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comment by goobster
goobster  ·  375 days ago  ·  link  ·    ·  parent  ·  post: No one should be a billionaire

In principle, I have no problem with pay disparity. I see no equivalency between the amount paid to a CEO, and their entry-level employees (with the assumption that the entry-level employee is making a livable wage).

They have different jobs with different responsibilities and therefore different compensation packages. It's not pie; if the CEO gets more, the entry-level clerk does not get less.

The ONLY context within which pay disparity is an issue, is in publicly-traded companies and their quarterly earnings reports.

For example, there is absolutely no reason why every McDonald's worker couldn't be paid $15/hr. McDonald's makes plenty of money to support that.

The reason they don't, is because shareholders are conditioned to expect their investment portfolios to constantly increase. So if McDonald's only made $1000 last quarter, instead of $250m, they would get hammered by their investors. The fact is that BOTH numbers show a profit, and therefore should be fine.

I'll say it again: It's Not Pie. McDonald's CEO famously makes $21 million dollars a year but his salary is only $1.1m of that. Everything else is bonuses for hitting short-sighted goals. The company made a PROFIT of $5.9bn last year. That is equal to two hundred and eighty times the entire compensation package for the CEO.

Trying to construct some sort of class warfare between the CEO and the entry-level employee is a diversionary tactic by the institutional investors who have a nice simple formula that they are very invested in. Change that valuation formula, and now investors have to do actual work for their money. And they don't want that.

(Side note: This is also why it is critically important to make sure any product or service is not being allowed to externalize any of its costs. No tax cuts. No breaks. No lobbying for less strict environmental regulations, so they can pollute the water table, and give people downstream cancer, that is then paid for with Government programs to clean up the waste, and deal with the sick people. Every company must pay their FULL BILL for all of their costs, including externalized ones, and that needs to reflect in the cost of the product. A $15 Happy Meal is a very different thing from a $3.95 one.)





user-inactivated  ·  375 days ago  ·  link  ·  

I feel you for the most part, especially on the role of investors and externalizing costs.

McDonald's, the way it's run as a franchise is a bit sticky, but let's pretend it's like a more conventional company as we understand them. If the CEO got the additional $19 million through bonuses and the average worker got $0, would you consider that to be fair? I don't think however it's sliced, I could. Without the people making the food, running the registers, keeping the stores clean, McDonald's as a successful business wouldn't exist and the CEOs and shareholders would not be able to make any wealth.

Additionally, while they're different facets of the same dice and they play different roles, I don't think that CEOs and other corporate leaders are immune from the same temptations shareholders have to make decisions that have an overall deleterious effect of workers and the companies they're a part of in pursuit of wealth and personal gain.

goobster  ·  375 days ago  ·  link  ·  

I hear ya...

    "...without the people making the food, running the registers, keeping the stores clean, McDonald's as a successful business wouldn't exist and the CEOs and shareholders would not be able to make any wealth..."

And without the enormous real estate management operation, supply chain, relationships with farmers and trucking companies and regulatory agencies and FDA and and and... none of those workers would have a job.

That's the core of it, really... the attempt to correlate different types of "work".

Without the CFO assessing different ERP platforms, and deciding on the tech infrastructure that will be used to run the company, the Accounting Department can't produce a quarter of a million paychecks, which means nobody gets paid.

Of course, without someone wearing a headset and running a register and taking orders at the drive-thru window, there's no income.

But there is no equivalency between these roles.

Each requires the individual to have a certain set of skills and experience, which can be measured and quantified (somewhat), but you can debate every variable used in that calculation. How valuable is an MBA? Or previous experience with enormous ERP system installations? Or being a short-order cook? Or being able to work quickly and under extreme pressure during the lunch rush? Etc...

We like to be all up in arms over $26m pay packages. But the fact is that this is a publicly traded company, with a board of directors, and shareholders, who have all approved that compensation package. They have weighed the responsibilities of the role, put a number on each aspect of it, and set awards for achieving a specific set of goals. If he hits X profits in the first quarter, he gets $Y bonus amount, etc.

His bonuses have been vetted by people whose SOLE RESPONSIBILITY is to make the company money... and they have decided that number is commensurate with the responsibility, and good for the business overall.

Neither of us have the information or right to question that, until we are sitting on that board, or a shareholder who is disgruntled with our stock performance.

And again, the problem is not the CEO's pay. It is what his board and shareholders have placed THEIR values on. They want short-term growth. Not long-term employee retention and benefits. If they were incentivized to make a business that was Good For The World, they would have different measurements that they would give the CEO to meet, so he could get his awards.

Looking at the money is easy.

The actual problem is the way we value business, as a whole, and Wall Street's skewing of all measurements to be towards profitability, rather than a Triple Bottom Line type of structure.

user-inactivated  ·  374 days ago  ·  link  ·  

I hope you're not offended if I say that I don't have much to add to the conversation at the moment. My head isn't with me today. Thanks for the responses though. I appreciate the time you took to talk with me. :)

goobster  ·  373 days ago  ·  link  ·  

No offense taken at all! I enjoy honing my intellectual swords against my fellow smart Hubskites!