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Federal Reserve chair says decline in workers' share of profits 'very troubling'

latimes.com

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Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#281

Post by astrodust »

acct1771 wrote: post #147
munk-a wrote: post #89

Earlier quoted context omitted.

This is correct but it's also rewording the parent comment. There is reason to be legitimately concerned that things might be on fire in a year or two, it would be very good for the US government to take actions to prevent that for the benefit of the people who are being ground down and, for bonus points, it would be in the best interest of the people grinding others down!

Why do you think the Bush family and thousands of others like them have swathes of land with bountiful resources in other countries? They have an escape plan when it gets real. You and I probably don't.

That's not an escape plan, that's just what wealthy people do. They own things.

Peter Thiel's jockeying for New Zealand citizenship however is an escape plan.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#282

Post by astrodust »

gbacon wrote: post #202
astrodust wrote: post #78

Earlier quoted context omitted.

Those are the kinds of people that are astonished at what those running the show are doing these days. Conservative pundits from the 1990s are rabid leftists by the standards of the current regime. Richard Nixon would be branded a communist!

Populism, nationalism, and authoritarianism don’t map neatly onto a one-dimensional left-right axis.

Yeah, well, tell that to Fox News.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#283

Post by gbacon »

Crye wrote: post #254
gbacon wrote: post #160

Earlier quoted context omitted.

We've thrown a significant percentage of our lives, and they've only thrown in money Money saved, borrowed, or inherited represents a significant percentage of someone’s life. Even if you deny this, the money in someone’s pocket in the present represents an enormous percentage of that person’s future life. Put yourself in the shoes of the owner who took risk up front. Yes, you took some as well, but at any time you c…

Or we can look at it the way it really is. Equity is just a point system which gives people the ability to make decisions and influence our world. They could earned the equity, been given it or just been plain lucky and found it. It literally doesn't matter. They have it now, and we all accept these are the rules. It's just a sorting algorithm we come up with to help efficiently allocate resources.

Equity is property, a resource to be allocated in some manner, and the earlier comment muses on an allocation that feels unfair emotionally.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#284

Post by isostatic »

israelisreal wrote: post #166
Art9681 wrote: post #115

Earlier quoted context omitted.

I'm a veteran that had to enlist so I could get out of poverty. I also lean left. Let me say this out of a little spite since you decided to get political: If you and your daughter's mother made the "right" decisions, your daughter wouldn't have to enlist in the military to have a chance at a good life. I'll show myself out now.

Fair enough, but it's her choice. She is choosing this path largely because she doesn't want to attend college in a traditional setting and deal with the kinds of BS that plague colleges now. My daughter leans hard right, again her choice, and in many ways she is further right than me or her mother. My daughter wants to do things her own way, and the Air Force is the way she wants to do it. Who am I to stop her? She'…

> My daughter leans hard right

How ironic she's relying on the taxpayer for her financial future. Good job the rest of us actually generate economic activity so we can pay taxes to pay for her.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#285

Post by gbacon »

dunpeal wrote: post #226
3pt14159 wrote: post #173

Earlier quoted context omitted.

Well, this isn't completely true. Founders are much more likely to make ten or a hundred million than first hires, but first hires are at least as likely to make $500k to $3m as founders, especially in net present value accounting terms, and not even adjusting for risk adjusted returns or opportunity cost differences. Most startups don't get to first hire. Most startups have founders that don't just make nothing, the…

I'm seeing a lot of these irrelevant moral arguments thrown around. The fact that the founder is taking as much or more risk than you does not mean you should forgo better opportunities to work for him. You should work for him if the combination of salary and equity is competitive, and nowadays it often isn't, even for early hires. Which makes the argument that being an early hire at a startup doesn't make sense at t…

Based on your comment elsewhere[0], I seem to be among the crowd you believe is throwing around irrelevant moral arguments when in fact I did not and 3pt14159[1] to whom you’re replying here did not. I was discussing valuation and 3pt14159 probability.

The founder owns a chunk of equity, an asset with some value. Given the ups and downs of reaching a point where people are kvetching about equity allocation — and 3pt14159 reminded us about survivorship bias — the founder may overvalue her stake. If bad news has recently hit, she may undervalue. Regardless, the question is what will persuade the founder to give up a piece of what she owns, and what will she accept in exchange?

Looking backward does not generally make for wise business transactions. The entrepreneur’s role in the market economy is looking ahead to make forecasts and allocate capital accordingly. Comparing past exposure to loss is a pointless exercise. Giving away resources with no hope of repayment or increase is gifting. Spending with the expectation of regaining what was paid plus an additional return is investing. This is still not a moral question but one of philosophy.

Many people miss this when looking at the situation as though it were an undeserved windfall for the founder, a gift from Santa Claus. Assuming the founder is primarily interested in increasing the value of her equity, accepting a smaller percentage of the pie will not achieve this purpose unless the individual slices become more valuable because the grant of equity was an investment, and “Well, I’m going to continue doing the same job I’ve been doing for the compensation I already agreed to” is not a strong business case.

Looking at it from the employee side, of course don’t agree to below-market pay with zero or insufficient equity on the mere hope that big blocks of equity will fall out of the sky later. (This would be an opportunity cost for the employee, but that is still different from out of pocket cash loss to which the founder may have been exposed.) Employees who want more have to either negotiate for it up front or increase their value to the business. On this, I will make a moral argument: yes means yes. Ask for what you want, and agree to what is acceptable. No one is a mind reader.

[0]: https://news.ycombinator.com/item?id=17553940

[1]: https://news.ycombinator.com/item?id=17553645

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#286

Post by jsoc815 »

tdb7893 wrote: post #158
pembrook wrote: post #124

Earlier quoted context omitted.

That's not what the Fed chair is talking about. Nobody is concerned about wages in tech. Tech is one of the few industries that has the opposite of a stagnant wage growth problem.

We are paid a lot but I heard somewhere that even though we should have crazy bargaining power we still are capturing less of the profits than would be expected so tech isn't fully immune to it (especially if you aren't working at one of the more famous tech companies)

>We are paid a lot... even though we should have crazy bargaining power...

While you are likely correct, what pembrook says is mostly true. The tech scene is often used by economists and the like as a cudgel against any talk that U.S. wages and the general economy are lackluster. (To be clear, I am basing this on actual discussions I have had, not theory and/or scholarly papers.)

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#287

Post by pjmorris »

pjmorris wrote: post #68
TAForObvReasons wrote: post #3

Earlier quoted context omitted.

To be fair, the Federal Reserve is not responsible for labor law and the like. They are clearly very late in their response, but it's notable that a non-political organization felt the need to comment.

The Fed is responsible for QE, including about two Trillion in purchases of Mortgage-Backed Securities [0], which has the effect of making housing more expensive than it would otherwise be. If you're a home owner or debt owner, that's good for you. If you pay rent or a mortage, that's wage suppression. [0] https://fred.stlouisfed.org/series/MBST

I am interested in the views of those who downvote this comment. My facts are conventional, I'm guessing that my perspective is controversial.

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#288

Post by walshemj »

spookthesunset wrote: post #243
walshemj wrote: post #146

Earlier quoted context omitted.

1.8 is non trivial (assuming no shenanigans) back in 2000 I had .5% in a uk vc backed company if we had been taken out I would have been a millionaire IRL not just on paper :-(

The "if we had been taken out" is the key in your statement. Odds are very good your startup won't ever "be taken out" in a way that results in you getting the money you lost by not working for a big tech company. The risk adjusted returns on startup stock options are so close to zero you might as well classify them as "winning the lotto". Personally, I'm done with startups. They simply don't pay nearly what you'll g…

Well it was a worker coop so there are some stronger laws governing that sort of company ie the employees directly owned the controlling interest.

Re being taken out if the coop movement was not stuck in the 19th century and embraced .coop properly it could have played out - and if ICANT weren't a bunch of xxxxx :-(

Re: Federal Reserve chair says decline in workers' share of profits 'very troubling'

#289

Post by selimthegrim »

pimmen wrote: post #211
rayiner wrote: post #107

Earlier quoted context omitted.

Are you thinking of any specific one out of the "so many" examples, or are you assuming? Because for Senators, it's illegal to sit on a corporate board, and for Members of Congress, it's only legal if the position is unpaid: https://politics.stackexchange.com/questions/10976/legislati... .

However their relatives can sit on boards, so a senator's spouse would be fair game. And they can use the paid board gig to make money between terms. Susan Bayh, ex senator and governor from and Indiana married to another senator, sat on multiple boards between her own political terms and while her husband was in office (also while she was governor). She's been on at least 14 boards in total: https://en.wikipedia.org…

Wait, since when was she a senator and governor?
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