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

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

#31

Post by SeanAnderson »

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?

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

#32

Post by secabeen »

hinkley wrote: post #17
kortilla wrote: post #12

Earlier quoted context omitted.

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......

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

#33

Post by aaronbrethorst »

throw0101b wrote: post #10

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 u…

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...

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

#34

Post by fabianhjr »

mortureb wrote: post #3

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.

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...

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

#35

Post by sokoloff »

jonathankoren wrote: post #5

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.

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

#36

Post by toomuchtodo »

bradleyjg wrote: post #14

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

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

#37

Post by 71a54xd »

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.

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

#38

Post by astrange »

econperplexed wrote: post #8

> 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…

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...

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

#39

Post by hinkley »

JKCalhoun wrote: post #13

> “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.

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

#40

Post by distortionfield »

econperplexed wrote: post #8

> 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…

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.

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