It’s time to balance the power between workers and employers

Because that works too.

A home is more than a structure that one happens to reside in and its value has other dimensions than what the market might be willing to pay in dollars for it.

You suggest that buying a house that people want is like winning a lottery ticket. That ignores the possibility that you bought your house as an investment, because you recognized the potential of a neighborhood, or that you were responsible (in part) for building the value of the neighborhood. Setting those possibilities aside, being rich is a matter of luck too. Your parents were well off, you happened to study the right thing at college, get involved with a startup at the right time, or were even born with the genetics and upbringing to generate a high iq. That's all luck too. Why should the rich person's luck be rewarded by forcing the poor to give up their home and move somewhere worse?

Americans generally use middle-class to refer to this state. Things are good, you have a paycheck or two of slack, you can make a healthy retirement contribution and save a little each month, own (via debt) a decent house and car, go out to eat a few times a month, not pinch pennies at the grocery store, etc. Major changes like moving, getting a new car, putting a kid through college, etc. require some planning, maybe some financing, but are doable.

Real wealth would be owning a grand house and luxury car, not needing to work to sustain the same lifestyle (before retirement age; after retirement age this is baseline for not being poor), ability to self-fund a capital intensive business, casually owning multiple residences, frequent international travel, etc. Luxury cars are toys and putting a kid through college is painless. That kind of stuff.

Why is this important? Because at that point, you can do, say or believe WHATEVER YOU WANT without fear of losing your job and you have the capital and network to influence others.

To me, that's about $20M ($10M in my case) invested in a boring old three headed portfolio (50% index, 25% bonds, 25% international index).

Earning $20M for the sole purpose of saving it is not easy. The only ways i know of acquiring that wealth is through an inheritance, a significant liquidity event or by stealing it.

And even those who feel it instictively, often can't express it well.

The only solution that's ever worked to turn that around is sacrafice. People need to start intentionally engaging in "losing" propositions to win hearts and minds to a cause. It's only by delivering gifts that you can turn a competitive game into a cooperative game where everyone wins together. If everyone insists that they win first, then you're stuck.

Edit: the parent comment added the second link in an edit.

Ask the people that offered student loans in 1997

If they are getting paid less than a 787 that just means they aren't producing entire 787s, they are producing parts of a 787.

When Henry Ford attempted to build the first commodity private motorcar for the middle class worker whilst also paying his assembly line workers enough to afford one of their own from their wages alone it was by design a very delicate balance. The idea was to enable someone, even without significant resources or higher education, who had the aptitude and is a hard worker to become an employee and in a measurable way start to join the middle class their own self. The assembly line was engineered to be profitable enough to accomplish this to begin with. What this meant was being able to gradually afford a house, a car, a spouse, and kids on one worker's income of course. Could be accelerated with overtime. Upward mobility financially by productive labor alone without having to receive a promotion in the workplace, or having to rely on family or other resources to become established.

Ford's factory as a system was created to be a value- and money-making-machine with everyone involved moving ahead together.

This element of mass-production of a new commodity for a large target class while simulaneously enabling new workers to enter the target class from their labor alone is one of the things that allows it to scale so well, and when this element is compromised the scaling may be unsteady and/or unsustainable.

This element is also not very present on the Boeing assembly line. Mass-produced commercial aircraft are still commodities but no middle class person is expected to purchase one using their labor alone. Balance is required but at a different pivot point. With Ford starting at a 0X target the degree of balance should be more obvious and easier to maintain. Boeing is a good example of the opposite extreme, those aircraft are so expensive who knows what multiple would be required just to get something like that off the ground. The higher the labor multiple like this you would think the more difficult the balance would be to maintain, but of course any multiple is huge compared to zero. And there's no more benchmark for anybody since the US dollar is so compromised now, a worker may have to do lots of overtime just to afford a car that's reliable enough to get to work in the first place, which can keep a home itself out of reach for their forseeable future.

Anyway, there have always been craftsworkers who build unique things for royalty, others who mass-produce commodities intended for the middle class, and anything in between. Either way the most successful can sell all that they can make.

New cars and aircraft are not designed for those whose resources are so low that they are below middle class. Such low-resource individuals can only maintain economically by doing without the full-price commodities of the middle class, substituting with second-hand and surplus commodities when possible. For them, higher expenditure levels can be unsound but are often entertained in order to give the appearance of full middle-class status. For instance the purchase of a brand new car or brand new home instead of second-hand may provide some degree of comfort but can seriously hamper any true progress up into the full middle class, especially for someone who is making a credit purchase.

You're not truly in the middle class unless you can actually afford to pay cash for the true middle class commodities. Extravagances on credit maybe but not necessities or common commodities.

Seems to me that when assembly lines are truly bettering the wealth of their workers, everything goes well until you can no longer sell all that you can make.

Uh-oh.

Employers are always going to have the upper hand, but during cutbacks even the truly generous payers can seldom recover anything significant by limiting employee compensation without being quite destructive to the structure that the founder had built. Employee cutbacks beyond a certain level, or in the case of employers who are on the edge by paying "market" or "competitive" rates, will end up generally halting employee's upward mobility in a tangible way. Even under the most severe conditions, shareholders with strengh and conviction are supposed to be there to absorb almost all of the financial fluctuations. Capitalists who fail to intentionally restore prosperity to their employees as soon as possible seem to be a great source of opportunity for a union to become competitive in offering more to the employees in bulk than the actual employer is doing on their own at the time.

Balancing the employee's entire financial opportunity versus a relatively small percentage of the bottom line is not easy even when it's intentionally generous.

Employee prosperity is always at the discretion of the involved capitalist, and the labor market is suposed to be set by comparison to how productive those workers would be if in business individually or teaming in a way that allows them to absorb almost all of the gains or losses from operations themselves.

Looks like without undue extraneous influence, capitalism involving other people's money would not be as rewarding compared to plain entrepreneurialism where the worker has the resources to fund the venture independently of other people's money.

How absurd is that?

Yes, I agree with that. But Larry Summers' article would have been welcome anywhere, probably even Fox News. He is accomplished like few others, and having him write for you is good no matter what. It is important to separate the cases indivdually.

>>I also find it interesting that no(or few) major media outlets were so against big business until this recent election cycle.

Cases like Uber help for sure, and the income gap is ever-widening. I think it's just a natural state of being. It couldn't last forever. An opinion of a significant number of Americans was that HRC/Trump offered us no real alternative in regards to labor/business reform, and the media is playing that up after the fact.

I don't think there is anything nefarious going on or anyone trying to get on the right side of history. I think in large part the media is reflecting what most Americans are feeling right now: Malaise.

(For the record I am upvoting you, I have no idea who is downvoting your posts.)

That's not a lot of risk. If they get laid off, they don't lose an initial investment like the shareholders do. If I get laid off today, I will just go find another job. I don't lose my previous wages.

>They also risk damage to their career if their company assigns to them work that doesn't look good on resume.

Doing something shitty is entirely the employees choice. If they aren't happy with the compensation they get for doing that thing, then they should move to a different company.

What are they investing that they aren't being compensated for in their salary/bonuses?

That's not an economic principle. There are no economic theories that make sense to support it. Why would anyone engage in a transaction where they give away all of the money they would gain as a profit?

Labor is a market good like any other. Companies don't pay more than the market rate for bolts just because they are doing well. It's silly to think employees are any different.

>but it's fairly apparent that, absent an illegal covenant preventing it, there would have been more upward pressure on wages in SV

The upward pressure exists when companies can't hire at the rate they want to pay and still have more to compensate. Even if companies have a wide gap where they could compensate more, the upward pressure will not exist if there are enough qualified employees to fill the positions at a lower wage.