expertise.

How does collaboration create more failure points, rather then fewer?

I don't think it's a given that what a group can do, the constituent individuals can do? You probably need a team to build and ship a meaningful product regardless of the type of organization that develops it.

It's a little weird that tech-folk are generally ok with the idea that groups can yield good predictions in the context of a non-owner community that is harnessed to improve a product, or in the context of a prediction-market, where people placing bets in disagreement can lead to a more accurate outcome than the participants taken separately would produce -- but somehow think this mechanism will fall apart if workers who have an interest in a firm's ongoing revenue are able to vote.

I'm not a tech worker. I'm someone that spent eight years working in cooperative ventures. Regardless of venture, the Pareto members (i.e. the 20% of people that did 80% of the meaningful business logic) were consistently outvoted by the majority that were not willing to vote the sacrifices necessary for the business to continue. In addition, they'd frequently vote on the basis of individual member's popularity to the extent that they'd vote to retain members that were a net revenue loss. This isn't a dynamic unique to worker cooperatives (democracy in general falls prey to this), but it is one that co-ops amplify. If you have only pro social and competent members, it doesn't really matter what the system is, but if you don't, structuring cooperatively is rife with pitfalls that conventional structuring avoids or at least allows mitigation.

economy of scale doesn't seem paradoxical?

There is also the thrill of making something happen together. Like barn raising with 200 people is quite different from building a shed alone.

Good episode of Bloomberg's Odd Lots podcast from a little while ago on the topic:

> On September 14, the contract between the United Auto Workers and the Big Three carmakers (GM, Ford and Stellantis) is expiring — and the possibility of a strike is real. This comes at a delicate time for multiple reasons. The labor market is tight, which means workers have other options. Inflation is high. And the auto industry is undergoing a major shift to the electric vehicle market, which may change the composition and pay of the labor force. The stakes are high. So what does the union want and how does it fit into the goals of the broader labor market? To understand more, we speak with Dan Vicente, the director of UAW Region 9, as well as Alex Press, a labor reporter at Jacobin magazine.

* https://omny.fm/shows/odd-lots/what-the-uaw-wants-from-its-f...

* https://www.youtube.com/watch?v=LBP8_8_S7Ls

There were some items that the unions conceded in 2008 when the US automakers were going bankrupt that have still have not been restored.

Alex Press also appeared on last week's episode of the podcast Why Is This Happening, hosted by Chris Hayes. https://www.msnbc.com/msnbc-podcast/why-is-this-happening/un...

Glad to see such a range of views, all the way from labor unions to communist magazines!

40% over 4 years isn't as crazy (especially when you consider that they had some concessions back in '08). typical clickbait when you consider this is a high value for negotiation and they're likely looking for anywhere between 20-30% over 4 years when it's all said and done. barely above inflation YoY.

> they're likely looking for anywhere between 20-30% over 4 years when it's all said and done.

TFA conveniently points out to you that 20% has been offered to them and was rejected.

TFA conveniently points out that the average offer between the three automakers is less than 20-30% :), and 20% is the low-end of 20-30% btw

Good. As it should be. Record profits deserve record contracts.

Only if the contracts automatically follow profits. Profits are not a ratchet, while contracts typically are.

Also they are asking for more than pay raises and shortened work week. They're also demanding health benefits for retirees and defined benefit pensions among other things.

All of these things are good for workers, their quality of life, and the quality of their work, and American workers deserve those things.

Defined benefit plans??

The only defined benefit plan left is social security , which is fast going into insolvency in exactly a decade, and where it will automatically be cut 25% once that happens!

“contrary to a common misunderstanding. In 2035, if nothing else is done, the program could pay 80 percent of scheduled benefits, mostly out of workers’ ongoing contributions, a figure that would slip to 74 percent in 2096”

https://www.cbpp.org/blog/social-security-is-not-bankrupt

Thanks for the 5% correction. I'd have to research more to be sure, but I'll give you the benefit of the doubt.

My point remains, to be in support of defined benefits, you must not be OK with unilaterally changing the de-facto definion of defined-benefit for SS?

How is it OK to literally pull the rug under people that paid - all their lifes - with the promise to get X on retirement, and will now get X-Y instead ?

actually, you are not correct either.

The exact figure is 77.5%

https://en.wikipedia.org/wiki/Social_Security_(United_States...

> Only if the contracts automatically follow profits. Profits are not a ratchet, while contracts typically are.

Are they? When concessions are given they should also be removed: there are some elements in the contracts that date back to the hard times of 2008 that the unions are still putting up with.

which automaker had record profits, when? all of their stocks are underperforming the index poorly on a 5 year timeframe

Stock price is not profit.

GM had $10b in earnings, but I think Ford is still in the hole with a $2b loss last reported in 2023. I'm not going to even try to figure out Chrysler's health, since it is mixed in with a bunch of European auto makers (Fiat among others).

It’s not entirely on the media for using these headline numbers. The Unions like these numbers being used. It sounds better to their members that they’re getting a 40% pay rise.

> It sounds better to their members that they’re getting a 40% pay rise.

When they get it - right now every reports that they are asking for 40%

Shawn Fain (UAW President) has outright rejected a 20% offer. Not to say they won't agree to 30% but for context - UAW workers gave up a LOT of pay and rights in the 2010 auto bailout - the workers essentially helped to bail out management in that case along with the USG.

40% is table stakes.

40% over 4 years is PREPOSTEROUS.

> From 1978 to 2021, CEO pay grew by 1,460%, adjusted for inflation, versus just 18.1% for the typical worker.

Why has the supply of CEOs not kept up with the demand for them? Surely, with the improvement in education and in increase in MBA programs, there must be far more CEOs today than in 1978. Why has the ratio of CEOs to Companies fallen by 14x for their wages to rise this much? /s

As many argue, wages are only set by supply and demand. And if workers are underpaid, then it is because they are replaceable. Use the same framework to explain CEO pay.

There is no academic training to be a good CEO. They are not easily replaceable. If they were, board members wouldn’t bother offering such high pay. Shareholders don’t appreciate wasting money.

But if we offer more money, surely we will attract the attention of a better CEO!

No one wants to hire a below average CEO! Our CEO needs to be Above Average, so we better pay above the median! And so the salaries spiral up and up......

They've become 14.6x more efficient at ... what? Increasing their pay? C'mon.

Like it or not, they've become more efficient at maximizing shareholder returns. 1978 to present included all sorts of financial shenanigans designed to turn a company from the old school "return on assets" model to a financial vehicle that profits on the spread between it's revenue stream and financing costs. I think it's shit too, but the job turned from running a company go making money appear, and the pay went with it.

Don't hate the player, hate the game (seriously, the system is screwed up horribly)

Any idea why this change occurred?

I know it’s probably multifaceted, but my first thought was that increasing inflation since the 70s has meant that there is an incentive to have as much debt as possible, the hope being that it will be inflated away

The Friedman doctrine[1] + hyperstition[2].

1. Friedman, Milton. "The Social Responsibility of Business Is to Increase Its Profits." The New York Times, 13 September 1970, https://web.archive.org/web/20230913104415/https://www.nytim...

2. Carstens, Delphi. "HYPERSTITION." Xenopraxis, n.d., http://xenopraxis.net/readings/carstens_hyperstition.pdf.

With the complete end of the gold standard in the 1970s, the government/fed's been free to create as much USD as it wants. The benefit of newly created money goes to those who spend it first (it's essentially a wealth transfer from those who get it last to those who get it first), and it's the banking/financial system that generally gets first dibs on this newly created money. This means there's a continuous, persistent transfer of wealth from the real economy to the financial system. In theory this wouldn't happen if the fed instead created money by e.g. dropping it out of helicopters equally to everybody (or direct transfers to their bank accounts), but the whole financial industry has a vested interested in keeping the current approach.

This is such a simple and clear explanation of the financialisation of society I just wanted to keep a reference

Genuine question, have you tried hating the game and observed the response? I'm curious if your experience has been the same as mine?

yes actually - I spoke with a contractor at giant banks, at a high level of security, and with it compensation. The casual stories he told were related to beyond-belief daily animosity, racist language, whoring references and other verbal attacks and harsh emotional content. The whole thing was told in the same breath as I get this much per hour (a lot), I travelled to this place and got this hotel, I got this bonus.. in the same breath.

There is more going on with people and work and money than most people seem to acknowledge when speaking in general.

> Don't hate the player, hate the game (seriously, the system is screwed up horribly)

I say it is fair to hare the player unless they are working to change/improve the "screwed up" game they are playing.

The person you're replying to is suggesting that their pay rates are inelastic due to scarcity.

Price is based on how difficult it is to find someone that won’t drive a massive company awry, not based on them becoming better.

Like Carly Fiorina? The pay for CEOs is set by the board, and the board of most large companies is made up of CEO's from other large companies. It's the private equivalent of plutocracy.

The board is not made of other CEOs

> There is no training to be a good CEO. They are not easily replaceable.

If Steve Jobs—who first created and then basically rescued Apple and started it on the path to where it is today—can be 'replaced' then any other leader can be replaced.

Similarly there are plenty of CEOs that are paid oodles of money that were or are absolute garbage: see Boeing for the last 15+ years as Exhibit A.

He was replaced, but not with someone as good. Apple has done well under Tim Cook, but there is an obvious lack of innovative vision since Steve’s passing.

Perhaps if they offered a pay increase they could attract someone better, but maybe they can't afford it.

The Apple Watch launched 4 years after he died. He probably wasn't involved in that at all, or just barely. Which means that was all Cook's doing. It's now a multi-billion dollar business on its own.

AirPods launched 5 years after he died. It's highly unlikely he was involved at all. That's now also a multi-billion dollar business.

Apple Vision is about to come out. I wouldn't be surprised if that turns into a mult-billion dollar business after a few years.

Yes, Tim Cook does not have the charisma of Steve Jobs, and probably doesn't have the design sense either. But he's awfully good at putting the right people in the right places to steer the ship with him and have quite a strong vision of the future.

Steve was replaced with one of the greatest minds in Operations that history has ever known, and much of Apple's success under Steve was thanks to Tim. So Apple is not the best example if you're trying to show "CEOs don't matter."

> So Apple is not the best example if you're trying to show "CEOs don't matter."

I wasn't try to show that they don't matter, but that they are replaceable. And few companies need to have "the greatest mind in Operations that history has ever known" to function well.

Does Eli Lilly, Unitedheath, Johnson & Johnson, Procter & Gamble, Home Depot, Pepsico, Walmart, Coca Cola, Accenture, Intuit, Caterpillar, Lowes, Nike?

* https://www.slickcharts.com/sp500

* https://en.wikipedia.org/wiki/List_of_S%26P_500_companies

Heaven knows that the last few CEOs of Boeing mattered as they have completely screwed the pooch and basically wrecked that company—all the while making a whole lot of money.

So CEOs can definitely wreck a company, but they’re all interchangeable? Not sure I follow.

Everyone is replaceable, but some people are simply better suited for their role than others.

Your definition of “replaceable” is so loose to be meaningless. Yes, any person can be appointed to the CEO position when another leaves. No, it is not easy to appoint one that will steer the company to greater success than the previous one.

Steve Jobs is practically an example of WHY top CEOs get paid so much. Apple was basically in its death throes when he came back. A few years later they had the iPod. A few years after that the iPhone. When he died in 2011 they were well on their way to being the worlds most valuable publicly listed company.

I do think a lot of CEOs are way overpaid. That said, if a couple hundred million package means the difference between a company folding and firing everyone, or being a multi-billion dollar business with thousands of employees, the math works out.

> Steve Jobs is practically an example of WHY top CEOs get paid so much.

Yes, I explicitly mentioned that: without Jobs AAPL would not be where it was today. But he was replaced.

If someone as instrumental as Jobs can be replaced then so can any CEO that is/was less instrumental.

And what other CEOs are / were as instrumental as Jobs? What other major companies need to have someone of that calibre?

* https://en.wikipedia.org/wiki/List_of_S%26P_500_companies

> That said, if a couple hundred million package means the difference between a company folding and firing everyone, or being a multi-billion dollar business with thousands of employees, the math works out.

Now do the example of packages that cost millions of dollars and the CEOs wrecked the companies, like Boeing, or Enron, or WorldCom. Or Jack Welch's financial shenanigans at GE.

Of course there is training to be a CEO. Do you think all the good CEOs were born with the knowledge to be a CEO?

The argument is not that CEOs are not valuable. The argument is that there's no obvious increase in their value since the 70s that might justify their relative pay increase.

Since there's no pay penalty for being a bad CEO (pay correlates almost exclusively with company size) I guess we can assume that being good at the job is not the quality most important to those who do the selection.

Alternatively, as many argue, wages are not only set by supply and demand.

What if CEOs were underpaid in 1978?

They weren't

the supply of prospective management people definitely has kept up. there are literally tens of thousands of MBAs graduating every year, to say nothing of managers at existing F500 companies. there are only so many large companies, and thus so many CEOs.

look at tiny barely profitable companies, the gap between median wage and CEO is sometimes less than 2X.

all these takes on CEO pay when the reality is simple - CEOs are paid a lot because they the cost of being wrong is more than their pay. this results in companies that have a lot of money competing, driving up the price. the end. it's the same reason lebron james is paid 10X more than NBA average.

> there are only so many large companies, and thus so many CEOs

This is a statement that there is low quantity demanded by the market. It's actually a great example of how the naive supply-and-demand argument doesn't make a lot of sense.

how so? low supply, high demand for "perceived" good ceos. thus those large corporations can throw money at talent.

It depends how they're counting.

There was an example in Money Stuff this week where a CEO got a pay package "worth $110 million". It's actually made of stock options that vest if the share price went above $150, but the expected value was $110 million so that's what was reported.

…But the share price only reached $66. So in fact he was paid zero, and he quit. (Well, $1.5 million in cash.)

https://www.wsj.com/business/ceo-with-110-million-pay-packag...

> paid zero

> paid $1.5 million in cash

These are two wildly different things.

Yes - that is serious tails I win heads you lose sort of numbers

Just think of all the risk that executive took by potentially only earning $1.5 million dollars! EDIT: called it, MichaelDickens just made this argument unironically.

$1.5 million is approximately $0 in comparison to the originally-quoted $110 million—it's less than 2% of the original amount.

And yet, a massively life-changing annual salary level for almost all Americans.

You don't spend a percentage, you spend a fixed amount. $1.5 million is enough to live in a nice house, eat what you want, send your kids to nice schools, Aruba in the summer and Aspen in the winter, and still have enough to buy a very fast car. It's easier to focus on EV once you live this life.

Everyone read that as $1.5 million in salary but I didn't mean to say he got that every year. He got it once.

So? It's still more than most families will make in a decade. How many years was that $1.5M compensation for? What other compensation did he get?

Being honest, I'd really have to know what kind of timeframe that $1.5M was paid out. Was that a single year? 5? 10? It changes my opinion, slightly.

If its $1.5M in a single year, I have absolutely no tears to shed.

If that was 5 years, that's $300k/yr in compensation. A very comfortable salary in just about every place in the country. Once again, I probably have no tears.

If that was 10 years, that's $150k/yr. Ok, if you're expected to live in Manhattan or whatever, I'll agree that's pretty tight. Still though, that's a couple times the average household income in the US. Congratulations on being a bit closer to a plebeian. Boo hoo, guy who could have had generational wealth just had to live like the rest of us. What a tragedy. Truly zero income, being more than twice the average household income for a single earner without even thinking of other compensation he might have received.

I can't imagine this was some kind of performance pay over 15-20 years, so his pay has to be in this. I don't have a WSJ subscription, so I can't comment further on it.

"A million here and a million there, and pretty soon you're talking real money." (To paraphrase.)

Right, but in general the CEO doesn’t really do much to the stock price. If the general market is up, it’s going up. If the market is down, it’s going down.

How many companies really break that relationship in their market sector?

So tldr, ceo pay is based on the economic cycle rather than how the company does.

Some public CEOs comp packages are defined by them exceeding $SPY so boards do expect more than just the economic cycle.

50% of SPY constituents are going to beat SPY. That in itself doesn't imply the CEO is a meaningful factor in company performance.

This isn’t true because of the weighting. If apple doubles in value SPY will be up 8% from that alone. It’s easy to see a scenario where one massive company has an incredible year and every other company returns below the average.

Or, alternatively, one massive company has a bad year, and everyone else comes out smelling like roses.

On average, 50/50 is a pretty decent benchmark here.

> but in general the CEO doesn’t really do much to the stock price

Steve Jobs, Bill Gates, Elon Musk, Satya Nadella, etc.

> ceo pay is based on the economic cycle rather than how the company does

You can always start your own corporation, name yourself CEO (all you gotta do is file some paperwork and pay an annual fee) and rake in the dough for doing nothing!!

That is true. Elon Musk has greatly affected the stock price of the Company Formerly Known as Twitter.

Since Musk took it private, the stock price is not known.

It has public shareholders like Fidelity, so they do report what they value it at. I don't remember what it is, but it's at least 1/3 marked down.

Those are founders but this is an external hire at a later stage not really the same.

The story I linked is actually a cofounder.

Nobody is complaining about founder pay. The complaint is about publicly traded companies being subjected to elite capture by parasitical execs.

Satya Nadella is not a founder. But during his tenure the value of MSFT went up by 10x. I'd say he's well worth his compensation.

> It's actually made of stock options that vest if the share price went above $150, but the expected value was $110 million so that's what was reported.

It gets a little weirder than that I suppose since you might have a great deal of shares in a company, which you never exercise so you could say that money doesn't really exist until exercised.

You can however use those shares as collateral for a mortgage or other line of credit which is a pretty common tactic for wealthy people to avoid paying income tax that they otherwise would if they were to sell said shares.

In this case he didn't get any shares. If he'd used the options to get a mortgage then he's got a pretty big hole in his pocket when they became worthless.

Shares can and do go up and down quite a bit. I bought heavily into one tech company where the shares went down 90% in a couple months. It was pretty devastating for me.

> You can however use those shares as collateral

Only shares that you own, not have an option to buy. And only a portion of the shares, and if your shares become worth less than the loan, you still owe the money, and they'll come after any other assets you have.

> you might have a great deal of shares in a company, which you never exercise

You're confusing owning shares with having an option to buy shares. They're very different. You'll also owe income tax on the difference between the exercise price and the current price of the shares. (A friend of mine didn't know that, and consequently lost his house.)

Isn’t that kind of lending what caused the Great Depression? Pretty sure you can’t take a loan out on a promise of an option value…

As someone pointed out "1.5 million in cash" for not doing the job you were hired for is .. not zero.

I'm fairly sure I could achieve the same results for considerably less.

Moreover making compensation dependent on stock price movement encourages corruption and fraud - look at the numerous Enrons and other financial claims. All of which left the majority of those responsible enriched while destroying the lives of others.

> I'm fairly sure I could achieve the same results for considerably less.

I'm highly skeptical of that. Not driving the company value to zero is worth a significant amount of money; anyone who has worked under a bad executive or CEO can tell the difference between one that didn't accomplish aggressive goals and one that's objectively bad. If you have a bunch of executive experience, maybe you'd be able to replicate that CEO's performance, but absent that it's more likely you'd cause more harm than just not making the goal.

well the CEO's been set a target share price, and he did not reach it. Dunno if you could consider that as failing.

The CEO here is the least likely to be responsible for the increase/decrease in profits/value in that one year. The best you can hope for is a pr boost. Whatever strategy change would not be visible in the short period. Key hires there is not enough time for an impact. Whatever value increase is going to come from vps and everyone down the line. Why not give them the upside on the value they create?

> If you have a bunch of executive experience, maybe you'd be able to replicate that CEO's performance, but absent that it's more likely you'd cause more harm than just not making the goal.

I doubt this is true. Organisations have inertia, and getting one to change direction or do something different is remarkably difficult. (source: I have been hired as a CEO to change the direction of an organisation. It was difficult).

I strongly suspect that an average person being put into the CEO role would do fine as long as the organisation was basically OK. They'd make mistakes, sure, but everyone makes mistakes. The organisation has ways of limiting the damage of mistakes.

The hard bit about being CEO is taking full responsibility for your decisions with no feedback. You can deal with this in a wide variety of ways; arrogance, narcissism, authoritarianism, or humility, honesty, and teamwork. We tend to see the first three because those kinds of personalities cope well with this kind of difficulty. But that doesn't mean this is the best way to deal with it.

It's zero of the bonus, of which the CEO had assigned a prior that made him choose that job over other offers he likely had.

Performance based bonuses exist at virtually all levels of skill in companies. What you see as a catalyst for fraud could also be framed as a catalyst for incentivizing an outcome most likely achieved via hard/smart work.

$1.5M is not nothing, but it's less than 1% of the CEOs potential compensation.

>Performance based bonuses exist at virtually all levels of skill in companies

lol. Any data on that? In tech maybe, but I'm fairly confident(also an unsourced opinion) that the vast majority of workers in the US receive zero bonus, skill based or otherwise

What percentage of Walamrt's employee base probably has a significant part of their pay tied to performance?

Home Depot? UPS? Amazon's 1.6M, not just those in Seattle making well into the six figures? Kroger? Albertsons? Target? Starbucks? You really think a bagger or cart grabber or barista is getting a performance-based bonus? These are some of the largest employers in the US.

The vast majority of the US workforce probably has less than 10% of their income (probably close to 0%) directly tied to performance. A massive chunk is entirely how many hours they get on the clock, that's it.

> Performance based bonuses exist at virtually all levels of skill in companies

This really sounds like the perspective from someone who's never punched a clock.

When I picked groceries in a freezer for Target, my pay was based on my performance relative to the baseline performance as measured by engineers. If I picked at a higher rate than 120%, I was granted incentive pay. If I picked below 80%, I was on my way to termination. It was meaningful on a $13.50/hr job.

Absolute lukewarm take here. Wages are not only set by supply and demand. Institutional power, regulatory concerns, etc... are huge factors in compensation, too. You can argue they're abstracted over by the market anyway, but you're not saying anything interesting until you dive into the tensions between those concerns.

And that's not even touching the fact that the workers are clearly valuable and irreplaceable enough that they can halt production like this.

“Supply and demand” is a very limited special case of a broader principal, which is that pay reflects power. CEO’s power and control over their own pay has increased, and the power of regular workers has decreased. There are a myriad of reasons for this but it’s certainly deliberate.

Not all jobs have quantitative measures for impact. The more a job is decoupled from a measurable value, the more likely that job is to be bid up to "as much as the company can afford."

I've seen this in my career, the closer I get to "SRE" or "platform engineer" the more decoupled my salary has become from my actual measurable value.

I'd articulate the thinking as, roughly:

We know this role is important. We know that having a bad SRE team (or CEO or platform team) is expensive, it could cost us the 100% of the business. And we don't know how to measure the value a good one provides. Therefore we are willing to spend as much as we can afford to make sure we get a good one.

SREs aren't on the board of directors setting the pay for other SREs who are on their board of directors though.

The elite/ownership/"capitalism winner" class are playing on an entirely different level with their power and influence. Don't kid yourself into drawing comparisons with your situation and miniscule in comparison compensation. It's always heads they win, tails you lose.

> Don't kid yourself into drawing comparisons with your situation and miniscule in comparison compensation.

There are two ways to read my comment.

One as explaining CEO salaries.

The other as actionable career advice for negotiating your own salary.

I've used this insight to nearly 5x my salary.

That salary was not minuscule to me.

> as much as the company can afford.

This is pretty much it. Everyone wants to avoid hiring a bad CEO so it’s a bidding war for executives with track records at large companies.

And when you’re making billions a year the CEO compensation is a drop in the bucket.

> We know this role is important. We know that having a bad SRE team (or CEO or platform team) is expensive, it could cost us the 100% of the business. And we don't know how to measure the value a good one provides. Therefore we are willing to spend as much as we can afford to make sure we get a good one.

And who are "we" in this train-of-thought? If it's shareholders, that's where the root of any problem lies. If shareholders are real businessmen and entrepreneurs who built up the company or similar companies, they will have a clue as to what is a good CEO. If the shareholders are real workers who believe in the company they're working for, they will have a clue as to what is a good CEO.

Today, shareholders are no longer real businessmen or real workers, but retirees represented by bureaucratic investors. That's why they have no clue as to what is a good CEO.

Yup the shareholder is an ETF today. The people voting on behalf of shareholders aren’t the people benefiting from the success of the company.

Yes. But now take CEOs and their pay and map it to company performance and stock performance. Are they skilled at bringing out the best in their company, or squeezing staff wages more and more?

Is that an apples to apples comparison? Is the mean inflation-adjusted market cap of all the companies in both their 1978 dataset and 2021 dataset the same?

I support the workers' decision and negotiating on labor rates is the basis of our economic system. Get what you deserve.

That said, the CEO pay is easily explainable:

> Profits at the struck auto companies increased 92% from 2013 to 2022, totaling $250 billion, according to EPI

> CEO pay at the Big Three has grown 40% in the last decade, according to EPI

If you're the CEO of a company and you increased profits by 92%, I don't know seems pretty fair to me. There's a lot of other businesses that suck and haven't raised their profits in the meanwhile.

I think talking about the CEO pay is the wrong path (though I do admit it's marketable in the mainstream news). Just ask for what you think you deserve and don't work if you don't get it. It's as simple as that.

The workers also contributed to that 92% increase in profit.

And they got 18.1% for it.

The effort is to close that gap. Can’t build cars without workers. Elon famously tried and failed.

https://techcrunch.com/2018/04/13/elon-musk-says-humans-are-... (“Elon Musk says ‘humans are underrated,’ calls Tesla’s ‘excessive automation’ a ‘mistake’”)

Tangent: This is a mathematically muddled discussion that turns out to be about right anyway.

If profits went from $5 per year to 10, they increased by 100%, but that doesn't mean that you have room for a 100% increase in everybody's salaries.

A much better way to have this discussion would be to look at the dollar value increase in profits versus salaries.

Profits are forecast to be about $32b in 2023, up from about $19b in 2013. At about 240k total employees, and an average union pay of about $30/hr - call that about $90k year fully burdened per employee - a 40% increase would cost the company about $8.6B, or about 2/3 of the growth in profits. That may be overestimating the costs, as there are only 146k workers in the union, in which case the $5.2b increase in employee costs is... 40% of the profit growth, which seems like an entirely reasonable split of employee vs shareholder gains.

> If you're the CEO of a company and you increased profits by 92%

Did you? Attributing all the success a company achieves to the CEO feels shortsighted.

Aside from anything else: if all these companies saw their profits grow by so much surely there’s an external commonality there? “The CEO did it all” would be slightly more plausible if only one company experienced that success.

And that's easy to test. Remove everyone except the CEO, and see how things work out.

Bad argument. I could just as easily say "remove everyone except the ICs and see how things work out."

That would work and leave the company functioning well. Without the talking heads there is little need for management and IC domain experts and IC architects and IC sales and customer service will continue and leadership will naturally come from the rank and file.

It doesn't matter what "the truth" is, as long as the board (aka the owners) believe that the CEO's decision making is what led to the profits. The CEO's compensation is commensurate with this belief of cause and effect.

Maybe. It could well just be the market and luck, but it could be the CEOs decision. On the other hand, it's never because the line workers just started working harder. Think about being an early engineer at Amazon vs the same at another startup that never went anywhere. Those engineers did the same amount of work, but the difference is that Jeff Bezos was telling the Amazon engineers what to build. BTW I'm not making an argument that workers shouldn't share in the gains, just that people at the top are much more likely to be responsible for them.

> Those engineers did the same amount of work, but the difference is that Jeff Bezos was telling the Amazon engineers what to build

Particularly at early stage startups engineers are often responsible for a ton of innovation. It’s rarely exclusively top down instruction. Same goes for pretty much every company I’ve ever worked at. The CEO is not making every decision and coming up with every idea.

It seems erroneous to me to imply that the CEO deserves a bigger pay increase than the workers that actually increased profits by 92%

Doing math like this is always bad and just leads to arguments.

Imagine a chocolate bar factory, making chocolate bars for 50 cents and selling them for $1... 1mio per month, 500k profits per month.

Then a new ceo comes, sees that all the ingredients are vegan, there are nuts inside, making the bars "healthy", slaps on vegan logos, superfood logos, changes the ads to make the chocolate bar seem more high end and raises the price to $2 each... due to new logos, superfood text and ads, even with a price increase, 1mio of chocolate bars are sold, and the profits rise from 500k to 1.5mio per month.

Did the workers make the chocolates that brought in 500k? sure. Did the same workers make the same chocolates that brought in 1.5mio? sure. Did the workers do anything differently than the month before? Change anything? No. Did the ceo make a single chocolate bar? Nope. If the workers did the same as they did the month before, and if the CEO didn't make a single chocolate bar, who 'created' the extra 1mio of profits?

Sure, it sounds intuitive to put dollar values to each person, but reality is more complex than that. In the end, workers want to get the as much as possible money for least work done, and owners want to pay as little as possible for as much as possible work done... and that applies to everything, from workers and owners in a company to average joe buying apples (most apples for least amount of money)

this is a superficial argument that leads to the point that you want it to, rather than determination of the factors such as:

Was there an entire marketing department that was needed for this to be successful? Why aren't we quantifying that?

Why aren't we quantifying the new QA processes to make sure the packaging is correct?

Why aren't we factoring in workers downstream contributing to the success by being able to pivot and be malleable in the job making this possible in the first place?

Why is it so anathema to people that everyone can share in the profits? Its not like we're saying only pay CEOs 100K per year or something. 1:25 ratio pegged to the lowest paid worker use to be the norm, for decades, and CEOs were plenty happy with that too.

You cannot calculate stuff like this... you just can't.

If they earn so much more, should they pay contractors more too? Does your plumber ask how much do you earn before he fixes your toilet?

What about other supplies? Should they pay more for cocoa? For sugar? Do you pay more for bread in your local store than someone who earns minimal wage?

You do none of that... you try to get the lowest price when you're paying (even if the plumber has 8 kids to feed at home) and get as much as possible when you're the one getting paid. Same with workers.. you pay enough to have them stay and they do as little as work as possible to stay employed.

I agree that some workers should be paid more, and that's why they're striking and hopefully they'll succeed... but taking out a calculator and saying that someone made X more so someone else should get paid more too by the same ratio is stupid. In my country, there's a huge shortage of contractors (electricians, plumbers, painters, tile-layers etc.) and the good ones earn as much as doctors... and due to a shortage, large companies have problems getting eg. electricians (because contracting pays more and gives more freedom), so their pay is going up... does that mean that accountants pay should go up too? (there's no shortage of accountants)

>You cannot calculate stuff like this... you just can't.

Then why assign the cause of the increase to the CEO?

The owners brought in a new CEO, and your company earned 1 mio more due to his decisions. The owners could've chosen a cheaper CEO, or a more expensive one, if the ceo made the company earn 1mio more, they probably made a good choice. Starting a company is easy and cheap, and anyone can be a CEO... making million(s) per month is hard.

you're saying that you can't calculate how everyone in the company can share in the success of the company?

Literally used to be called profit sharing.

> If you're the CEO of a company and you increased profits by 92%

This assumes that the increase in profit is attributable primarily to the CEO. Well, that at least 43% (40/92) of it is.

> Just ask for what you think you deserve and don't work if you don't get it. It's as simple as that.

This only really works with unions. Fortunately, these workers have one.

> Just ask for what you think you deserve and don't work if you don't get it.

This is the most wildly privileged take possible on the issue.

I agree. Someone in the leadership tier can generally get by longer without desperately needing to work; their house is often paid off, they get dividends from shares, etc. Down in the blue collar ranks, many of those people are scrounging to stay on top of rent, or pay a mortgage, or getting hit by rising food costs. Many workers aren't in a position to change jobs on a whim.

It's probably a bit easier if you can collect unemployment for refusing to work, like I hear California is doing.

It's called a strike and it seems to be working. The key is that everybody does it at once.

> The key...

If that were true, the pay of every non-union employee would be minimum wage.

That does not follow in the slightest.

> This assumes that the increase in profit is attributable primarily to the CEO. Well, that at least 43% (40/92) of it is.

The CEO's didn't get 100 billion extra pay, they just got 40% more than before not 40% of all the profits.

CEO pay has gone up pretty much across the board, significantly outpacing workers for several decades, even at companies that have not done well.

> If you're the CEO of a company and you increased profits by 92%

YOU, the CEO, didn't single-handedly increase profits by even a single percentage point. One employee out of 1 million, take your millionth of a cut of the profits, that's still $150K.

the CEO has quite a bit more influence over the company financials than ICs do, however good they are.

Good leaders are able to make other people more profitable. If someone was able to make 500k people more profitable that is worth a lot.

There is a big difference between "CEO responsible for increasing profits" and "CEO while profits increased", and it's not at all clear that this is one or the other. (Although in fact, if all competitors in an industry all had their profits grow, I think that's actually likely excellent proof that the CEOs weren't responsible at all.)

> If you're the CEO of a company and you increased profits by 92%,

If it's a company of one than I agree. In any other scenario the CEO led the company to a 92% increase. The CEO didn't do this alone. They maybe managed that increase and had a part in it but others most likely did the vast majority of all the work.

Now, how do you feel if the CEO fired 50% of the workers and maybe the remaining work twice as much to make up the slack. This leads to a 92% increase in profits and the CEO deserves the vast rewards?

So ceo and boards increased profits by screwing workers out of pay and in return ceos got pay raises.

If a ceo grew front line employ pay and also profits at the same rate, the ceo pay should naturally follow that rate.

On the other hand, if they grow profits by suppressing wages, then they should eat the same pudding they served everyone else.

gross growth should be less important than relative growth.

From 2013 to 2023 GM was beat in innovation by both Tesla (Model s,X , Y, and 3) and Ford (aluminum f150 and electric f150, mustang mach e) and has only recently been producing vehicles that look like their 2030 lineup - on the competitor's charging network technologies.

GM was even particularly slow on ice adoption of things like independent rear suspension. Or, the Corvette - where they basically pulled a Nissan and bought the competitor's engine.

Slow to innovate, early to fail (Volt/bolt), purchase from the competition is not what we should define as a good CEO.

That's assuming that the CEO has anything to do with the growth in profits. Average US GDP looks to have grown by ~66% in the past decade. Do some spreadsheet shenanigans and it wouldn't take much to drastically outperform that number.

Who's to say that the various attempts to "chart a new course" and change business strategy for the shareholder's benefit during that time didn't actually make these corporations underperform vs locking the executives in the boardroom and cutting off all their decision making ability for the same time period?

To paint the above in starker terms:

Worker pay is set by the leadership, leadership pay is set by the leadership.

100% this. Leadership gets to decide how insanely hooked up they will be. Same as congress. Remember when they carved themselves out their own Health Insurance requirements? Same thing.

That hasn't been true for ~13 years now, Congress's healthcare comes from ACA exchanges.

While this is true, they do get 72% of the premiums paid for by the USG, as well as numerous perks like free onsite visits from OAP etc. Not unlike some large employers.

I remember I was reading a subreddit for actually rich people (/r/fatFIRE) and there was a thread about concierge doctors; everything about the service sounded worse than FAANG health benefits I've used. (Which does include an onsite doctor's office.)

Leadership is set by shareholders. There is still accountability.

Public unions seem more undesirable. There we have the gov negotiating with itself with no external accountability, unlike your example.

institutional ownership has entered the chat.

> Leadership is set by shareholders.

Funny thing, I own a vast number of stocks through various means, either directly or via ETFs, and yet never in my life have I had an opportunity to weigh in on the salaries of anyone in the companies I hold equity in.

> Public unions seem more undesirable. There we have the gov negotiating with itself with no external accountability, unlike your example.

The government is negotiating with unions, not itself. However, if we're going to take a crack at public sector unions, let's start with the police unions.

> Funny thing, I own a vast number of stocks through various means, either directly or via ETFs, and yet never in my life have I had an opportunity to weigh in on the salaries of anyone in the companies I hold equity in.

Because obviously what you call "vast" is actually a minuscule percentage of the company.

> and yet never in my life have I had an opportunity to weigh in on the salaries of anyone in the companies I hold equity in.

None of them do the "say-on-pay" thing where stockholders get to vote on whether they're happy with the pay packages for named officers?

>Funny thing, I own a vast number of stocks through various means, either directly or via ETFs, and yet never in my life have I had an opportunity to weigh in on the salaries of anyone in the companies I hold equity in.

Really? I get shareholder meeting notices for voting on compensation packages all the time. I admit that the chances of me personally shutting down the pay package of AIG's executive team is pretty much nil, but that's also because I personally own pretty much nil in terms of voting stock, and most people like me probably either don't vote at all, or vote with the board recommendations. Still, it's always within my power to try to start a shareholder movement on this front.

Technically that’s true but the holdings of these public mega firms tend to be in the hands of many small holders such as you or I, who it’s well understood are unlikely to cause a fuss for the reasons you mentioned.

Exactly. "shareholder activism" is called that because it is a considered an anomalous, bizarre state of affairs. Imagine the temerity of the people who own the shares of the company calling the shots! In reality, management has basically a completely free hand to do whatever they want so long as an incumbent board doesn't get its shit together and replace them (and even that is sometimes not enough).

This is also beside the main point, which is that management shares a class interest with shareholders, even if they aren't literally the same people at some particular point in time. Capital and management are obviously on the same side, and labor isn't part of the club.

I haven't actually kept track, but it wouldn't surprise me for my direct stock ownership I've voted on executives in at least 70% of them and executive pay packages on probably 20% of them. Mostly mid to large cap though.

Not that my votes "no" were ever successful in curbing the growth of executive pay. Hard to vote against the executives who probably own a decent chunk of the voting shares themselves.

Public union leadership is determined by a member vote. Union leadership represents the worker. The external accountability comes from you regardless if your elected official is dealing with a union or a private company

> Public union leadership is determined by a member vote.

Correct. But unlike private businesses, I can not vote by taking my business elsewhere.

> The external accountability comes from you... Sure. It does via voting. Fair point.

> regardless if your elected official is dealing with a union or a private company

These are two separate things. The gov only affects private companies by regulating. It cannot negotiate benefits with the union or the private company. It is the neutral third party.

With public unions, the gov is both sides of the discussion and the mediator. There is no unbiased party in the negotiation, and seemingly no incentive to vote out pro union officials. I cannot understand why.

This is a good listen as to the problem with public unions:

https://youtu.be/6PI_EldBehU

1. The gov doesn't haven't to turn a profit, so there is no alternative if prices are driven too high by union negotiations.

2. The union members get to vote on both sides of the table: both for their union wages and for the elected "neutral" party, that is obviously not so neutral.

> Leadership is set by shareholders.

This is completely untrue. The board of directors sets leadership pay, and often the BoD is appointed by leadership anyway so it's essentially leadership setting their own pay.

The board, elected by the shareholders, sets the compensation of executives.

Worker pay is set by supply & demand. After all, the pay has to be enough to attract workers.

> Use the same framework to explain CEO pay.

Sure. It's the same framework that explains the pay of Lebron James. The NBA became a massively popular global game during the era of fast growth globalization, in which billions of consumers entered into the active global economy.

Now you've got like 50 players earning $30m or more per year in the NBA. To play a game in just the US market.

~450 active players earning around $5 billion per year in just league salary (not counting endorsements).

Now do it for global football, NFL football, Nascar, Major League Baseball, Hockey, F1, and so on.

Who knows the insane total compensation figure. $30 billion?

The economic force producing that comically massive figure, is the exact same reason Tim Cook is worth every dollar he's getting paid to operate the juggernaut that is Apple. The same goes for Nadella at Microsoft.

The top 450 NBA players earn more in salary every year than the CEOs of the S&P 500. Why shouldn't a CEO get paid extraordinarily well, as well as an NBA all-star, for operating a $10 or $20 billion market cap corporation? Obviously they should.

The only time I see arguments against high CEO pay (speaking generally), it's from people that know absolutely nothing about what a CEO does or how exceptionally difficult it is to operate a very big company.

And should mediocre CEOs that fail or otherwise perform poorly get golden parachutes? No, of course not. Exceptional CEOs should get properly exceptional pay. They deserve to earn drastically more than the average worker.

The common Redditor railing against CEO pay, looks at a Tim Cook and thinks they can maybe do what Cook does (he just sits in his chair in a big office while other people do all the work, dur dur dur), or what Nadella does, or a random S&P 500 CEO does. In reality they can barely do their own basic job, much less one ten tiers above them. The average Redditor is further away from being able to do Tim Cook's job than they are being able to do the job of Lebron James. The issue is the average person doesn't know anything about what a CEO does at all, they're entirely ignorant of it. However they can watch Lebron James play basketball and immediately understand they can't do anything like what James can do, because they get the physical visual display immediately, meanwhile they know zip about the job of a CEO at a big company. As usual the issue is extreme ignorance and mediocre education.

> The only time I see arguments against high CEO pay (speaking generally), it's from people that know absolutely nothing about what a CEO does or how exceptionally difficult it is to operate a very big company.

The most common argument I see is that the ceo pay has increased relative to the common or average employee salary. I doubt being a ceo has become that much more difficult over the same time period though.

People are not paid based off difficulty.

I did not make the claim that it was. I was only responding to:

Which links ceo pay via complaints to "how exceptionally difficult" it is to do the job of a ceo. The implication is if people understood how hard the ceo job is that they would not complain about the pay. That implication does not make sense if there is no link between difficulty and pay.

> I doubt being a ceo has become that much more difficult over the same time period though.

So what? The fact that you think this is an argument and not a meaningless talking point further supports the idea that you cannot even comprehend what a CEO does.

The comment I am responding to implied a link between difficulty to pay. What I quoted does not make sense otherwise. If you take that implication to be true and the difficulty of being a ceo has not change in portion to the wage change, which is my claim, then there has to be some other mechanism at play.(this is similar to what I said in my other comment[1]).

The best response I can hope for to my comment is one that tries to explain the mechanism and whether or not it makes society more productive or not and maybe other associated costs if there are any.

[1] https://news.ycombinator.com/item?id=37565350

One big difference is with a NBA team there are only about 9 - 11 other primary contributors, maybe some coaches and back office staff. At any large company there are tens of thousands pulling the boat (pick your metaphor), however the rest have limited bargaining power (without a union). CEOs sit on the board and are good friends with board members and often return the favor on other boards and networks.

CEO wage negotiations have nothing in common with employee wage setting.

I can follow your logic for basketball players beause I know the players compete with each in grade school, middle school, high school etc.. until being recruited to play in the NBA.

Does this mean that I have been missing the CEO tournaments? surely they must compete with one another after all how else can you compare who is better without a direct face off?. It seems like the big companies always get the best CEOs so they must have scouts all over the place on the lookout for that great undiscovered CEO talent.

Or could it be that big companies always produce "great" CEO because its a lot harder to fail and a lot easier to win when you are stearing the biggest ships.

CEO opportunities, especially the first, are very network heavy or "right place right time" heavy. Try contacting some headhunters. They may have leads.

> And should mediocre CEOs that fail or otherwise perform poorly get golden parachutes? No, of course not.

Oh but they do! That’s the rub. Also it’s very hand wavy to say “the CEO’s job is exceptionally difficult”. But that person has a whole bunch of people bringing him ideas and trying to improve the company. In fact, that’s how you even get promoted. So they pick a bunch of things to do. If it doesn’t go well and the stock tanks, the first person to leave are the workers and not the CEO. In fact, in almost every case the CEO is the last to get affected. Win or lose for the company, the CEOs only win.

Lebron James is not the CEO of his team. In your analogy, he's a worker not a CEO. He was the vice president of the player's union.

The NBA compensates workers based on the value they bring to the team. Isn't that what the UAW is arguing for?

Sure, but the problem is that the UAW is likely wrong. Their work, relative to its substitutes is of lower value to the company on the margin. It is also why the NBA doesn't compensate, say the concessions workers millions, they can more easily be replaced. Likewise, the team's medical staff is payed much better both due to the alternatives they could find outside of the sport, and due to the relative difficulty in finding talent.

The UAW has skilled workers, and they are compensated well in general. Perhaps they should earn, more or less, I'm not sure. But the relative value is exactly the point.

>And should mediocre CEOs that fail or otherwise perform poorly get golden parachutes? No, of course not

So start there instead of making it seem like your few specific examples speak for the entire population of CEOs. Talk about the CEOs who fumbled completely during COVID despite having a great position, demanded benefits despite their huge reserves and are now crying about having to pay it back while their profits are up.

Talk about the CEOs dumping their toxic waste straight into the rivers to avoid having to pay costs. And the CEOs who push for every trick in the book to pay a close to zero net tax. And the ones who will lobby and keep almost any potential upstart from ever becoming a threat. And those who have solidified themselves in their branch thanks to first mover advantage, and can do whatever they want and still succeed despite our 'competitive free market' (yeah right).

>They deserve to earn drastically more than the average worker.

They already did in absolute terms. Percentages compound. How about explaining why CEOs need an even bigger advantage in both absolute and relative terms than they had before? Did the workers not contribute to their success?

And why are the workers the first to feel the headwind whereas the CEOs are the first to feel the tailwind?

> The top 450 NBA players...

The top 450? There's only 450 players. 30 teams, 15 players on the roster.

> earn more in salary every year than the CEOs of the S&P 500.

No, they don't.

There are 30 teams, with a salary cap of $136M, i.e. $4.08B.

I'm looking at the top CEO salaries and I'm already at $2.6B and I'm only at number 20.

> I'm looking at the top CEO salaries and I'm already at $2.6B and I'm only at number 20.

I appreciate how many of you immediately jump to make such egregiously bad displays of business logic in response to someone asserting that you cannot even comprehend the job of a top CEO.

Acting like receiving some of your compensation in immediately exercisable stock grants being not technically a salary is a distinction that matters to none but the IRS.

Yet somehow, bundling in endorsements and book deals and other extracurriculars when referring to NBA player salaries? Totally reasonable, apparently.

"Steve Jobs only took a $1 salary from Apple!"

The CEO's of the banks that went bankrupt in 2008 carried on "earning" 10´s of millions of dollars for years after they were bailed out by the government.

Is that performance related pay?

Or is it Crony Capitalism?

Because the number 1 quality that you want in a CEO is that he has experience being CEO, and there aren't that many openings for you to get in on it, and the ones that are are given to people who's been CEO before.

Obviously.

No, the number 1 quality I, as a board member, want in a CEO is that he will vote me a massive pay package when I take my turn.

> As many argue, wages are only set by supply and demand.

Most of the time that I see people invoke "Econ 101" concepts, they are wrong. Supply and demand does not account for the power imbalance between workers and leadership, which unions specifically attempt to address. It does not account for the class differences between workers trying to make ends meet and the board of directors who believe they deserve much higher pay than workers. We are free to change the perceived value of workers through the power of worker solidarity - ensuring that individual workers are not so easily replaced to keep wages suppressed. You can simply say "it's supply and demand" and do nothing to support the workers whose labor is so clearly needed for our economy to function, or we can support collective bargaining rights to make sure that individual workers are not crushed under the power of company leadership. How you view this is up to you, and not a simple fact of natural laws of economics.

> Supply and demand does not account for ...

Yes, it does, in each scenario you presented.

> We are free to change the perceived value of workers through the power of worker solidarity

It's more like using the power of government to ensure the company has no alternative to the union.

Company leaders have no actual power over the workers. They cannot force anyone to come to work. They cannot have you arrested. They cannot confiscate your property. They cannot beat you. They cannot prevent you from accepting a job at another company. They cannot prevent you from leaving. They cannot extort, libel, slander, blackmail, or threaten you. They cannot put a hit on you.

All they can do is offer you money in exchange for your labor. That's it.

> They cannot prevent you from accepting a job at another company.

They can totally do that with a non-compete clause. Just not in California.

I'm pretty sure that there is no US state where a company can "prevent you from accepting a job at another company."

In some states, and in some circumstances, they may be able to prevent you from accepting a job at a competitive company.

Clearly a competitive company counts as "another company".

Yes - but not every other company - so they have not prevented you from working at another company...

This seems like a bad faith reading of the english sentence here. The phrase "every other company" was not used. Obviously they can depress the value of worker's wages as a whole if they can prevent you from working at the competition - because a worker with a specific skill set will be best utilized at companies which are in the same field, and so generally in competition with one another.

Not within the context of the long list of things that the OP listed companies can't do...

Most people with skills are only really capable of working at competing companies.

Really?? I've lived and worked in Massachusetts and Washington, both states with very strong support for non-competes, prior to living in California, and, as a skilled worker (bachelors and masters degrees in computer science, mba, many years experience in tech) I've not had trouble working in many companies that don't compete with each other. And even in companies that do, as long as I wasn't working in directly competitive parts. And I've had collectively hundreds of thousands of colleagues who've also created careers across companies.

I mean, I'm in California so my employer can't prevent me from taking a competing job, but the contract does cover starting a business in your free time and they definitely seem to think doing anything on a computer competes with them.

Which means they can prevent you from utilizing the skills you have, forcing you to start from the bottom. How is this not an extremely lopsided power akin to preventing you from working? In general people will keep quiet to keep making the same money to support their family, etc

Having control of money is power. A kind of power that everyone needs, and many workers (who are typically poorer than company leaders) don’t have secure access to.

Having skills someone with money needs is power, too.

> It's more like using the power of government to ensure the company has no alternative to the union.

Unions absolutely do not need the government to exist. It is only through government attempts to control and curtail unions that the government has involved itself in unions. See for example the Taft-Hartley act:

https://en.wikipedia.org/wiki/Taft%E2%80%93Hartley_Act

> Unions absolutely do not need the government to exist.

That's absolutely correct. But in America, the unions use the government to tilt the balance heavily in their favor.

What makes you say that? The Taft Hartley act I linked to significantly weakened union power in this country. In other countries like Germany unions have much more power and representation.

Unions help politicians get elected. Said politicians repay the favor.

My econ 101 talked about the difference between commodity and illiquid markets which explains the difference between worker and CEO pay. The CEOs are coming from a restricted group of insiders and can't be replaced because of their relationships which make them unique. Workers in the sectors most often unionized have few distinguishing characteristics from the perspective of the company and are thrown around by the same laws as the price of corn. The black death is a well-documented example of a restriction in the labor supply raising the price of labor and improving the wellbeing of laborers. There is no indication anywhere that supply and demand is wrong about the job market.

This is so obviously the right answer, I can’t believe its not upvoted more. To be clear, I stand with the union on the principal of their argument. However, the principals of economics itself, much like gravity, do not care about the nobility of your cause.

It seems to me that what the union is asking for is that the corporation act more like a benevolent force than one that is restricted by market pressures. Of course, you could use the power of government as one poster mentioned to force this issue, but those violent delights have violent ends.

"but those violent delights have violent ends." You talk as though the US isn't steeped in regulation. All modern capitalist nations are. Without regulation, you get absurd instabilities as we saw until the New Deal.

If someone's selling you a simple explanation, they're likely wrong.

> It seems to me that what the union is asking for is that the corporation act more like a benevolent force than one that is restricted by market pressures.

I disagree. The union is simply changing the market pressures that the corporation experiences. There is no benevolence required when you are faced with a strike. You either negotiate acceptable terms, or you have to deal with the consequences.

You've got it backwards. The principals of economics accurately describe a shitty situation created by corporations. They do not determine how the corporations must act; economics models exchanges of wealth. When the corporations control the wealth they simply model what the corporations are doing.

From a purely laissez-faire perspective, so long as the union does not call for government interference -- and there is no indication in the article that they have done so -- their strike action (or threat of such) is merely a way to influence the supply side in the question of supply and demand.

Do you feel this to be illegitimate? If so, why?

> The CEOs are coming from a restricted group of insiders and can't be replaced because of their relationships which make them unique.

Wouldn’t that be simply favouritism/cronyism rather than a free market?

Favoritism, cronyism or more like it would actually be described by the people who do it, a preference for trusted associates you've worked with in the past over strangers to run your stuff for you isn't a violation of your "market freedom" but rather an expression of a set of preferences that make all your choices incommensurable. P.S. it is not in the interest of investors for one employee to make way more money than normal it's just that nobody knows how to avoid it when that employee is the center of decision-making. The kids of yesterday's owner-operators have an entirely different set of preferences from their parents due to being real, "classical" capitalists... Which makes the focus on CEOs kind of ironic! Technically they're workers who escaped the cruelty of a liquid market.

Employees at the bottom of the pyramid can make bullshit excuses too, but it is a privilege of the upper layers to have no one in a position to call them out.

> it is not in the interest of investors for one employee to make way more money than normal it's just that nobody knows how to avoid it when that employee is the center of decision-making

See "A Principled Approach to Executive Pay", Chapter 1.F in The Essays of Warren Buffet, arranged by Cunningham.

The issue I take with your line of reasoning is that executive compensation is often at odds with investor interests in more ways than just its amount. Buffet describes "heads I win, tails you lose" executive compensation plans in an essay from the 80s/90s. He describes how they do things at Berkshire Hathaway - they're doing very well and I doubt have any issue recruiting good executives.

Despite this, and decades later, we see terrible compensation plans being approved by boards. We see executives exiting failed businesses with enormous paychecks. We see boards offering those same executives new management positions with terrible (for investors) compensation plans. What gives?

It certainly looks like cronyism to me, but maybe I ought to be applying Hanlon's Razor.

Cronyism isn't an exception to microeconomics, it's a lesser-known example of a consumer preference. In this case the board has a... preference... for cronies. :-)

Yes, I believe that is exactly the point: the invocation of econ 101 as explaining away all the iniquities of life as "simply how the world works" is simply a veneer of objectivity over what is just cronyism and imbalances of power and oppirtunity.

Yeah it’s like trying to apply supply and demand to politican’s wages. Company directors and executives set their own wages using others’ money. It’s obviously not a market.

Or for this audience, the tech industry, where in-demand skills are often bid up in the form of higher salaries.

> There is no indication anywhere that supply and demand is wrong about the job market.

If supply and demand worked as theorized in the labor market then there would necessarily be a loss of employment when the minimum wage is raised, but that is not always the case [1].

Some studies find effects and some don't, which is a good indication that the labor market is more complicated than Econ 101 principles.

[1]https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies

I think that's called an "inflexible demand curve," and is part of the complete theory. I do remember drawing flat lines in econ 101. :)

You are looking at it a different way, but the conclusion should be the same. You are saying there is more demand for specific CEOs because they are the ones who control the industry (this is actually why they "can't be replaced"); yes, of course, they value themselves highly. They already have control of all of the money that can be used for hiring and therefore determine what is desirable even when it is not valuable. This makes the situation that much worse because: 1. Supply and demand can be used to model it and 2. It doesn't do anything helpful to resolve the very real problems that exist.

Demand isn't the same thing as value. When we create an economy where a few people have all of the disposable income then we also create one where the only business interests represented are theirs. We should let value dictate demand, which only happens when we spread the money around.

> There is no indication anywhere that supply and demand is wrong about the job market.

It's not that supply and demand is wrong. It's that supply and demand is not the whole story. It is an open question whether workers should change the market forces at play by unionizing and demanding collective bargaining of their wages. This does not subvert supply and demand, it simply alters the pressures the company leadership experiences in the market. I said that the original comment was "wrong" because the comment stated clearly that "wages are only set by supply and demand". This seemed to me to imply that nothing could be done about low worker wages, which is clearly wrong. What workers can do, and apparently in this situation have done, is unionize and strike for better wages.

Exactly this. The "law of supply and demand" is like the ideal gas law: it is a useful model, but it has certain key assumptions. And just as the ideal gas law breaks down in extreme conditions, supply and demand does not hold without certain invariants.

The farther actors are from perfect information, the more asymmetry in the system there is, the slower the system is to react, the more the relationship between supply and demand breaks down.

> Supply and demand does not account for the power imbalance between workers and leadership, which unions specifically attempt to address.

You’re both right. Power dynamics and supply and demand are interrelated.

Most forms of human organization involve hierarchy. Even co-ops have a CEO and that CEO makes a multiple of base worker pay.

What that multiple is and how it gets decided is a fair question: in co-ops, voting rights are built-in, but for private corporations you need collective bargaining

> Most of the time that I see people invoke "Econ 101" concepts, they are wrong.

It's not that they're wrong. Worse, they're thought-stopping.

They're mantras we all know and we are trained to "accept their wisdom" and stop questioning.

I have bad news for you. Those workers who demand 40% wage increases and 32 hour work weeks will be "easily replaced" by auto factories in the South who have right to work laws.

This is why global worker solidarity is so important.

Interesting. What's that if I may ask?

It’s also unrealistic. Different workers in different nations have different cultures and compete with each other for a scarce supply of buyers.

> Different workers in different nations have different cultures and compete with each other for a scarce supply of buyers.

This is a description of the status quo of capitalist competition, but is not a fact of nature. We can arrange our economies to work in cooperation with one another, rather than in competition. Competition is used specifically to depress all worker wages for the benefit of the ownership class, and we do not have to accept that at face value.

Why would workers in the global south feel any solidarity towards workers in the wealthiest country on earth who earn global top 5% wages?

well, the unions pushed for wage requirements in the auto industry within the USMCA (NAFTA2) and required Mexico to (effective) legalize unions alongside lots of other rights enshrining measures. So Mexican workers benefited greatly from the work of these unions.

Other than the 10 million+ of Mexican farmers impacted.

> Supply and demand does not account for the power imbalance between workers and leadership

Supply and demand is the imbalance. The workers, individually have no control over supply. The whole point of a union is to control the supply of labour and shift the balance of power.

More like the CEO pay is a cushy symbiotic relationship with the board, which sets their pay. This is not a line worker job when there's competition.

What we choose to value as society is entirely subjective. While supply and demand influence the change in the mid point of the bid/ask spread - it doesn’t set the absolute clearing price.

Stellantis has 270,000+ employees across 16 brands. I'm not saying their CEO does or doesn't deserve $20m in compensation but at some point you're going to run into a problem where... nobody wants to do that job for $1m/yr and they wouldn't be qualified or very good at it.

> nobody wants to do that job for $1m/yr

I invite everyone here to raise their hand if they're just as hard-pressed as me to think of any job that they wouldn't do for a million per year.

Nobody who is qualified to do it... I've worked with executives at that level, and let's face it-- most of us don't have the single-minded devotion to do it, nor the experience to manage thousands of people.

I do not understand people that believe all executive are useless and do nothing.

Can you blame anyone? For decades, average workers have faced layoffs, shrinking wages, stagnant career growth and numerous other downsides. For instance, Wells Fargo has gone through multiple layoffs and downsizing over the last 2 decades, and yet their CEOs have all gotten golden parachutes, never once facing the negative affects of their own decision making. There's so many examples of this it hardly makes front page news anymore.

Between the failures of Kodak and RIM/Blackberry, and with hindsight being able to see how those falls could have been avoided, I've come to see the job in new light.

I mean, to be fair, no executive is managing thousands of people. Maybe leading thousands of people, but there's a real physical limit to how many people you can directly manage.

That was my first thought at "270,000+ employees across 16 brands". They're not handling those people. They're paying multiple tiers below them to deal with those people. They'd be thinking of brands as units, and staff below them think of teams within those brands as units, and so on.

> nor the experience to manage thousands of people.

No-one is managing thousands of people.

You might have ~10 direct reports as CEO (common incident command theory says that number should be between 3 and 7, optimal around 5, because after that, you start to lose connectivity between what each report is doing).

I wouldn't take that CEO position. Seriously. I would make a terrible manager, let alone a CEO of a massive company responsible for the livelihoods of thousands of people. I might be able to keep something floating for a year, if I leaned heavily enough on other experienced people around me, and even then only if I could trust them. I've been places where the people just under the top layers were royally screwing things up and the top layers weren't competent enough to see it.

Do I wish I could make that sort of money and run a world changing company? Sure do. But I'm self aware enough to know how badly that would likely go for both me and the people I'd be responsible to.

Maybe if a company gets so big that finding people to manage it becomes disproportionately expensive, it's time to break it up.

As long as we do the same to the gov.

Why is that in anyone’s best interest?

Because it's unable to allocate resources efficiently. Breaking it up may be more rewarding for sahreholders over the longer term.

That would be even more expensive with every company needing its own C suite

True, although if you're getting above $1M/year as a CEO, it's not because "the job is really hard." In fact, the bigger the company, the more layers of management to keep you from any real work.

Instead, the board has approved that compensation based on very real business needs: growing the company, acquiring competitors, changing business models, etc. It's actually hard to find a leader who has experience doing that thing and is also the right fit. Hiring the wrong CEO is a quick way to kill the whole company. On the flip side, to the board, a CEO that can drive meaningful growth is worth the risk, even if they have to fire with a golden parachute two years later.

I'm not trying to justify pay disparity (in fact I think there should be minimum AND maximum FT salaries when currently there are neither), but that's what's going through the board's mind when they set CEO compensation.

But apparently people will do it for $2 - $5 million. In the most recent fiscal years, Stellantis’ revenue was about double Honda’s.

https://www.motorbiscuit.com/how-much-money-does-ceo-of-hond...

Are you being rhetorical, or are you actually positing that CEO pay is driven purely by supply and demand?

> Why has the supply of CEOs not kept up with the demand for them?

Why would it?

Because the pool for a CEO hire is much smaller, than "people with MBAs" as has been floated in thread elsewhere.

If you want to hire a CEO, you either usually are looking either at A) A CEO of another company with experiences relevant the current situation, at a size similar to the current company's size. Or B) A senior exec (CFO, COO, etc ...) at the same company, or more rarely an involved board member.

These are self-limiting pools.

So why would it?

CEOs are an illiquid market, and demand for CEOs is pretty inelastic (companies need but one CEO after all). It's not a market which can reach price equilibrium.

If you expand your horizon somewhat to C-suite in general, it seems that demand for C-suite has tended to increase over time. If you also consider that C-suite is to some degree a Veblen good (demand increases as price goes up) [1], that makes sense under economic laws. Worker pay, unlike executive pay, is going to be considered a significant cost center, and business will higher fewer workers if individual pay is growing too quickly, making worker pay act like regular goods and not Veblen goods.

[1] The framework for setting CEO salaries tends to be "take the median CEO pay, add a little extra because our CEO's clearly better than average..."

... thus increasing the median CEO pay. Rinse and repeat and that explains a lot.

CEO pay is adjusted based on another CEOs in the market. Since every board members has already markup their CEO pays higher and then higher, the increases are what you see today for CEO pay. Not every CEO skills at Steve/Tim/Jensen but they all delude themselves by paying high, hoping they will eventually get Elon-quality CEO into their company and make their stock the next Tesla-NVIDIA-Netflix. Most of the time, they get Stephen Elop type of CEO, unconsciously destroying company in the name of strategic stakeholder value maximization (MBA lingo). Now what about workers? The good one will just hop away. They then will tell everyone "no one is replaceable" and then go on to mis-hire even more incompetent or noob staff in. Or they will outsource it just like Dell and others during Bush Jr time.

What they need to do is to publicly disclose the performance of their CEO. Have CEOs rated by staff and publicly distribute this info worldwide. They also need to implement clawback dating as far as a decade depending whatever products they in charge during their tenure. And lastly, always put full jail offenses directly on CEO without any plea bargain. Not doable? Then workers need to get retrenched as they rightly deserve it when they didnt bother to hop away.

There are two determinants of your pay. One is supply and demand, and the other is how much could your potential replacement screw things up. For most workers the supply/demand is the only part that matters because if you are a line worker, you don't really have the potential to do much damage if you screw up. So if Ford needs to replace a competent line worker, their potential bad replacement won't be able to cost the company much even in the worst case, so this does not grant the worker any leverage.

CEOs are much different. A bad CEO can cost a large company 10s of billions in stock valuation. If you have a decent CEO, and you fire and replace him with a poor replacement, the damage to the company will be tremendous, so the board won't want to risk it. This gives good CEOs the leverage to demand massive compensation. A CEO can basically hold the company hostage by saying "I want a $10 million raise this year, and if I don't get it I'll quit. Have fun rolling the dice with my replacement!" (Though they would never actually say it that way) And the company will basically have to choose to pay an extra $10 million or roll the dice on potentially losing billions. This is why they almost always pay CEOs a massive amount.

It's actually hard to find people who will reliably break unions, and generally do whatever it takes to de-prioritize line workers and eliminate "cost centers" - while also showing pure allegiance to the board without defecting.

That's the entire process of creating the professional corporate managerial class - you have reliably shown that you care more about the financial success of the company, and yourself, than you care for your employees and coworkers.

I mean how many movies and characters have we made that are precisely calling out this exact behavior:

Gordon Gekko

Bill Lumburgh

Mr "Coffee is for closers" Blake

Richard Chesler (Fight Club boss)

etc...

Like...we've been roasting this precise kind of corporate myopic psychopathic forever as what precisely not to be yet it's like an entire generation used them as pathfinders

The fact that terrible CEOs obviously exist is what drives up the prices for the ones that are not obviously terrible. It is an extremely high leverage role (see also: Microsoft).

What separates the good CEOs from the poor CEOs isn't something you can readily teach. Some of the best ones have a preternatural ability for the role in the same sense that Lionel Messi has a preternatural ability at his sport, and are equally rare. The majority of CEOs are journeymen with the skills to do the job but not to be great at it. This doesn't mean that average employees are fit to be CEOs; you don't have to look further than startup CEOs, which are pulled from an above average pool of semi-random people, to discredit that notion. It is a highly specialized skill set that is difficult to acquire and most people aren't mentally cut out for what is required to be good at it. The experiment of promoting rando employees to CEO has been tried on occasion across industry with almost universally poor results.

This is true of most professions that command a high wage. Thinking that anyone could be a CEO is like thinking any dev can be Fabrice Bellard. Even if that turned out to be the case in a specific instance, no one should expect it to generalize.

During the same time, the US automakers worldwide market share shrunk from 30% to about 10%.

That's almost a x100 increase.

If you ignore Pelé, the top soccer player had a similar increase in the same period. https://www.expensivity.com/soccer-salary-inflation/ Compared with the median income, they went from 10x in 1979 to 1300x in 2020. Why has the supply of Messis not kept up with the demand for them?

Thanks, I think this is the best answer and really gets at what is going on.

"Star" pay has exploded across all industries (entertainment, sports, and yes, business) and it's not hard to see why. Technology has vastly grown the size of markets, and the "winner take all/most" dynamics of these star-driven occupations means the winners are able to take an outsize chunk of the revenue.

I think there are some other things going on with CEO pay (CEO salaries are basically set by other CEOs, for example), but the parent comment absolutely gets it wrong when they say "the supply of potential CEOs has increased". In the competitive market for CEOs (as well as actors, musicians, sports stars, etc.), people are not interchangeable commodities. Someone who is only slightly better can be responsible for their corporation completely "winning" in some industry, and thus companies are willing to pay top dollar for this chance at getting the brass ring.

> From 1978 to 2021, CEO pay grew by 1,460%, adjusted for inflation, versus just 18.1% for the typical worker.

We should remember that CEO pay is often equity linked, and thus can vary. Not sure if workers want large portions of pay equity linked. I remember I was once in discussion with a hedge fund for a job and they offerred a sliding scale of pay that was cash vs equity. The more equity I opted for, the greater the pay, since of course there was risk involved.

Because the board and the investors don't want just any MBA to be their CEO: they want a person with a record of success in leading organizations (or at least collaborating closely with such a leader).

"Obviously, CEOs should be the highest-paid person in an enterprise"

Hold on there chap! How is this obvious?

They have the highest accountability.

But do they do the most for the company, though? What about those who actually invent their products in R&D, or any of that?

I've yet to come across a company that pays the highest output individuals the most. That's not how capitalism works.

Not really true. They have the most people beneath them that can take the fall for them. Finance shenanigans? CFO takes the fall. Missed targets? COO or CMO. Major hack? CTO. Etc.

These people with the highest accountability do not hesitate to blame lowly software engineers when it suits them.

https://www.theverge.com/2015/10/8/9481651/volkswagen-congre...

But isn't compensation proportional to the cost of replacing someone?

I can imagine a bunch of roles that are more costly to replace than "someone with accountability".

Do they? They will frequently tank a company and then golden parachute into retirement. This happens all the time.

they are at the top of the hierarchy and the top dog eats first

Not so. The board sits above the CEO.

For a fun thought experiment:

If the CEO go on strike and don't come to work for a month, how many cars will not be built, and how money will the company lose?

If the union factory workers go on strike and don't come to work for a month, how many cars will not be built, and how much money will the company lose?

Therefore, who is actually more important to the earnings and success of the company?

That's not an interesting thought experiment at all. The workers in aggregate are clearly more valuable than the CEO alone. That's why their cumulative salary is way higher than the CEO's.

But why did the CEO's salary increase more than the workers?

To keep the equation in check, surely they need to increase at the same rate

Why? No individual assembly line worker has any particular value - so if the aggregate increases then the equation, in your example, is “in check”, whatever that means.

Alternatively, if assembly workers were difficult to effectively replace, they would get paid more. Simply doing some unit of work neither makes that unit of work valuable, nor does it make the person doing it valuable.

> nor does it make the person doing it valuable

That is a very sad way to look at human life, and I hope these strikes now and into the future prove that not to be true.

They obviously mean "valuable" in terms of value to the company, not literal value as a human being.

In any case, yes, if someone wants to smash rocks with a hammer, manually, all day, their work would not be valuable to a company building cars, which is what the parent means. Simply doing some sort of "work" for work's sake has no value if that work is not useful.

I’d argue that no individual CEO has any particular value, or at least no more than an exceptional worker. What they have done instead is effectively organize as a class (Capital owners) to make companies profits accrue to themselves. This is why they also all serve in the boards of each other’s companies.

> But why did the CEO's salary increase more than the workers?

Has it? Sources indicate that the CEO of Ford's salary has remained quite steady at $1.7 million.

Perhaps you are confusing salary with total compensation?

I'm not interested in arguing semantics.

The CEO gets paid millions of dollars.

The original discussion was about relative change to salary, of which there has been little to no change seen amongst the CEOs in question. How much the salary is in absolute figures really means nothing with respect to discussion.

Now, total compensation is quite variable as it is largely dependent on stock price. While a good CEO theoretically can compel the price of stock higher by building a better business, realistically it is outside of control of the company.

Hit the nail on the head. A more appropriate comparison would be if one worker went on strike, not all of them.

Quick estimation tells me that average ratio amongst the big three is 1:336[0].

Put differently: 336 workers’ per annum amounts to the pay the CEO gets. There are three CEOs in this case so that’s about 1,000 workers to equal their pay.

If I recall correctly there are about 12,000 workers striking, so their cumulative salary is about 12x that of the cumulative CEOs.

I don’t know why, but that doesn’t feel “way higher” to me. I guess I just expected something along the lines of 100x for some reason.

Also makes me wonder how this scales when you look at C-Suite as a whole v. workers.

0: https://fortune.com/2023/09/17/uaw-strike-highlights-carmake...

That's just the nature of the work though. If the CEO of a film camera business decided that digital cameras weren't going to be a thing, and refuses to pivot, that'll doom the company, but it'll take decades to realize his mistake. The company will lose all its money all the same. If the CEO of the car company decides not to build any factories to make electric vehicles, that decision's also going to take years to play out. They're both important, in different ways.

Permanently losing one line worker vs one CEO? You don't have to be a disciple of Ayn Rand to think the latter would have a greater negative impact on productivity.

Depends on what executive actions only the CEO can perform. I've seen this happen in a microcosm, where the managing director just refused to do things, and due to tasks only he had authority to do, contracts went unsigned.

Obviously large corporation will be more robust, and have things like attorney of power that - so that there's no single point of failure. But, these things happen.

It's obviously wrong. NBA teams are a good counter-example. Nobody talks about the team's president/CEO/etc when prognosticating which team will be the best.

Do NBA CEOs get paid less than the highest paid players? I would expect them to get paid more.

> At least 44 NBA players are set to earn more than $30 million in salary for the 2023-24 season, according to ESPN, while only 36 S&P 500 CEOs earned more than $30 million in 2022, according to the AFL-CIO’s Executive Paywatch.

Looks like only one NBA GMs is paid over $10M.

It's not even close.

I think this may be slightly misleading because the owners of the team serve in many ways that a CEO does in a traditional company. And owners make literally billions off their teams.

After unionizing, players get half of profits while owners get the other half.

I would have thought the owner would be the highest paid person in an enterprise.

So much for that whole capitalism thing.

There is an equation with an equilibrium:

CEO's pay rate = (some multiplier) * median salaried worker's pay rate

CEO's pay rate = (some multiplier) * minimum salaried worker's pay rate

We've been conditioned to think it's not fair somehow, but the discrepancy is just....engorgingly terrible. I'm not arguing for how this metric would be enforced, only that it would be a good one to have. Especially in a time when greed is the lowest common denominator in the race to the bottom for some of these large corporations.

It wouldn't fix the stockholder "value" chase, but at least it would shore up one part of the system weak to corruption.

It's also been suggested that Congressional salaries be a fixed multiple of minimum wage, and for similar reasons.

Honestly I think that would probably fix things a lot faster.

Congress already makes more money from cutting deals with their power & influence than they do from their salary...

Yes that should be illegal too.

If you underpay elected officials then 1. they just start taking bribes 2. only rich people will run in the election.

This is why Singapore pays them even more than we do.

Anyway, minimum wages (despite being ok policies) aren't what people are actually paid, and of course aren't especially what non-working people are paid. And remember that non-working people, namely children and the elderly, are poorer than workers.

THEY ALREADY DO

Nobody said the multiple has to be 5. It could be whatever the current ratio for Singapore is.

I am always suprised at how people think that elected official then have to get bribes in order to survive like its a doctor prescription, and how it seems that when they do we can’t do anything about it ffs

Just look at most countries around the world.

Corrupt elected officials is more of the norm, than the anomaly world-wide.

They mostly don't, people just like being cynical.

Though, legislators don't have individual power to take action to be worth giving specific bribes to; what may happen is that if someone is friendly to your business, you want to keep them motivated to keep re-running for Congress and do the awful annoying job of being a legislator, when they could instead quit and go back to industry or retire on the beach or whatever.

It's like selling your data to ad tech companies. They'll do it no matter how much you pay for the product.

They don't, but the important point is:

> 2. only rich people will run in the election.

Which is not true unless you think AOC is rich. It's not unheard of that congresspeople sleep in their office i.e. are homeless because DC rent is high.

https://www.npr.org/2022/12/09/1141635119/the-first-gen-z-me...

> congresspeople sleep in their office i.e. are homeless because DC rent is high

any source for this? your link just mentions a representative who has bad credit, it never claims he is homeless.

It's in the second half of the article.

> Dozens of members of Congress have even turned their Capitol Hill offices into their makeshift apartments.

https://nypost.com/2018/05/01/these-politicians-are-sleeping...

Of course, sometimes they're just weird and like it. Mitt Romney lives in a small apartment and only watches TV for fun and he's a multimillionaire.

America's GDP allocated per congressperson is like $50 billion each.

Salaries wont fix bribes for someone with that much to command and even the already rich can make a lot of money getting into politics. Their salary means nothing to them.

GDP per Congressman is a new statistic

You need to pay congressmen enough money so they can have upper middle class lifestyle - without that pressure to take bribes is dramatically higher. You have nice 5bdrm house in good school district and enough money for nice vacation + savings? Refusing bribes is easy - you are comfortable. Kids are taken care of. Wife does not have to work. This lifestyle requires 300-600k in DC.

You live in shitty 2bdrm apartment with wife and two kids in poor school district? With no savings and vacation? Your life is hell and you are that much more likely to take bribes.

It’s all about incentives.

Is there an actual source for this logic? Not a huge fan of arguments-via-intuition.

What happens when they want more? That upper middle class salary won’t be enough anymore and they’ll seek bribes.

We should have about 1000 representatives by now but I think they just didn’t want to retrofit congressional buildings to do it. Of course that would still be 20 billion per congresscritter.

But GDP is a bit misleading. A lot of it is financial services lately. It’s not real goods or services.

That literally is already what's happening. Bribing officials through lobbying is legal, and only rich people can afford to take on the instability of an election run.

And idk where you got the idea that people don't make minimum wage. They absolutely do. Go look at a job board.

> suggested that Congressional salaries be a fixed multiple of minimum wage

That's insane no matter how you look at it.

Minimum wage is paid by individuals, private businesses and their owners. Congressional pay is paid for with your money - an effective infinite of your money, or they'll just poof new money out of nowhere to continue to pay themselves.

Correlating the two is plain wrong.

Why do you think it matters where the money comes from?

Congress is responsible for raising the minimum wage. That’s the connection.

People in congress are millionaires, and it's not from congressional salaries. It's due to it being somehow legal for them to insider trade, and bribes in other guises.

100% agree.

Serving in public choice should for duty, not a career.

Make a fixed salary. If you dont like it, get a job elsewhere just like everyone else.

And oh, you wont get qualified candidates - nonsense. We had a movie actor, a silver spoon heir, a community organizer, a real estate broker and a lifelong politician as presidents.

There's nothing in technical expertise that they have in common. They were just good orators with some charistma and a penchant to lie with a smile...on their face.

Oh, you are worried of a bribe? Good thing we have FEC disclosure forms etc. Make them audited every year. Have more bite. Increase sentences. Put bounties on whistleblowing. Then sit back and relax

IMO an equation like that would be fine as long as you made it possible for CEOs of larger companies to make more money than CEOs of small and medium sized companies.

There’s a job market for C-Suite employees (whether we care to admit it or not). At a certain point you won’t get qualified candidates if you can’t reward them enough, same as engineers or any other role.

The answer for how much CEOs should be paid is the amount of money you would need to pay to employ the most optimal person to run the company. Figuring out what that number is is difficult.

Well that's simple, larger companies that want to pay their CEO more can pay their lowest paid employees more.

That's moronic. A good CEO at a fortune 500 company could have a $100M revenue impact. That same CEO could never be worth $100M to a local restaurant. The idea that the bigger company can't offer more to attract a better CEO just because both businesses employ janitors that make market rate is mind-numbingly stupid.

I thought janitoring was all contracted out these days.

But the fortune 500 company can offer more for its CEO. It just has to pay its janitor more. Which it totally can, being a fortune 500 company.

If they can afford to pay the CEO 100M they can afford to pay above market rate to the janitors, no?

Do you have arguments or are you just going to call someone a “doo-doo head”?

Business's exist to make money, not give it away.

Fascinating.

So why are we entertaining 100M salaries? That sounds like giving away money.

The board of directors believes the CEO adds more shareholder value than they cost.

That's so fascinating.

The janitors don't?

They certainly dont add $100 million of value. Probably add at least as much as they're paid but that's not saying much

How do you come to that conclusion?

The cleanliness of an office space is a gigantic force multiplier for productivity. I wouldn't be surprised if janitors had a bigger impact.

value is about opportunity cost. If anyone off the street could replace you your value is the lowest amount a competent person would demand on the market.

Do you really think anyone off the street could be a top-performing janitor?

I guarantee you California will find a way to legislate this view into existence within the next year, with horrendous results.

> The answer for how much CEOs should be paid is the amount of money you would need to pay to employ the most optimal person to run the company.

"Should" by what standard? Minimizing deadweight loss?

And hence median vs minimum, median scales well, but minimum is more aggressively equitable -- after all, it's a nice 'soft scaling lock', which we currently seem to struggle with.

If we can hit a nice logarithmic return on investment for company size, I think that would be nice. Like many things, perhaps impossible to easily achieve, but it's a nice thought in idea at least methinks <3 :'))))

> There’s a job market for C-Suite employees

And it can sometimes be VERY illiquid. Headhunters help to provide this liquidity and get paid for it.

Sometimes C-suite career people can go years without a job. Not every CEO or CFO makes fortune 500 comp and many people falsely assume low compensation volatility as e.g. a "career CFO". It can be extremely stressful, especially with family/dependents.

No. There is no financial stress in a CEOs life. The CEO that can't afford private yacht lessons for their daughter is not the same as the single mom working 2 jobs to feed her children. Stop drawing a false equivalency.

Total straw man

No. Financial stress comes from not being able to meet your basic needs. Everything after that is a choice, and choices are reversible.

I agree but would phrase it differently: C-level stress is often self-created – gotta have a bigger mansion, longer yacht, hotter trophy wife, etc. than my frat buddies - whereas many of their employees’ stress is externally-driven - hoping the car doesn’t break and cost you a job, worrying that the cost and time of a return to office mandate will take a big chunk of what’s left of your margin after inflation, etc.

I think of that whenever I’m back in San Diego and remember the tree poisoning lawsuit where these two rich guys were feuding because the one whose mansion was in front had a tree which kept growing and the other guy thought that was depriving him of a fractional sea view. This ended with the twist that he paid his gardener to poison the tree, but was caught and … I just couldn’t get past thinking about how this guy was a millionaire, living on the cliffs over one of the world’s better ocean views, and all he could do was think that it wasn’t a degree wider.

I'm married to an exec and I can tell you both that

(a) The stress is very real, and (b) It's not self-created, it arises due to the responsibility and magnitude of decision-making coupled with having to deal with other execs that are promoted beyond their ability yet somehow still have absolute faith in their ability to lead and execute despite their limited experience, worldview, or both, and (c) It seems to be about the same amount of stress as those worrying about tight finances, but less than those worrying about where the next meal is coming from.

Having said that the majority of CEOs that my spouse and I have worked for cannot find their asses with both hands but a minority of them have been incredibly good and well worth the compensation they were paid.

"About the same" is not the same. I'm sure it's a stressful job, but it's also self imposed. If you're getting paid a CEO salary, you can quit and live off investments after a single year of doing it.

It is in no way comparable to people that need to work to live.

>C-suite career people

How do these people get to be C-suite career people? Seems like you basically have to be born into modern nobility. I've asked people who work with them about this and they make these vague claims about 'ultra drive & competitiveness' but I don't buy that those things are magically statistically concentrated in Ivy League grads.

What about CEO pay * Widgets shipped?

I always think "I can clock out at 5pm" or "If I screw up it'll only cost me my job and not 1,000 people their jobs"

C levels deal with stuff I am not interested in and the while the pay is appealing the added life complexity is not. Thus I W2 while seeing my kids 90+ hours a week.

I would love it if my brokerage would show me that multiplier for the companies I invest in.

The problem with this is that the CEO of Walmart is a much more important job than the CEO of McKinsey but under this formula they would get paid a fraction of the amount, no matter how well they did for Walmart workers.

The end result of this situation would probably be a mad dash to automate away any blue collar work, which may not be such a great thing.

It’s a tough problem.

> The end result of this situation would probably be a mad dash to automate away any blue collar work, which may not be such a great thing.

More typically, this results in the outsourcing/contracting away of lower value work.

The CEO of Walmart doesn't do anything for the Walmart workers, he works for the investors.

I would say it would be a huge upgrade to get rid of investor CEOs and put in a worker CEO in place instead.

Who decides how important a company is to the economy?

People get really fixated on CEO pay. Its only of symbolic importance.

Google says: 167,000 GM employees Mary Barra salary: $29M

Distribute that salary across the whole workforce: $174 per employee

They should really be talking about it in terms of inflation or profit margin. GM profit for 2022 was $21B

I always see people show this equation and it never made sense to me.

No one is saying the CEO is taking money the employees would have otherwise earned. When you divide it out like that of course its a pittance per employee.

The statement is about the relative scale of the CEO pay to one employee. I don't care about the difference applied to all employees.

An absurd parody I always imagine: John is 7ft tall. His group of 6 other other friends are only 6ft tall. Wow John is really tall! Nah, if you distribute his tallness between his friends they would only gain 2 inches! That has nothing to do with John being 12inches taller than any one of them.

It frequently doesn't matter how much the CEO makes. It's not why the other employees aren't making more money. It's just a distraction. It boils down to "it's not fair". If what is important is the ratio between CEO pay and employee pay, then the board can cut CEO pay, and call it a day. That doesn't improve employee pay.

If the employees really only care about that ratio, then they should accept that outcome from their strike. That's not why they are on strike, they also want to be paid more, just like the CEO.

This is some of the most disingenuous crap I've read in a while. Flip it on its head:

"If c-suite really only cares about $ spent on labor, they would accept the productivity outcome of their salary proposals to employees. But they don't. They want to get more productivity, just like the workers of [insert competing corp], while not changing or even reducing comp."

The reason your comment is disingenuous is that it assumes that the best place for this money to go is into c-suite/board pockets, and for some reason assumes that workers wouldn't take the couple extra grand the CEO pay split would give them. I challenge any CEO to put it up to a (non-binding, don't shit yourself) company-wide vote.

But let's disregard the salary split. It is an incredibly simple-minded way of approaching what to do with millions/year. Are all of you, who justify these ridiculous ratios, truly unable to think of ways to spend dozens of millions of dollars to improve all employees' qualities of life? Those who spend all this money on consultants to figure out how to squeeze an extra penny of profits can't figure out how to further optimize the health of the workforce instead?

Cue the comments about "no choice, fiduciary duty". Makes me sick.

Where did I state that the 21B in profit needs to go to shareholders? I'm all for giving the employees more of the profits, but not because it's unfair that the CEO gets paid well.

I agree I was just stating that comparison above I don't like.

The reason we're even talking about this means the UAW's demand (management raised their take 40%, line workers deserve that as well) is an effective one.

yes, you're right, if you distributed john's height across his 6 friends, they'd all still be normal height, and nothing would really change for them, except that john would no longer be abnormally tall. you've taken a situation where there's something noteworthy, and made that noteworthiness disappear.

the same logic applies to CEO pay. you can either pay the CEO a lot, or you can pay everybody else an amount so slightly different that it's unnoticeable. there's value in paying a CEO a lot, or you can not pay them a lot, and not pay anybody else any more either. surely you can see how there might be value in offering a high salary for a role that can have a big impact on the company, and how simply not doing that and essentially erasing that money instead would be a bad decision?

This is a super bizarre argument.

I suppose I should be paid 167,000 more per year as a software engineer at GM because it's only 1 dollar per employee?

Sure if the board thinks that you singularly deliver the value, why not?

I wonder why the board always seems to think they are the most important and therefore highly paid people within the company.

So interesting how that works.

The article suggests that the CEO is usually the highest paid position in a company, not the board members. The board is the most important position, however, as it is the representation of the ownership.

> Mary Barra salary: $29M

$2 million, actually. The $29 million is total compensation; mostly stock awards.

> “Obviously, CEOs should be the highest-paid person in an enterprise, but then the question is exactly just how much higher than everyone else,” Josh Bivens, chief economist at EPI, told NPR.

Are there any examples where this isn’t true?

I know someone who works as an engineer cleaning up nuclear waste. The workers who do the job he engineers are paid more than him. He is ok with that but did pass the comment that it’s an unusual situation.

"Of course they should be paid more, cause they are."

I think NPR does a lot of damage not questioning assumptions like this. Or, often times, putting them out there themselves.

The football coach is often the highest paid employee at the university. I wouldn’t be surprised if many rockstar doctors made more than some of their hospital CEOs.

I’d imagine Linus Sebastian (of YouTube Linus Tech Tips fame) is taking home more money than the recently appointed CEO of the Linus Media Group. But that’s also a weird situation because he basically hired the CEO to free himself up to do the parts of the job he likes.

He said someone offered to buy the company for $60M cash I think it was? Which is astounding.

He and his wife own 100% the company so it might be better to hold on to the cash for tax purposes than pay themselves a lot because tax on payroll is pretty high compared to company's cash sitting in the bank.

I think the offer he mentioned was $100M for LTT.

In banks and financial companies it's relatively common that some rock star trader or quant that has an exceptionally good year might make more than the CEO.

I'm surprised unions don't throw their weight around more via equity ownership in the company. Controlling the company directly is really the endgame move, once they control a majority stake, they're literally just negotiating with themselves for their labor contracts.

Even better, if they're managing their pensions via investment houses, why not just build their own investment house and leverage their negotiating position that way?

If they could afford that they wouldn’t need jobs. They’d need to hire a bunch of new workers.

It would be interesting to see what happened when the shoe was on the other foot.

I'm surprised, I did a little digging and there are actually quite a few companies that are at least 50% employee owned[1]. The biggest company in the list is Publix Supermarkets, but there are also quite a few manufacturing and engineering firms.

[1] https://www.nceo.org/articles/employee-ownership-100

I always thought the same. Bargaining for some minimum amount of cash is important (food on the table, gas in the car, etc.).

But beyond that, meaningful equity in the hands of labor should surely be the goal — it aligns interest in a way that cash can’t.

US unions are notoriously anticorporate, they generally despise the idea of stock based compensation.

> “Obviously, CEOs should be the highest-paid person in an enterprise, but then the question is exactly just how much higher than everyone else,” Josh Bivens, chief economist at EPI, told NPR.

I thought I read that at Japanese companies the CEO doesn't make 300 times what the workers make. Maybe the CEO made 10 times at most?

Why should the CEO be the highest paid person in an enterprise?

Why is that obvious? This foregone conclusion stuff is just notes cribbed from the aristocracy. You're not aristocrats, you're citizens.

This is true, but they also tend to get free use of things like homes and cars owned by their company.

https://www.japantimes.co.jp/news/2023/06/30/business/top-au...

...Akio Toyoda, was paid ¥999 million ($6.9 million) last fiscal year...

"Owing to culture or corporate structure, the salaries of American executives and foreign executives in Japan have historically been much higher,” a Toyota spokesperson said Friday. "We’re aware of the gap and we’re working to fix it.”

Nissan, which has just shuffled its leadership, also published salaries Friday, showing that former Chief Operation Officer Ashwani Gupta was paid ¥726 million last fiscal year. CEO Makoto Uchida made ¥673 million.

Honda said last week that its CEO Toshihiro Mibe was paid ¥348 million and Chairman Seiji Kuraishi got ¥138 million.

I'm not sure why it's obvious that the CEO should be the highest paid? Why should everybody's boss make more than them? I know that isn't the case for many line managers of highly-paid programmers, for example, and I assume the same is true of other similar professions, at least sometimes.

Wages are theoretically a market, and probably it's often easier to replace a skilled manager/business bro than it is a skilled engineer/artist/salesman, and often it's more important to your business.

I've heard a counter-argument to this before and I'm curious to get other's take on it.

Basically, the story goes that when an individual rises into a significant leadership position at a large enough company that the economic calculations become different. There's still an element of domain expertise, but, for the most part, leadership is leadership wherever you go. This implies that a leader could (potentially) move across sectors and still be effective which results in a wider pool of companies that are interested in competing for this person when contrasted to the ICs. Since some sectors are very profitable they end up "bidding up" quality leadership. The combination of this effect along with the fact there are objectively fewer CEOs than ICs results in a mismatch in salaries.

I think there's an element of truth to this, but probably not to the extent that it justifies the widening pay gaps everywhere?

I’d like to see one of these guys use their magic leadership mojo to lead a platoon of marines into battle. I think he’d find that domain knowledge does, in fact, matter.

To the extent that it truly doesn’t matter, the ceo is a glorified mascot.

It's more likely that it is the only role that tends to be in the room when the board is deciding salaries. Turns out it's great to be able to decide how much your own compensation should be.

Though this argument falls apart with evidence that CEOs of big firms do need to deeply understand their companies domain. It may work to a degree, but doesn’t seem to coincide with the most valuable companies.

It’s why when Intel was floundering a few years back they got rid of CEO and brought on a CEO with deep engineering expertise.

Tim Cook is a wizard of supply chain, and in many ways that’s a large part of Apples current success, IMHO. The list goes on.

>Tim Cook is a wizard of supply chain, and in many ways that’s a large part of Apples current success, IMHO. The list goes on.

Okay but don't many other companies deal with supply chains? I guess software companies don't, but "companies that trade in physical goods" is a pretty big segment, and it stands to reason that having "a wizard of supply chain" would be useful. Doesn't this translate into an argument in favor of "leadership is leadership wherever you go"?

> Though this argument falls apart with evidence that CEOs of big firms do need to deeply understand their companies domain.

Counter-example: the last few CEOs of Boeing who have completely messed up the company.

They came from the Jack Welch of GE school of management, and it turns out that Welch et al were cooking the books. See also Enron and WorldCom.

How is that a counter example? Seems like another example of “professional managers” coming in and screwing up a company.

The first Boeing CEOs were from Boeing and were steeped in Boeings engineering culture and valued that expertise. Later CEOs like you mentioned didn’t. Boeing also acquired McDonnell Douglas, and many thought it was great that Boeing got to keep all McDD’s “experienced” managers.

> How is that a counter example? Seems like another example of “professional managers” coming in and screwing up a company.

The screwing up started at the top by changing metrics and priorities post-McDD. See Flying Blind:

* https://www.penguinrandomhouse.com/books/646497/flying-blind...

And the screwing up was richly rewarded.

> leadership is leadership

what is leadership other than being stern, following up, driving projects to completion or up/down the org chart as needed (escalation, etc.)?

I mean, it involves leading. Making strategic decisions and then gaining support for them. Leadership is not just a synonym for project management.

I don’t understand your comment at all.

I think the MBA mantra that specific product expertise is not important: a widget is a widget, died with Jack Welch and Carly Fiorina (her career). Its still around but not nearly as much as 15-20 years ago.

HR people and accountants also have the same sort of domain independence. Their salary has not particularly risen faster than the average worker salary.

"leadership is leadership wherever you go"

Not all CEOs are built the same. Only a minority are able to cross industries successfully, the majority fail miserably. This is because elements that drives success are different between industries. Most of the time, if the CEO is successful one way in one industry, he/she would pursue the same path in another industry, without acknowledging that the second industry is different. What's worse if when they bring their previously successful team. Now you've got a bunch of people doing more the wrong things at the same time.

> Only a minority are able to cross industries successfully, the majority fail miserably.

Now analyze that a little deeper: How do we know they were successful before they tried to cross industries? Solely because the company they were CEO of did well while they were CEO?

Absent a fairly egregious set of drastic changes (eg, Musk's Twitter), the success or failure of a company is both much more complicated than the contributions of any one person, including the CEO, and a trailing indicator. It is very easy for a CEO to make changes that will not be fully felt—for better or for worse—for years after they "step down to spend more time with their families".

We do not have good metrics for successful leadership. We just don't. And despite this, we have whole subcultures that have grown up around the idea that these people, who are often actively detrimental to the organizations they manage, are geniuses singularly responsible for the company's many-million-dollar (or even many-billion-dollar) profits.

I think the whole thing falls apart when you get to the point of a CEO making so much money, regardless of their performance, that they can just retire after a single year.

So what if I don't get my contract renewed if I have $50 Million, that's more than most people make in their entire lives. See you at the beach!

A counter consideration I’ve heard is that they have to pay more to keep them off the beach! If the board thinks Turskarama is the best leader for the org, then they have to pay enough to keep you off the beach. Which could be absurd amounts of money.

The problem is that that amount of money doesn't exist, I simply do not desire a lifestyle that costs me more than maybe a couple hundred thousand a year, tops.

At some point sure maybe I can work for a couple of years and I will earn enough to buy myself a super yacht... but I don't want a super yacht as much as I want to not work.

It's very funny to me that people make the argument against raising welfare that there will be no incentive to find work, yet somehow they think this same argument can't apply to the super rich who can retire with a lot of money instead of struggling along on a subsistence income.

The average CEO at a top U.S. company was paid $27.8 million in 2021, including stock awards — 399 times as much as the typical worker — according to research published by EPI. From 1978 to 2021, CEO pay grew by 1,460%, adjusted for inflation, versus just 18.1% for the typical worker.

Auto workers aside, this is always a crappy stat that is thrown about.

"Top US companies" is rife with survivorship bias. It's like saying "the CEOs of the most successful companies had their pay increase..." Well yeah, when a company is successful, compensation rises.

Average CEO pay across all companies in the US is like $250,000.

Honestly, if the union wants similar compensation as the CEO, they should have the same pay structure as the CEO - 10% in cash salary and 90% in options or stock. When the car company does really well, they make a ton of money, when it does poorly, they make almost nothing.

But I would guess they wouldn't go for that.

> Well yeah, when a company is successful, compensation rises.

Only for the C-suite apparently.

> When the car company does really well, they make a ton of money, when it does poorly, they make almost nothing.

That’s already how it works. Workers took pay cuts in 2008 to keep the companies going. It worked and now the UAW is asking for the same pay recovery that the C-suite already received.

> Only for the C-suite apparently.

Seems like you missed the point entirely, but ok.

But anyways, that's false, US autoworkers have a profit sharing component to compensation.

https://www.freep.com/story/money/cars/general-motors/2023/0...

> That’s already how it works. Workers took pay cuts in 2008 to keep the companies going. It worked and now the UAW is asking for the same pay recovery that the C-suite already received.

Workers did not take pay cuts in 2008, the autoworker unions actually created a multi-tier compensation structure that protected existing union workers (surprise!) and penalized all the new hires.

And CEO compensation, at least at GM dropped by ~80% after the 2008 crash.

https://www.reuters.com/article/us-gm-compensation-idUSTRE73...

Just wondering, but are any of the American car companies doing well besides Tesla? Every year they seem more irrelevant, even Texans will buy Japanese pickup trucks these days. I just don’t see them rich enough to pay their CEO or workers 40% raises, and that increase is just going to be temporary as their business become less viable and layoffs or insolvency follows.

Best-selling cars in the US are

• Ford F-series(F-150 being the most popular car in the US)

• Chevy Silverado

• RAM Pickup

• Tesla Model Y

• Toyota Rav4

• Honda CRV

• Toyota Camry

• GMC Sierra

• Nissan Rogue

• Jeep Grand Cherokee

So 6 out of 10 are American.

Okay but that's in a protected market with high entry barriers and import tariffs for foreign competitors.

What's the list globally?

So 4 pickups? At least pickups are high margin now (they used to be cheaper than cars when I was a kid).

I guess American non-Tesla cars still are popular in places like Texas then?

It’s important to note the workers made huge concessions in 2008 that saved the companies from bankruptcy. Over the years they’ve seen stagnant wage growth, while the execs got solid gold toilets. Even with 40% increase (inevitably spread out over many years), theyd barely be back to where the would have been without the concessions.

Arguably, without the 2008 concessions, they'd be out of a job entirely.

Or maybe they would already be employed at a better place paying more and using their labor with greater leverage.

I believe that workers and non-CS engineers are horribly underpaid around the world. They are underpaid in the US's Aerospace, they are underpaid in Russia's military industrial complex and they are also underpaid in China which actually supplies the stuff that everybody uses. Don't doubt they are also underpaid in Japan and Korea.

>Or maybe they would already be employed at a better place paying more and using their labor with greater leverage.

I mean this in all seriousness. What in the past 50 years of deindustrialization makes you think that that as even a possibility? Sure, it’s the Econ 101 textbook answer. “Creative destruction” and all that jazz. But in reality, how has that actually played out?

All the more reason why they ought to get a little back at this point.

And the shareholders would be out of their investment.

Didn't the shareholders lose everything when the government nationalized the car companies in 2008? That may just have been GM.

Shareholders at Chrysler at GM already were out their entire investment. “Old GM” went bankrupt, the current corporate entity known as GM only existed since 2009.

Same for the CEOs, though.

They were in no position to negotiate back then. Plus, there was probably heavy influence from retirees to save the pension fund.

I think they should get it and it should be in out of the money stock options. I don’t understand why so many dinosaur companies restrict equity based comp to the C suite.

Profit sharing is common, especially amongst employee owned companies. Base wages are behind inflation and cost of living, so of course it needs to catch up to the current macro. Fast food worker minimum wage is now $20/hr in California, for example, and healthcare worker minimum wage will be $25/hr (SB525).

https://news.ycombinator.com/item?id=37558256

It’s generally a bad deal for the worker compared to cash. An assembly line worker has absolutely zero say in the direction of the company, their work will never meaningfully move the needle on stock price, so it makes no sense to tie their income to something they have no control over.

Share-based compensation can be good if the stock is heading up, because it's cheaper for the company to pay it than cash is. In between the award and vesting, the increase is paid for by equity investors.

But, you have to keep working there and you have to be able to afford to wait for the vesting.

why is it working for Tesla line workers?

The GP clearly stated it's "generally" a bad idea. This implies that sometimes it is a good idea.

Equity based payment will attract a different risk profiled group than salary will.

Stock options are complicated. On a factory worker's salary, you probably don't have the money to throw at a financial advisor who will know how to handle those options competently.

This is great. Add this to SAG-AFTRA, Waffle House workers and Starbucks walkouts and we have real movement toward a general strike

If both Wal-Mart and Amazon drivers strike we might actually have a shot a taking a bite out of capital finally.

serious question: say everyone you described gets a 20% raise

what do you think will happen to the cost of goods? what companies do you think are operating with enough margin that they can just afford a 20% rise in their payroll costs?

Serious question: if every company was working with razor thin margins, and every worker made make minimum wage while investors reap profits from speculation, would that be good?

in the case of the GM stock particularly, is their profit that could/should be redistributed to workers (they had $10b in profit last year): yes

in the case of the GM stock particularly, are shareholders/investors reaping profits and benefit? go look up the GM stock, it's flat/down over 5 years

> in the case of the GM stock particularly, are shareholders/investors reaping profits and benefit? go look up the GM stock, it's flat/down over 5 years

You failed to take into account that GM issues real stock (unlike most tech companies) and thus pays dividends. If you take dividend payouts into account, the value of an investment in GM has been indisputably positive (though probably not more positive than inflation).

Think differently

It’s not about a one time 20% raise

Think more like:

“4 day work week”

“Return to 1945-1949 tax rates”

“convert corporate to cooperative ownership”

great question! profit margins have indeed been rising significantly over the past few decades, from around 5% to 12% just since the mid-90s -- https://www.yardeni.com/pub/sp500margin.pdf

The costs of goods will increase regardless of labor cost as they have already. The issue lies in the contradiction between relatively stagnant wages and the rising cost of goods/housing/etc which naturally develops into labor organizing.

A better question to ask is what will happen when a larger portion of the profit that these workers created now flows back into their communities?

Workers spend their money at family run business, and small to medium size businesses in their community and contribute to the local economy. The economic implications of this effort are not just beneficial for the 150,000 UAW workers but their communities and local economies as well.

In contrast the board members who are reaping those profits are not spending money in those communities. Even if they theoretically lived in the same communities and frequented the same businesses they would not buy anywhere close to the same quantity of goods and services that the 150,000 uaw workers would with those same profits.

Did you realize that only 5% of the cost of the vehicle is from labor? So essentially car prices would rise 1%.

Sounds acceptable to me.

There is way more than 5% of the cost from labor, you are missing all the extra costs from the parts they buy from other companies. There are way more laborers working on the cars than what the car companies employ themselves, the small number of workers still working at the car companies now try to leverage that but it is unfair to give all the value of the cars to them rather than share it evenly across the industry. And when shared evenly there wont be much left.

This seems to dispute your claims [1]. Also - you can't count suppliers' employees since they're not part of the union action / demand.

[1] https://www.cnbc.com/2020/01/17/labor-costs-for-detroit-auto....

"Labor costs, at roughly 5%, remain a small percentage of annual costs for the Detroit automakers, according to Dziczek."

You're deluding yourself into believing that costs set prices. This is econ 101: prices are made when supply meets demand. Costs only set a floor on supply. In any case where a business has a moat of any kind, only the demand curve matters: prices will be set where price times # of people willing to pay that price is maximized.

Companies are profitable, by definition. If they aren't profitable, they die (eventually). As long as there is a profit, worker pay raises does not need to be completely covered by an increase in price. Where does profit go? Into the hands of the rich.

Thus, workers demanding raises is simply a progressive wealth redistribution, from lining the wallets of fatcats, to rewarding the people who actually created that wealth.

Value of a cog, gear, or screw is minimal. Value of a complete and functional engine is much greater than the former. A complete and functional automobile’s value is, most times, greater than cogs, gears, or engines.

An employee’s value is relative to a gear, cog, or assembly of them.

A CEO is akin to an engine, infinitely more valuable, a requirement for functionality, is the force behind a company’s goals and provides locomotion.

The automobile itself is the company.

While an auto may function without gears and assemblies the performance will be sub optimal.

An auto functioning without an engine is said to be coasting. A company without a CEO is also coasting.

The value is supposed to be performative. A great CEO provides direct value, direct movement, and is rewarded thus.

Why does LeBron James make so much more than the ball boy and concession stand workers and ushers?

A CEO that delivers alpha deserves a big cut of that. The board exists to hire leaders that can deliver alpha. A good deal fail to. But the ones that do are more than worth their compensation.

And btw you have 0 chance of attracting the kind of CEO that can deliver alpha by offering peanuts. It doesn’t always work out and there’s plenty of snake oil CEOs, but the good and great ones are worth every cent to stock holders.

My understanding is that the CEO's in question are not even remotely comparable to Lebron James's stature in basketball.

Then your understanding is misinformed I’m sorry to report. CEOs are generally top level business people and most business people can’t play at their level. There are exceptions but the system cycles poor performers out much like the NBA does to high draft picks that have lower than replacement value.

Businesses compete against each other and the CEO orchestrates the strategy and is accountable for the the execution across a broad spectrum of functions. There is a power law distribution where the very best CEOs are vastly superior to the good who are to the replacement level ones. So like in the NBA you may overpay for a guy in the hopes they are great or you pay handsomely for a good player that is above replacement level or you pay the highest for the best to run your company. Sometimes it pays off and sometimes not.

But the value that great CEOs produce is astronomical. Well more than a basketball player could ever hope to produce.

The problem is that so many people are "CEO" nowadays. Anyone can become a CEO tomorrow by registering a corporation for a few thousand dollars or less. The businesses that produce great value, and may reflect well on their CEO's abilities, are in the minority.

It's not unreasonable unless you feel the C-suite are simply parasites trying to leech as much out of the system as it can stand

I don't follow why workers' pay should increase at the same rate as their CEOs' pay. They're subject to entirely different labor markets with accompanying risks, opportunity costs, supply, demand, cost of replacement, etc.

"Should" is a loaded word here. Market equilibrium is not always the best thing for society as a whole, morally or practically.

I agree — but deliberately breaking the market equilibrium almost always seems to be hysterically worse!

Imagine a FAANG software union asking for 40% more pay for devs, to match the CEOs'.

I’m assuming auto workers don’t make 400k a year already.

I got an average 20% annual TC increase every year of the decade I worked at a FAANG, so 40% over 4 years would be well below average.

Hard to argue against.

I hope they succeed.

CEOs are often overpaid by a lot. If I had as regular access to the books and the board of directors as C-levels do, I bet I could be paid a lot more too.

IDK about the current guy, but the CEOs who moved production to Mexico will be seen as deserving every penny.

On a per-unit cost, what’s labor vs CEO?

Why not have a law that C-suite compensation can only increase as much percentage as the lowest increase in the company?

imagine a line worker comparing themselves to a ceo. tim gurner is right the workers really are becoming arrogant

The word you're looking for is "uppity." "Arrogant" is the CEO assuming he's worth hundreds of times more than a different man.

at least in usa the word uppity has some other connotations. also i was quoting that guy as saying arrogant so i guess he was the one looking for the other word not me

Yes, those other connotations would be what the other poster is accusing you of secretly thinking.

How about this compromise: cut the CEO's pay by 40% and give an 80% raise to the workers.

her pay was $29m 40% is $11.6m

there’s 160,000 employees

$72.50 a year per employee

a $1/hr raise for a full time employee is $2,080/year

they makes $17/hr and UPS makes $21/hr on the low end part time wise

lots of employees want at least $8k/yr raise ($4/hr on the low)

a bit different from $72.50

I didn't say "take 40% of the CEO's pay and divide it up among the workers", I said, "take 40% of the CEOs pay AND give the workers an 80% raise". Take $11.6m from the CEO. Give the $17/hr worker at $13.60/hr raise. Give the $21/hr worker a $16.80 raise. Both.

I have to wonder. What percent of Tesla's success is attributable to not having legacy union baggage. Unions are the tech debt of the manufacturing world.

It starts with a good idea, but if you let it fester, then it quickly becomes more of a drag than a productive addition to your organization.

It’s a balance. Tesla employees are not having a good time, I can tell you from first hand experience. You’ll make reasonable money but it’s not really a life worth living with 12 hour days and extreme stress. Atleast the options made me rich so maybe it was worth it?

what’s something Elon has done better/differently than the GM CEO?

Having a product people desire and doing at excellent job of marketing without actually spending marketing dollars. But this was back when I was there and Elon wasn’t crazy and actually adored.

Unions don’t serve the company. They serve the workers. The real irony here is that Henry Ford jumpstarted the middle class by increasing pay to match increased productivity. That new middle class then bought his cars. A company that doesn’t serve workers and thus society has no right to exist.

I remember getting downvoted then flagged for making a reasonable argument against a bunch of employees from Tesla unionising.

While its not exactly a vindication, I feel super vindicated right now and I'm not gonna be reasonable this time.

These companies have no way out, they are going to die! All these people will lose their livelihood and worse their options to monetise their skillset/experience will be next to zero. Is this your utopia?!

I've been researching Ford for a while, they have so much debt and an extremely small margin for error for the EV transition. It was gonna be so tight and now their fate is sealed.

I'm not proud of this but a part of me find a bit of joy in what comes next. There is this Thanos side of me that feels like a grave injustice have been done here. These people have no right to have this much power over a company.

You really think a CEO isn't worth 300-400x more than a line worker? Honestly I can't fathom that level of ignorance/cognitive-dissonance.

Replace CEO with any sort of leadership role in any kind of organisation/entity with skin in the game (where outcomes can hurt). Whether if its football coaches, generals, head of state etc.

I know nobody (sane) disputes the difference between a c-suite employee vs a line worker but what I'm talking about is the exponential nature.

These people are barely human. Imagine the stakes, the leverage, the consequences and the sheer amount of context you need. Being in the top percentile of IQ, EQ, competence, industriousness etc are just tablestakes. You need to be ruthless while at the same time have an immense capacity for empathy. You need to be extremely conscientious/industrious while at the same time having a large reservoir of creativity. Its like the infinity stones, you can't just be a galaxy brain or just have the gift of the gab or be a psycopath. You need it all and more while competing against people just like you for rarified roles.

To top it off, all of this just gets you into the ring, you also need to actually win and win consistently over period of time. Usually this requires sacrificing your entire life. Btw this where the barely human part comes in, these people thrive on this. All these CEOs have enough money to retire on a beautiful ranch or oceanfront mansion, instead they work 70 hour weeks.

And you think these people are somewhat similar to the guy who screws in car parts? You think society should value these people in somewhat the same realm? like a linear nature (50% or 300% more).

This kind of thinking is what leads to the end of civilisations. These people should be revered. We should be grateful.

I still can't accept there are people in the world who think its somewhat similar. This is not an IQ thing, its not even a being well read thing.. This is common sense. We all have met people in our lives where we go "oh there are level to this game", like freaks of nature.

How can you not think its the same for you know, leading a multi billion dollar public corporation with hundreds of thousands of employees.. Its mind boggling. How can people no see the asymmetry!

Some executives are as you say. In general, those companies which are lead by executives like that are leaders and produce high quality and innovative products that people love.

But many execs are not. They work just as obsessively as the first type, but only to increase their own power inside of the organization, at the expense of the organization's cohesion, trust, productivity, and quality. They live in a bubble, totally disconnected from the organization's purpose. They make strategic mistakes over and over again. They fail to truly understand why even a single dollar of revenue happens; instead they take it as a given that the money is coming in and only think of ways their unit can siphon off more of it, at the expense of all the others.

If just one of these type 2's enters your organization, you can typically get by, as long as you recognize them quickly enough. If even a small handful enter your C-suite, they will metastasize, cause your type 1's to leave, and put your org on a death spiral.

Many execs are of the second type. You can tell: if you use a product or service, and it sucks, that's probably what's going on at the top.

I tend to agree with you. I was generalising quite a bit for the sake of conciseness (& being a little cheeky)

Its not uncommon to see people in these roles because of nepotism, they write the checks or they are good at short term games (machiavellian, gift of the gab, office politics).

That said, such exceptions tend to not last long because of the unstable nature of these situations.

In other words, those who match the description I made earlier tend to eat these peoples lunch given enough time.

Yes the CEO should make more, but where do you get off that a single individual can possibly do 300-400x more work than another individual. It is sheer absurdity of an opinion to hold.

In a civilized society I would say maxing out the top paid employee of a company to 20-30x of the average of the salaries of the bottom half of all salaries in the company is what should be done. Anything more than that creates a system of perverse incentives to take action that is against the greater good of the community.

Also Akida Toyoda made $6.9m last year, and Toyota is larger than any of the US companies by a wide margin in every metric, while bringing in more net income. How do these US CEO's calculate their worth as 5x as much for smaller less profitable companies? It's avarice clear as day.

Dear sir, Akida Toyada very very surprisingly unbeknownst nobody just so happens to be the grandson of this random guy Kiichiro Toyoda who shockingly was the founder of Toyota Motors.

Just do you know I'm using all the restraint I have in me to not question your mental capacity using slurs (pls don't ban-ish me señor Dang, grant me this sentence).

I tried to address this in the latter part of my post.

I'll start by saying there is a lot of nuance here with cases where I might even agree with you but I'm going set aside nuance in service of getting to the core of my point.

The guy who pushes around a trolley, unpacks a box of goods and puts it in the shelfs of a local branch of a nation wide grocery chain is not just worth 30x less than the CEO of that multi billion dollar grocery chain.

The key distinction here is that the difference isn't just linear, its non linear with a steep gradient. You can replace that guy with a 12 year old disabled girl and it would make almost no different to outcome for the multi billion dollar grocery chain.

Whereas if you hired a slightly less competent/experienced CEO and I mean like 0.5% less, the difference is tens or even hundreds of millions.

The non linear nature to this is not just something to do with humans, its a natural phenomenon. Its the Pareto principle & distribution.

Maybe things can be in the realm of 20-30x when we are talking about CEO vs the rest of the C-suite.

P.S. Just to directly address your civilised society claim: There is nothing civilised about the proletariat or their puppeteers dictating by fiat how far high a person can fly before their wings get chopped off. Btw in such a society, those who chose are an order of magnitude more powerful than the most richest and powerful in our current society. You just replaced one set of elites who "atleast" "somewhat" earned their station with another set of elites whos only skill is in being a good orator.

They are going for at least relative parity if not absolute parity.

Well, if interest rates remain high, perhaps CEO pay will go down.

The only person losing out is going to be the consumer. What's to stop executives at Ford, GM and Stellantis from saying "sure, 40% pay increases, no problem" and then just passing it along to consumers one way or another?

There isn't enough margin in the R&D + logistics of producing cars as is.

Ford's stock is up 25% in 5 years, vastly underperforming the index

GM stock is -5.6% over 5 years

Stellantis stock is +3.55% over 5 years.

Where is the argument that the greedy capitalist meanies at the top are doing nothing but buybacks with the millions in profits inflation the stock?

“and then just passing it along to consumers one way or another?”

The consumer will buy a car from a non-union automaker that charges less.

Ford jumpstarted the middle class by increasing compensation to a level that created more customers. This is consistent with the idea that value is created.

This is great, I hope they get it. The wave of unionization in this country is a good thing over the long term.

Robot makers and overseas workers are all in supporting this strike.

40%? I sincerely wish them the best of luck and I hope they get what is their due but this is probably good news for India, Mexico and China.

So what, nothing prohibits the US and Europe from raising tariffs on industrial products.

The pendulum of globalization is bound to swing backwards for a multitude of reasons.

Isn’t that what leads to Ladas and Trabants.

cough WTO cough

The WTO has been fucked over for years now. Practically they've been kneecapped since 2019 "thanks" to the 45th [1], and even before that, they didn't do much against the clear breaches of good conduct that China committed, and for what it's worth it's not like the actions of the 45th were without good cause, even back under Bush the WTO was infamous for being slow as molasses even compared to other international organizations and having failed to update their rulebook because everyone and their dog kept vetoing stuff.

[1] https://www.theguardian.com/australia-news/2022/dec/25/austr...

I'm just amazed how, with enough money invested into propaganda of economic liberalism (still a paltry sum in the grand order of things), you can have smart people around the world repeating your mantras without noticing for decades that you have not even pretended to live up to your own faith.

Many of them acolytes actually ruining their domestic economy by executing on these principles.

The problem is, the propaganda was all just propaganda in the end. Yes, we got cheap trinkets out of China, but at what price? Insane amounts of economic devastation, as none of the promised benefits other than said cheap trinkets materialized. None of the countries that "change by trade" ("Wandel durch Handel") targeted became democratic, and instead of "trickle down of wealth" we got a "trickle down of shit and exploitation" [1] while the elites at the top got ever richer and richer.

[1] https://www.allaboutlean.com/hoshin-kanri-3/bird-shit-hierar...

> So what, nothing prohibits the US and Europe from raising tariffs on industrial products.

I mean, there's retaliation. Trade is mutual.

Tariffs, which are just a regressive tax increase on car consumers, are a very bad industrial policy. You want to do export promotion instead.

> You want to do export promotion instead.

That's what us Germans did, and look where it brought us to: our car companies make a significant chunk of their profit in China - Deka estimates the Chinese share of BMW profits at ~40% [1], for VW all I could find is that 41% of their exports go to China, for Mercedes it's 37%.

Now the Chinese government is massively subsidizing domestic electric vehicles, and our car companies are headed for very dark times.

[1] https://www.handelsblatt.com/unternehmen/industrie/autoherst...

[2] https://www.manager-magazin.de/unternehmen/autoindustrie/vol...

[3] https://www.inrlp.de/ratgeber/fahren/mercedes-benz-china-aut...

Sounds like they made a lot of money they wouldn't have otherwise. If they're not making that in the future, that's still better than the alternative.

You could always sell to the rest of Europe, but since they're in a fiscal union with you and you refuse to deficit spend, they're not very good customers.

The problem is the car manufacturers are massively leveraged against and now China has our economies by the balls. All the CCP needs to do is squeeze them and we're in for many years of pain as we unravel our unhealthy dependency on both China and the automotive industry.

That seems more like a mismanagement of risk outside of, and confirming, the windfall from the overwhelming success of the export promotion.

If it was that easy it would’ve happened already. And software engineers jobs would have moved first due to savings and low effort and low infrastructure changes required.

40% of IT work is already outsourced and that’s a number that is rapidly growing and that’s only over a decade and a half. It doesn’t even take into account foreign employees that now just work remotely.

Sort of. There's a lot of outsourced work. It doesn't appear to have cannibalized the onshore work in a significant way.

Tell that to the current SE labor market though it may be unrelated.

why does Meta pay engineers $400k when there’s somebody offshore willing to do it for $35/hr?

hmm…

For a long time the answer was they needed those people to physically come into the office.

It's interesting to see workgroups that are harder to outsource, and the kind of contract renewals they are getting. Like airline pilots, for example...and not just forward pay increases, but retroactive pay raises for 2+ years as a lump sum, and many other perks and changes to work rules, higher reimbursement for various things, etc.

China has been averaging a 9% wage increase yoy or about 41% per 4 years. This wouldn't be news in China instead it would be the average case.

https://www.statista.com/statistics/743563/china-average-yea...

https://www.china-briefing.com/news/average-salaries-in-chin...

US market car manufacturing isn't in India/China because of NAFTA. And because cars are big and heavy, of course.

Mexico it is then.

Buick Enclave and Lincoln Nautilus are two Chinese made cars in the US. Expect US car manufacturers to have the bulk of their product lines to be made and designed in China before too long.

Some Jaguars and Land Rovers are made in India and are available in the US.

Whereabouts should we purchase land in Mexico? Needs to be near the new factories that'll go in next year.

Companies and individuals do not make decisions based on posturing or their pet peeves. If a company has not outsourced a plant already for cost savings there are reasons for still keeping that operation in the US.

Are you aware of the cost implications that may exist by them keeping the plants here?

Maybe that article linked would help you understand the structural cost implications that are proposed.

If labor costs go up 40%, but only in the US factories, I don't see how that doesn't lead to more parts & assembly in Mexico, Canada, China, etc.

The corporate counter-offer is 20%. Clearly they’re fine still employing a US workforce with double digit employment cost inflation - over four years.

It's beyond wishful thinking to assume that 46% increase will not motivate Ford to seek cost savings by moving factories offshore. The motivation:action tuple in this regard has been established for decades.

This kind of logic doesn't help anyone - yes, CEO pay is insane but its that way because of how much risk they take ownership of and shoulder day in day out. If one line worker forgets to tie a wire-harness it's not like the entire company will end up in financial ruin... However, the CEO making serious mistakes can and has cost GM millions.

Do they take ownership though? That hasn't been that way in a while.

Used to be the best warrior had skin in the game. We have them resources so when the lions came or the boars got into the crops, they were ready to kick some ass, even if the rest of us were undernourished due to a drought.

Now they just "take full responsibility" where that just means they have to announce that something dumb happened on camera. Truly a gruesome fate. So brave.

That's why the pay rates are different, but that doesn't explain why the pay rates should increase by different percentages

A failed CEO of a large company almost never ends up bankrupt, and they almost always remain a multi-millionaire. What exactly is the risk they're taking on?

Yeah but these guys typically fail upwards such that they are immune to failure, and take almost no personal risk at all.

> CEO making serious mistakes can and has cost GM millions

So despite GM paying the CEO millions, they couldn’t prevent him from making mistakes?

CEOs make mistakes all the time and often face few consequences.

We should all be lucky enough to have the chance to earn in a few months what we'd normally make in a lifetime. I'll gladly accept the extra risk that goes with that.

Are we supposed to pretend that most CEOs don't have an entire fleet of people at their disposal to ensure that they aren't making incredibly boneheaded decisions?

> because of how much risk they take ownership of and shoulder day in day out

What? The CEO of any substantial company is going to have a golden parachute in their contract. Literally the opposite of putting everything on the line, just merely "Will only make X, not 10X, where X may well be more than median lifetime earnings, even if the company completely collapses."

I totally agree that CEO pay is out of control for the most part, but I doubt the companies can really afford to give such a huge raise to thousands of employees. I think in the 1950's US, the average CEO's salary was "only" around 5-10x that of the average workers rates. This meant while CEO's were wealthy, they weren't Uber-wealthy like they are today with 100x salaries vs. average worker pay.

Next year’s headline: Auto Makers Hike Prices 40%, Leaving Buyers Stranded

Does it work the other way round?

Next year's other headline: More industries seeing more interest in unionizing.

Amazing how the people who are so "concerned" that raising working class wages will result in higher prices never seem to consider that outsize executive compensation, massive stock buybacks, etc are responsible for higher prices. Almost like they aren't concerned with the prices at all!

I actually never made any of those claims. My general take is that companies who are in dominant market position will use basically any excuse to raise prices, including the ones you listed.

They accidentally have a point there though.

1. poorer people spend a much higher % of their income, whereas rich people save it.

2. there's a lot more poorer people than rich people, which unfortunately can mean they're more capable of moving prices.

This is sort of related to why the middle class thinks full employment+low inequality economy is worse. There's other middle class people to bid up prices, and service at restaurants is worse/more expensive. It's nice to be in a high-unemployment high-inequality economy, if you're employed.

How much is executive comp really at a publicly traded company as a percentage of revenue? 40% raises for most employees across the board probably dwarfs it.

I don't see how stock buybacks relate more directly to anything here than retained earnings, or other kinds of reinvestment. They're just an effect of market conditions and the stock price.

They can't do that, because there are plenty of other car makers including from Japan, Germany, etc. This is why competition is good.

Buyers are already stranded. I should know, my car got totaled a few months back and a 1:1 replacement with current model year was about $15k more than my last one. Worse, the value of my totaled car was only $8k less than the original sticker.

The car market is extremely ugly right now.

Settle in for a wild propaganda-filled fall season.

Between UAW Strike, SWG Strike, barely avoided UPS Strike, and probably a few I'm leaving out, we're going to be inundated with half truths, misdirection, selective statistics and even the occasional outright lie.

UAW opening demand isn't just a 40% pay hike - but also a four day workweek (when combined is ~70% increase in pay). Nobody expects for UAW to get everything they demand (that's not how negotiations work of course) but still, it's a particularly unreasonable starting position and is likely demonstrating just how far apart both parties are.

It's become a sort of meme to bag on C-Suite salaries - with a lot of folks fundamentally believing C-Suiters don't earn their pay or at the very least don't earn the extreme pay gap between them an your average line worker.

Anyone thinking a C-Suiter clocks out at 5pm and doesn't work after hours has no experience in the C-Suite (or even upper management for the matter). There isn't really a such thing as "off hours" for these folks on average. Correspondingly, decisions made by your C-Suite can earn a company huge returns, or doom the company and all of it's employees and stake holders.

Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.

4 day work week has been successful in most places. As a world we should move towards it.

Other benefit: less environmental impact, more time for people to improve themselves and their mental health, etc.

Successful or not is not the point.

If met with the 40% pay increase it's another huge pay raise. There is no reality where line workers screwing in the same 3 door bolts all day long are getting what amounts to an effective ~70% pay increase.

Additionally, the 4 day work week is yet unproven in an industrial setting, such as are UAW member's jobs.

That 40% is amortized over 4 years, which is ~9.8% annually. Where are you getting the rest of the 70% from?

> Settle in for a wild propaganda-filled fall season

> There is no reality where line workers screwing in the same 3 door bolts all day long are getting what amounts to an effective ~70% pay increase in one year.

Please align your own comments. They are looking for a 40% hourly pay increase over 4 years, and a reduction to a 32 hour work week. These combined work out to an increase of 12% in annual pay, over four years. No UAW hired since 2007 makes more than $17/hour.

If you're looking for more details of what the UAW wants, they are in this article: https://www.cnbc.com/2023/09/13/where-uaw-negotations-stand-...

Ah, so the propaganda has already started.

In four year's time, will their pay be 70% higher than it is today if all demands are met?

Yes.

Are you hopeful about a 70% pay increase in four years? I sure am not...

Ah, so the propaganda has already started.

This is getting into weasel word territory; you completely ignored the GP observing the contradictions within your own rhetoric, and responded with more rhetoric and a fallacious premise. Being rude isn't helping your unpopular argument to gain more traction.

> In four year's time, will their pay be 70% higher than it is today if all demands are met?

No? If a given employee is making $17/hr, and working the union agreed 40 hours a week, they are making $35360. If they get a 40% raise over four years, they will be making $23.80/hr, and working 32 hours a week, giving an annual wage of $39,603.20. This is an increase in annual wage of 12% over four years. The hourly wage is an increase of 40% over four years. No one is getting close to 70%.

> Are you hopeful about a 70% pay increase in four years?

Honestly yes, I think that is in the realm of possibility, as I'm currently pretty underwaged for my industry and experience level. Currently interviewing for a job at a 45% increase. Regardless, as I demonstrated above, your 70% number is, as you put it, propagandha. I certainly feel that the post-2007 UAW hires aren't being compensated adequately for any industry, and the 40% hourly increase they're seeking is quite reasonable.

In one post you say 70% in a year, now you say 70% in 4, with respect to the first quoted post, this looks like walking back a failed attempt at propaganda.

A four day work week is only another pay increase if you're talking about a salaried worker. The kind of worker represented by UAW is not generally overtime-except, so they don't get paid for hours they don't work.

I somehow don't see UAW arguing for a reduction in pay. The four day work week is more often than not accompanied by a related pay increase so the total pay per week remains the same as a five day work week. The benefits are supposedly a better rested and production workforce, which has yet to be demonstrated in the type of setting UAW oversees.

You're inventing terms that are not discussed in any source I can find. The sources I see show a 4-day work week and a 40% pay increase. If you can find evidence of a second pay increase we can talk, otherwise I'll assume that the 40% is meant to be that increase.

You led out your initial comment warning about propaganda—it might be worth considering if you fell for propaganda on the other side.

When picking candidates for employment, why would an employer choose someone who is willing to work five days over someone willing to only work four? A stressed-out employee who is at work is going to outperform a well-rested employee who isn't present

Because their union insists that all their members get a 4-day work week or you don't get any workers at all. This is what unions are for: standing up for workers' rights when the employer would otherwise be incentivized to pursue the short-term gains from exploitation.

Or the workers can go to an employer without a union, work 5 days a week, and see a greater return on the amount of work that they're putting out since they're having 20% more output than the competition without having to pay union dues

> A stressed-out employee who is at work is going to outperform a well-rested employee who isn't present

Citation needed.

There is no hard evidence for this belief. In fact, and especially for creative jobs, employees that are well rested and happy will contribute more than stressed out plebe barely getting by.

You ask me for a citation, then make an even more specific claim without providing definitions or a citation yourself?

I’ve worked with “c-suiters” and in an auto parts factory. In no instance did the former work harder than the latter and in some instances the “c-suiters” were far below a factory worker in terms of ability and intelligence. I have, however, never met an auto worker that was born into a rich or well-connected family, which seems to be the primary differentiator between the two groups.

I'm not sure how you hope coming out justifying the ridiculous state of CEO pay is going to go for you, but the problem is the incentives are not aligned.

CEOs make big decisions... but they get paid more money than they'll ever need even if they do doom the company. In fact, many CEOs against union workers are torching their own companies to avoid a fair deal which would cost their businesses less.

The only way CEOs would justify their high pay is if we were able to hold them responsible for their company's misdeeds and throw them in jail. But since Sundar Pichai is still a free man, we clearly definitely don't do that either.

CEO is a completely zero-risk, massive return job that you get largely for knowing the right people and having a deeply flawed moral fiber that enables you to sleep at night after doing unusually cruel things to everyone else. That's really all there is to it.

> having a deeply flawed moral fiber that enables you to sleep at night after doing unusually cruel things to everyone else

I don’t think this is necessarily true. You might just be really good at lying to yourself.

Okay, I can accept that is also an alternative working criteria.

> Anyone thinking a C-Suiter clocks out at 5pm and doesn't work after hours has no experience in the C-Suite

That's not the standard, though. The criteria is cost above replacement, and quite frankly modern executives show up extremely mediocre on that measure. Companies flip executives all the time, and it almost never results in significant changes to revenue (and when it does, it's down as often as up). In fact there's almost no measurable meritocracy among salaried executives.

The reason executive salaries got so high is simply that the class the makes up the C-suite residents (the major investors and board members) got jealous that the outgoing founders of these companies got so rich, and wanted to play in the same sandbox. It's only fair, right?

But that's exactly the moral argument UAW is making: these companies got fabulously wealthy over recent decades owing to GDP growth and stock market booms, and they should share that wealth with their employees and not just keep it for the owners. The only difference is in how you define "employee".

Flipped on it's head - 2 thoughts:

1) You cite cost of replacement - yet these companies are unable to replace their C-Suite with anyone costing less. Therefore, they can command the compensation levels they do (not to mention compensation != in pocket pay).

2) UAW employees are indeed readily replicable with little or no training on average. Offshoring is very realistic, and there is no shortage of high-school educated folks willing to work in a factory/plant for current levels of pay.

Inflation is putting a squeeze on everyone, and it just so happens your average worker is feeling it the most. It's no coincidence all these labor issues and strikes are happening right now.

> these companies are unable to replace their C-Suite with anyone costing less

They can replace their C-suite with me. The fact they don’t want to because I’m not some rich, well-connected, historical CEO does not mean they don’t have the option.

I’d do the job for just the basic pay package.

Have you considered that you are perhaps not a very good big-org leader, and perhaps that is why they have not hired you?

Simply stating they can hire you and they don't because you're not already well-connected clearly demonstrates you haven't an idea what these people actually do.

And you are qualified to judge right?

My point is that there are a lot of people that would make perfectly fine CEO’s skipped over because they’re not already a CEO/born into connections.

The strongest signal people use for determining whether they would be any good is whether they’re already one. Which is how people that torpedo a company get re-hired anyway.

Unlike for example, engineers, where we assume they can’t program their way out of a pack of butter even when they come in as a principal.

Yes, exactly. You can flip the argument on its head and it works symmetrically. So why was it OK for executives to get huge salary increases over the last decade but not workers, since it's based on the same moral ("fairness") calculus?

It's not. The moral ground has been ceded. Now it's just about "I got mine".

> Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.

Why? Why is it that CEO pay reflects company performance but not the line workers? It seems incoherent. How does the collective performance of line workers, which we can predict somewhat from salary, not impact company performance? Where did this idea that only in upper management does salary correspond to company performance? What research was done?

Aside from the rare company built by the CEO wholly or largely, CEOs just seem to come from wealthy families, are tall handsome men, and have all the right connections. These are not brilliant geniuses. Being a c-suite executive is not a meritocratic thing most of the time, it’s an inherited privilege.

Compensation is not a function of their performance, it’s a function of their ability to hold their businesses hostage and threaten to tank their companies unless they’re paid high salaries. Rotating out the c-suite will at least temporarily tank company profits. It’s about power not merit. So why uh, doesn’t the union do the same thing and also hold the business hostage? 40% is not wild at all, it’s a drop in the bucket for shareholders because salaries are so low to begin with.

> Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.

For everything besides growth rate I can see arguing that they can't be compared—I don't agree, but I can understand where you're coming from—but why should a CEO's salary go up dramatically faster as a percentage than line workers'? Is the CEO somehow working 40% more hours than they did last year? Working 40% harder? What is that 40% tied to that line worker salaries shouldn't be tied to?

The CEO is measured by company performance over a period (may be a year or years), and the value they bring the organization as a whole.

Your average line worker cannot impact the entire business like this. They alone cannot be responsible for huge growth or periods of rapid shrinkage.

They just happen to be the most visible...

> Your average line worker cannot impact the entire business like this.

We already use this to justify the massive disparity in raw salary, so it doesn't make sense to use that same argument to justify the massive disparity in percentage increases as well. The scope of influence is already factored in to last year's salary.

Raises on the order of hundreds of thousands would not make sense, but why not raises that are comparable as a percentage of pay? Each front line worker making (for easy math) $50k a year in 2022 can absolutely contribute more than $20k to a year's growth.

Because the CEO is managing a company that is either 40% bigger or 40% more profitable. The worker is likely doing similar work...

A bad SRE team can destroy your company. Yet, even at the best places, you’re lucky if you get a small per diem when you’re on-call.

I’m not saying SREs are poorly paid, but they often are keeping entire companies afloat, and their pay is nowhere near that of the C-Suite.

If the entire SRE team quit / went on strike, there is a non-zero chance the next incident would utterly break the company.

If the entire C-Suite quit, uh… what exactly would happen? People would continue doing what they had already been doing?

Executives are overpaid. Period.

> A bad SRE team can destroy your company.

Ah, and the SRE team assembled themselves, hired themselves, decided what to work on, direction, technology, plans, etc all on their own?

Or is there a C-Suite running the SRE team, even if indirectly?

> If the entire C-Suite quit, uh… what exactly would happen? People would continue doing what they had already been doing?

This is beyond naïve, I'm not sure what to call it. Yes, things hum along for some duration... and then what?

C-Suite are not laborers, as you've queued into. They provide direction, guidance, goals, identify problems, etc.

Take a human being without any of that in their personal life. What becomes of them? Nothing good... it's similar for a company. The wrong leadership dooms a company before any of the line workers even notice.

> Ah, and the SRE team assembled themselves, hired themselves, decided what to work on, direction, technology, plans, etc all on their own?

And you think the CEO did this? No - hiring managers and directors decided it was necessary.

> This is beyond naïve

Not at all. Who decides what the product needs? Product Managers, or sometimes Engineers directly. “Setting company direction” is vague at best, and can easily be replaced by people in more direct contact with customers.

And in any case, you made my point by agreeing things would hum along for some time. Executives are not critical to a company. Workers are. Without workers, profit immediately goes to $0 (modulo automated factories / SaaS, but as mentioned once something breaks, you again need people).

You seem to believe that workers are incapable of autonomy, of seeing needs and meeting them, etc. This is why Scrum exists, because people like you don’t think people like me can be trusted to do what’s necessary to keep things running.

> No - hiring managers and directors decided it was necessary.

Where did the hiring managers come from? Poofed out of nowhere?

How did they know what to hire? Just made up their own direction?

This would be like if a McDonald's line cook could just decide the company no longer will offer the Big Mac because they don't like making it.

This line of thinking is so typical for a developer. You even reference Scrum like that means anything in the areas we're discussing. But even in that setting, how do you think Product Owners know what things to prioritize? They're just making it up as they go?

> Where did the hiring managers come from? Poofed out of nowhere?

Now you're talking about founders, which is !=== CEO. I have respect for founders - they built something. If the founder happens to still be the CEO, then same. If instead it's just yet another suit, then no, they had nothing to do with the hiring manager.

> How did they know what to hire? Just made up their own direction?

I mean, yeah? Do you think that everyone under the CEO is a helpless infant, incapable of independent thought?

> You even reference Scrum like that means anything in the areas we're discussing.

Because they stem from the same line of thinking - that workers must be managed, lest they wander aimlessly and destroy the company.

> This line of thinking is so typical for a developer.

Two fun facts: I'm not a dev (SRE/DBRE), and tech is not where I gained this line of thinking. I spent a decade as a nuclear reactor operator on a fast-attack submarine. Submariners in general are taught to be independent, and fully capable of taking over someone else's duties when necessary. Nuclear-trained personnel, even more so, and those who actually operate the reactor (me) yet more.

Could a submarine leave port without the Captain? Ideally not (and the Navy would never let it happen if they had a choice), but we are absolutely trained to do so. Hurricane prep during in-port periods mostly consists of making sure the duty section are the good ones, because if it hits, whoever is on the boat is going to start her up _real fast_, take her out, and submerge. A $2 billion warship is entrusted to a skeleton crew of personnel because we know what we're doing.

It's worth noting that Google - who invented SRE - heavily borrowed from the Nuclear Navy [0].

[0]: https://sre.google/sre-book/lessons-learned/

It seems to me that a lot of these skills can and should be cultivated inside the company. Toyota famously incorporated this idea into their corporate culture from top to bottom. The company has done very well, yet the CEO's pay is modest by US standards - about $7 million this year, some 80% of which is in the form of stock options. This was a record; in recent years the job has paid in the $-5 million range. Toyota isn't the world's most bleeding edge company, but it's fair to rank it among industry leaders globally. I've never heard anyone saying they wish they hadn't bought one of their vehicles.

https://en.wikipedia.org/wiki/The_Toyota_Way

Of course they can and should be compared. They’re human beings, and I don’t care how much additional “value” you brought to the company (you know that’s BS they tell to justify being overpaid) or how many late hours you worked, in my eyes you’re not deserving to earn 1000x more money than your ordinary workers.

So those with the least leverage to earn more just so happen to deserve to be paid just as little as they are, and those who have severely disproportionate influence on their earnings just happen to be making exactly what they deserve?

Trying to justify exorbitant C-suite salaries because they often work hard (in conditions significantly easing working hard due to having a litany of assistants to handle boring stuff, private jets, drivers, Michelin starred meals with regulators, lawyers an executives counting as "work") is silly when you look at how hard so many working class people work. But I know you know this, so it seems you're just blaming them for being born poor, unconnected and not having the "big business brain" that all C-suite executives must have.

Jeff bezos has something to say about the 5pm thing :

"By 5 p.m., I'm like, 'I can't think about that today. Let's try this again tomorrow at 10 a.m,'" he told the Economic Club of Washington, DC.

https://www.businessinsider.com/jeff-bezos-daily-routine-201...

That's a well known quote precisely because it's such an outlier.

If you believe this means after 5pm Jeff Bezos forgot all about Amazon, then you are sorely wrong. Nobody, and that means nobody builds a business the size of Amazon within a single lifetime and did not work/think constantly.

It's kind of like how people think Bill Gates or Steve Jobs just accidentally became some of the most successful people on earth...

>it's a particularly unreasonable starting position and is likely demonstrating just how far apart both parties are.

Their demands are only unreasonable if they lose. This is a strike. It's fight, not a discussion. The goal is to give the company no choice but to give in. The strikers are under no obligation to be fair. They can make whatever demands they want. They don't have to give an inch if they don't want to.

>They cannot be compared, nor should they.

Comparing them is pretty simple, actually.

$ units

You have: 21 million USD / year

You want: (28 USD / hour) * (40 hours / week)

* 359.35059

/ 0.0027827977

Defending the excessive remuneration for C-suite inhabitants by saying they're never off work falls flat when you realise there are many other professions where this is the case. Whether this be a veterinarian who gets called out at night, a farmer who stays up all night because one of his cows is about to give birth, a mechanic on board a fishing boat with the responsibility for keeping the thing running or any of the other professions where responsibility is combined with unpredictable and/or uncontrollable event timing.

"Yes, but the C-suite is responsible for $zillions"...

Are they personally responsible? If they fail in their job do they get to reimburse the investors for money they lost? Hardly, they tend to get a golden handshake and move on to another company whereas that vet, the farmer or the mechanic tend to be punished for failure in some way - by loosing their accreditation, livestock or livelihood.

C-suite remuneration has far outgrown its justification.

> Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.

Why should they not be compared? Why should it not be discussed whether an hour of a systems engineer's life is worth far less than an hour of a CFO's life? What great sacrifice does the CFO make which the farmer does not to explain the disparity in remuneration? An hour in a life is an hour in a life no matter your profession, you won't get it back when it is gone.

The point isn’t to compare CEO and factory worker salaries dollar for dollar. The point is to compare growth rates of both over years. If the company grows 3x, CEO salary grows 10x, and worker salary grows not at all, how does that make sense to you?

>Anyone thinking a C-Suiter clocks out at 5pm and doesn't work after hours has no experience in the C-Suite (or even upper management for the matter). There isn't really a such thing as "off hours" for these folks on average. Correspondingly, decisions made by your C-Suite can earn a company huge returns, or doom the company and all of it's employees and stake holders.

you're ignoring the contributions of people in the company that make the C-suites job possible. Why should the C-suite be entitled to this just because they work long hours?

I work long hours. I've had jobs - salaried, mind you - where I worked past 5 PM, well into the evening, and no stock options are not the same. At any rate, one of those jobs the stock options weren't worth anything anyway.

CEOs get golden parachutes and gobs of money and for what all, exactly? What do they actually contribute?

I'd love for there to be an experiment where you take a senior operations person, for instance, and put them in the CEO role, and see, if given the same support and onboarding, if they can't make good or possibly better decisions than the someone with "CEO experience"

I've met alot of CEOs, and they don't tend to be very in touch with their workforce, they simply see what they want to see, most of the time, few exceptions.

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