How does that work when 60% of Americans are living paycheck to paycheck?
When you're not sure if you'll manage to pay the electricity bills to keep your fridge turned on, is your first thought going to be "let's invest in the market!"?
When you're not sure if you'll manage to pay the electricity bills to keep your fridge turned on, is your first thought going to be "let's invest in the market!"?
"71.93% of Americans Living Paycheck to Paycheck Have $2,000 or Less in Savings"[0].
So no, it's not a tiny percentage. $2k or less in savings means being one emergency expense away from not being able to pay rent or your house loan next month.
- [0]: https://www.forbes.com/advisor/banking/living-paycheck-to-pa...
It's a meaningless statistic. They can still have high net worth and/or large incomes even if they don't keep cash on hand.
Just read it, it's all in there.
I may not always agree with everything I read, but at least I take the time to read it before openly disagreeing with it.
I respect your opinion but the stats presented before does not “shows“ illiteracy but low investments. Lack of liquidity to invest seems a very plausible raison because a revenu threshold has to be passed to be able to buy food before founds. This stat is probably almost a proxy for how many Americans are below that threshold.
Of course there are economic literate people who really are struggling, but I doubt they make even half of those 71.93%.
Did everyone become illiterate or maybe the inflation rate has exceeded the growth rate of wages[1], among other things?
What's funny is that on two comments rejecting my argument one accuses me of considering people "too dumb" to take their own financial decisions, the other tells me people are actually too dumb and that's why they are in financial trouble.
- [0]: https://tradingeconomics.com/united-states/personal-savings
- [1]: https://www.epi.org/publication/charting-wage-stagnation/
Last 60 years we experienced enormous growth of advertising - is it really hard to believe that many people are having big problems with limiting their spending.
But I don't see any argument that paying that higher comp in the form of shares instead of in the form of cash is any better?
(Unless you want to imply that people are too dumb and need to be protected from themselves, and that why we need to give them more stocks instead of more cash? Or something else?)
That's a good argument to make.
Among the entire workforce of a successful employee-owned org, I would think there would be no disagreement, IOW nothing to argue about.
It surely depends how successful, but all you need is to do the math to know for sure.
Beyond a certain threshold, companies where most of the workers are living paycheck-to-paycheck can end up paying them more and that bugaboo can go away completely. Whether or not they are actually awarded or entitled to any shares in their employer yet. Even during a time when it's just the rest of the employees owning the company.
What good are shares if you're never going to sell? I mean never sell your shares nor (vote to) sell the company.
The only thing shares like that entitle you to is dividends. And you only get dividends when the company makes enough money to declare a dividend. Over and above any shortcomings that might need to be overcome.
The net difference is that distributions that go to outside investors under the more-familiar arrangement, are instead returned only to employees when they are the only shareholders.
And sometimes that could be a very life-changing difference for doing the exact same work. Sometimes yes, sometimes no.
That's why you do the math.
No need for your charity, thanks. I'm simply making the argument that you must live in a bubble if you think that enough people have the excess liquidity and market knowledge for this to be an applicable solution to the general population.
> Unless you want to imply that people are too dumb and need to be protected from themselves
Not being wise in the markets != being dumb.
Protected from themselves? No, protected from speculators and exploiters.
Nothing prevents people from investing also in other companies if they feel like. Or are you implying they are "too dumb" to consider the possibility?
Shared ownership also protects employees from speculative decisions like mass layoffs made only to give more value to shareholders. It also prevents the alienation of working on something you don't own and gives a strong incentive for everyone to give their best.
I thought you just said that this isn't a viable option for most people? Now it is on the table?
> are you implying they are "too dumb" to consider the possibility
For what it's worth, reading through this thread, it seems like you were the one who claimed most people don't have "market knowledge"...
I was just commenting on what I was seeing in your comments - sorry that I struck a nerve..
I'm not sure what bubble you think I'm living in, given how little you know about me. But in "your bubble" it doesn't seem like there's a way to reconcile two very antithetical propositions: 1- people don't have the resources/knowledge to invest, but also 2- they can use their excess resources to diversify away from having significant investment with solely their employer. How does that work?
And just to re-iterate, no one besides you has brought up the intelligence of "most people" when it comes to the ability to invest. So...?
The people who need money now will just sell the stock as soon as they can.
Or are you suggesting that employees just get a fixed share when they join the company? That model exists, but it typically only works for companies that need no outside capital to get started. Like law firms.