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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

#361

Post by ramranch »

MichaelDickens wrote: post #266
vel0city wrote: post #78

Earlier quoted context omitted.

> paid zero > paid $1.5 million in cash These are two wildly different things.

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

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.

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

#362

Post by ytoawwhra92 »

whatshisface wrote: post #248
noizejoy wrote: post #240

Earlier quoted context omitted.

> 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 th…

> 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.

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

#363

Post by queuebert »

vel0city wrote: post #78
astrange wrote: post #38

Earlier quoted context omitted.

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/busines…

> paid zero > paid $1.5 million in cash These are two wildly different things.

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

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

#364

Post by sgerenser »

TheCoelacanth wrote: post #126
sokoloff wrote: post #35

Earlier quoted context omitted.

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

And the shareholders would be out of their investment.

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.

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

#365

Post by ummonk »

noizejoy wrote: post #240
whatshisface wrote: post #196

Earlier quoted context omitted.

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 s…

> 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?

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.

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

#366

Post by elforce002 »

TaylorAlexander wrote: post #336
hgdfhgfdhgdf wrote: post #311

Earlier quoted context omitted.

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?

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

#367

Post by kortex »

whatshisface wrote: post #196
TaylorAlexander wrote: post #124

Earlier quoted context omitted.

> 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 hi…

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 s…

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.

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

#368

Post by queuebert »

jcranmer wrote: post #249
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…

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 ec…

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

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

#369

Post by edgyquant »

TaylorAlexander wrote: post #336
hgdfhgfdhgdf wrote: post #311

Earlier quoted context omitted.

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.

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

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

#370

Post by ummonk »

TaylorAlexander wrote: post #336
hgdfhgfdhgdf wrote: post #311

Earlier quoted context omitted.

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.

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