Worker-owned businesses: 'We get paid the same regardless of role' | Hacker News Reader

Worker-owned businesses: 'We get paid the same regardless of role'

theguardian.com

53 pointsadrianhoward77 comments

> We all get paid the same hourly rate regardless of the roles we do.

Good luck retaining any skilled professionals then. One of the most repulsing stories that I got from Soviet Union from my grandparents was about excellent engineers being on the same pay scale with manual labour workers. No matter how much do you put into your skills, the system had standard pay scale that you couldn't break out from.

I'm happy that these days are gone now, and skills and professionalism can be valued by the free market by people competing for them; why, despite pure populism for the lowest common denominator, someone wants to return to something like this, is completely beyond me.

Equal payment is definitely not the norm for co-ops worldwide. Workers realize they should be paid for their contribution. For example at Mondragón, a network of cooperatives in Spain which employs 75,000 people, workers established a scheme that distributes profits in line with contributions. The difference between this co-op and other businesses is that workers decided to collectively absorb the impact of the Recession, taking a 5% pay cut and shifting jobs between co-ops as needed such that zero workers were fired despite an economic downturn.

What you will see is that, for example, instead of top managers of a co-op making hundreds or thousands more than the median employee as in a public corporation, they make a more sensible amount which still attracts and sustains the best talent in the enterprise.

> What you will see is that, for example, instead of top managers of a co-op making hundreds or thousands more than the median employee as in a public corporation, they make a more sensible amount which still attracts and sustains the best talent in the enterprise.

And why, do you think, shareholders don't pursue that strategy? They're giving their own money to CEOs - are they doing it just because they're feeling charitable?

In other words, your argument supposes that a LOT of individual actors, independently, pursue a strategy (overpaying execs) that isn't optimal, and you don't even bother with an explanation as to why does it happen. This logical fallacy happens all the time when exec compensation is discussed, and it really bothers me that everyone just assumes that shareholders and board of directors of so many different companies are just plain stupid.

> make a more sensible amount which still attracts and sustains the best talent in the enterprise.

Who should be in charge of how 'sensible' is defined? And how can you argue that it attracts the best talent? Most people outside Spain probably have never heard of Mondragón, but they've almost certainly heard of Google, Facebook, Amazon, AliBaba or Baidu.

The workers decide the pay scale. As long as they're satisfied with the performance of the company then there is no need to push for greater and greater pay to the CEO. If they are not attracting talent, they raise the pay scale just as a normal publicly owned company.

I agree that those tech companies have greater name recognition.

> skills and professionalism can be valued by the free market by people competing for them; why, despite pure populism for the lowest common denominator, someone wants to return to something like this, is completely beyond me.

The real determination of where the money goes is by the owners of the business. If one looks over the Forbes 400 richest list, we can see the heirs who drain off so much profit each year from the labor of those who work - the Kochs, the Waltons, the Johnson family. The Rockefellers fell off the list in the past few years, $2 billion is the individual cutoff and I suppose Forbes doesn't know of any individual in the family worth more that that. But I can assure you if they and their three siblings are worth 1.5 billion each, and their first cousins are all worth 1.5 billion each, they are not out there breaking the bricks.

It's amusing to hear about meritocracy and the rat race for education, skills etc. when these heirs are the people controlling the economy, and causing so many economic and other problems due to its increasing lopsidedness towards them. What are their skills and professionalism that are valued? The money they suck off from those who work is the truest lowest common denominator, rule by parasites. At least Lenin, Stalin and Molotov rose due to their merits, not their birthrights. Russia went from being a country pushed around by the Japanese, with an GDP equivalent to 1917 Brazil, to a superpower sending satellites, men into space, probes to the Moon (the first country to do so). It also had little crime and little poverty.

I am supposed to get into a tizzy about someone with less skills getting the same pay as me, when the money is being sent off to the heirs who do no work? I certainly would prefer that the people actually doing the work alongside me get the money.

> At least Lenin, Stalin and Molotov rose due to their merits, not their birthrights. Russia went from being a country pushed around by the Japanese, with an GDP equivalent to 1917 Brazil, to a superpower sending satellites, men into space, probes to the Moon (the first country to do so). It also had little crime and little poverty.

Following your logic so did Hitler. Whew, my first Reductio ad Hitlerum ever, but to my defence you've started with tasteless jokes.

It's easy to fell into this 'communism was good idea but bad implementation' meme. I've lived in communism era in western Europe and believe you me same things were happening as you describe (Kochs, Waltons etc), there was still '1%' just not mentioned in newspapers as 'those who got wealthy by hard work'. Lower and middle classes were basically under oppressive regime.

> Russia went from being a country pushed around by the Japanese, with an GDP equivalent to 1917 Brazil, to a superpower sending satellites, men into space, probes to the Moon (the first country to do so). It also had little crime and little poverty.

Russia went from one of the leading european powers to a country ran like a prison. It's easier to score up country-wide achievements like moon probes if you have slaves instead of citizens — a system that even the legendary lead engineer Korolev was a victim of.

> we can see the heirs who drain off so much profit each year from the labor of those who work

If successful people couldn’t pass ownership onto their heirs, the value of ownership itself would drop dramatically. If Bud and Sam Walton knew they couldn’t pass on their business to their kids, they would either have never done it in the first place or they would structure the business to close out well before they died. Neither of these is good.

Most complaints about rational capital allocation, including this one, are based on a failure to generalize or punch through enough layers of indirection.

Hot take: if the Waltons (and their ilk) had not built the walmarts of the world, to maximize profits by externalizing costs (food stamps for employees who are not paid a living wage) and then dodging the taxes that pay for that externalization, then yes. Things would undoubtedly be better.

Pretty sure that if there were a much higher estate tax and other ways to de-incentivize generational wealth inequality that people would still find ways to exploit a semi-capitalist system by arbitraging the interface between public good and private service (c.f., the modern 1099 economy)

> If Bud and Sam Walton knew they couldn’t pass on their business to their kids, they would either have never done it in the first place or they would structure the business to close out well before they died

How confident are you in those conclusions? There are plenty of very rich people who claim that they don't intend to leave much for their heirs.

They still can command what happens to their capitals after their death.

Remove this ability, and incentives change dramatically.

> when the money is being sent off to the heirs who do no work?

Do you want to use your resources to help your children thrive? If so, then you've got to be OK when extremely rich to exactly that. It might not seem "fair" when you asses heirs as individuals, as if they appeared out of thin air - but they didn't. The original founder decided to pass on his wealth to his children, as most of us would.

Seriously. Can you imagine trying to hire a skilled professional who has put years of effort into acquiring a skill when you won't pay them any more than a retail cashier?

In a world where that was the expectation for everyone, sure. Professional jobs are a hell of a lot more interesting/rewarding than being a cashier. I don’t think you’d have programmers quitting to do service work if they weren’t making more money.

How would you create such a word? For that, you'd have to forcefully suppress all voluntary exchanges at labor market, since if somebody can do something others can't, there would be otherwise lots of people offering them more money to do that special things for them. The only way to counter that is to eliminate any freedom in job assignment or distribution of benefits for a job.

You can learn from a historical lesson. Do you know why medical insurance so inherently linked to the employment in the US? Because at the time of WWII, wages were fixed in a lot of places (they could pull it off since a lot of freedom suppression can pass in wartime) but employers still wanted to attract more and better workers. Thus, side benefits like employer paying medical insurance proliferated. If that were banned, there would be some other kind of compensation. Only by centrally regulating absolutely every aspect of life you could ensure this is not happening. But why would you want to live in such society? I lived in one, and it's not much fun.

If I were going to live like a starving artist regardless of career choice, I would become an actual artist.

There’s a reason this strategy was coupled with central-planning assignment of graduates to jobs.

If I didn’t get paid more to do programming than to do a mindless low-effort job like cashiering, I would absolutely switch to being a cashier and use my mental energy on my own time for my own goals.

Salaries already price in the “interestingness” of jobs.

Well, I wouldn't. Dealing with the general public would drain way more of my mental energy than programming. Which leaves us with two anecdotes.

yeah fuck that... I'm a developer because I'm an introvert, and overweight and want to sit on my ass and NOT talk to anyone all day... anyone who'd rather stand on their feet and do mindless drudgery because they can is insane...

My idea of the perfect worker co-op is where cashiers/programmers earn the same but that 'same' is above market value for the top level employee... so say devs go for 100k, cashiers also get 100k. Since there's no CEO/board/etc demanding 10 million/yr+ each then there's plenty to split.

Since there's no CEO/board/etc demanding 10 million/yr+ each then there's plenty to split.

Not really; the thing with the rich is that there aren't that many of them. Take the top 1% - their average income (including the people making billions) is $1.15M. Let's redistribute $1.1M of those. ($1.1M * (1% of population)) / population = 1% of $1.1M = $11k. So each person only gets $11k extra.

The top 1% earn 20% of all income. If you got rid of them, everyone could get a 20% raise. E.g. cashier goes from $30,000 to $36,000. Much less to split than people assume.

> The top 1% earn 20% of all income. If you got rid of them, everyone could get a 20% raise.

No, that's clearly wrong. If the top 1% get 20% of the income, redistributing their income to everyone else would give everyone else a 25% raise.

20% of 100 is 25% of 80.

You are, of course, correct.

> everyone could get a 20% raise

So even the people in the 90th- to 99th percentiles would get a 20% raise?

I would continue to program and stop worrying about the sprints, timelines and company goals.

Presumably, you could still be fired.

If retail cashiers and engineers at company A earn more than an Engineer at company B, then why not?

Question: why don’t all companies pay the guy in the mailroom the same as their top scientists and sales people? I’ll give you a hint: it’s not greed at the top (most of the time)

Have you ever been on upwork?

It depends on the mix of roles in a company I guess, but animal farm comes to mind here: all worker-owners are equal (but some are more equal than others). What happens when the company expands? Do the new employees get equal shares?

But these are positive-negatives, i.e. the harm is done by being successful. When the company starts to fail, what then? What happens when a company needs to downsize? Which of the worker-owners will survive, and under what conditions? Will it be political, e.g. we all vote, so the 7 PAs who everyone loves get to stay, but the entire sales department gets voted out? What about if departments vote together? Seems very sketchy.

Ironically, the ability to survive failure is why our system perpetuates. In the hard times, hard choices can be made that are individually distasteful, but required. Evolution is driven by the non-dying breeding, and corporate evolution is similar, with company structures that can navigate the bad times - much more than maximise the good times - the ones most likely to be replicated.

> Good luck retaining any skilled professionals then.

I was thinking exactly the same. I’m spinning up a small technical manufacturing business and my first products will have wireless capabilities. I’d better not pay my wireless engineers and programmers the same price as my unskilled assemblers. The former can save me hundreds of thousands per year with their acquired knowledge; the latter, dozens of dollars over China. And if I ever get big enough to need C-level execs, I’ll never fill the positions with good employees on tech support pay.

This world is set up to reward value, not hard work. It’s hard work to dig a ditch, but not terribly valuable. A well-paid, intelligent, quality C-level exec can create more value in a week than a hundred cashiers can in a month.

> Good luck retaining any skilled professionals then.

It's a good wholesaler where employees “multiskill” so that roles re flexible; virtually all skilled professionals are probably outsourced (which isn't uncommon in firms where professional services aren't the core business, even if they aren't coops.)

Equal pay isn't a universal (or even dominant) norm for worker coops, though they do tend to have flatter pay structures than traditional firms.

> One of the most repulsing stories that I got from Soviet Union from my grandparents was about excellent engineers being on the same pay scale with manual labour workers.

Which would be germane if we were talking about either the Soviet Union or a system with that feature, which we are not.

The market rewards leverage though, not skills.

They only coincide sometimes. Academia is one place in particular where the two do not go together.

Markets rewards what you can give.

You can have a lot of very hard to learn and impressive skills that have no economic sense whatsoever. Don't expect to get paid for them.

No, markets reward leverage.

This can be about what you can give, it is also about what your alternatives are, what their alternatives are, what you can take away and what you can threaten.

You don't need skill or economic sense to have it.

and markets reward luck

Markets reward what you can take.

Sometimes you have to give first.

But only sometimes.

All sounds good in a free market, you know unless the major players are working together to lower pay intentionally: http://fortune.com/2015/09/03/koh-anti-poach-order/

Let's not forget that it is culturally considered taboo to talk about money and compensation.

Employers hate it when employees talk about what they get paid.

If people were turly getting paid what they are worth nobody should feel like they need to hide their paycheck from their colleagues.

Yet I'd bet most of the people here complaining about how this wouldn't work for x, y, and z reasons don't actively discuss what they are paid with their peers. Some "free" market alright.

Employers hate it when employees talk about what they get paid.

In the US, most employees have a legal right to talk to each other about pay.[1] Supervisory employees may not, but rank and file employees do. State laws go further in some states; in California, non-disclosure terms involving pay are prohibited for all employees.

[1] https://www.dol.gov/wb/media/pay_secrecy.pdf

Yeah, it's still a better alternative to fixed pay rate.

Isn't it the case that with this sort of system that if you increase your skills, your company is more profitable and therefore you all get paid more? (Which is a common system in capitalist America - the exact same job with the exact same skills at different companies pays differently based on the company's ability to pay, and year-end bonuses are often linked to the company's profits that year. And employees who get stock grants or options are effectively compensated based on the performance of the company, incentivizing them to cause the company to succeed.)

That's very different from a system where the government sets pay scales for the entire country, and an individual's efforts cannot make a meaningful change in their own earnings. In the system described in the article, it can.

> Isn't it the case that with this sort of system that if you increase your skills, your company is more profitable and therefore you all get paid more?

Your reward is not commensurate with the opportunity cost of improving your output. It gets worse with larger companies.

Sure. But I think that's also true in capitalist America (or, at least, in my / my friends' experience in tech) - at least in the sense that it's much harder to get your current employer to reward you for your own increases in skill than to put the increased skills on your resume and start interviewing elsewhere.

I don't know any system (other than perhaps a carefully planned and unusually benevolent and well-funded central economy) that rewards people for the opportunity cost of increasing their skills, as opposed to the increased output gained from using their skills - one advantage of this system is that it's very clear that if I use my skills more efficiently or in a way that helps the company, a portion of that reward will go to me whether or not I can prove it to management. If I save my current traditionally-capitalist employer $1M/year due to cleverness, I'd expect to see $0.00 of that. I'm far more incentivized to get good at writing self-reviews that portray the things I'm already good at in a good light than to learn the skills to, say, optimize our AWS spend.

Skillfulness to me implies giving a crap about the world you share with others. Skilled, in comparison, is a consolation price.

> One of the most repulsing stories that I got from Soviet Union from my grandparents was about excellent engineers being on the same pay scale with manual labour workers.

That's the most repulsing? Nothing about children and old people being murdered en masse? See above, more skillful grandparents would have told wholly different stories.

This comment breaks the HN guidelines twice over: the one that asks you not to take threads on flamewar tangents, plus the one that asks "Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize."

Would you please read https://news.ycombinator.com/newsguidelines.html and not do these things when commenting here? They reliably degrade discussion, and we're hoping for better than internet median.

Ah, but why were there children and old people being murdered en masse?

It's because humans naturally resist what was being imposed upon them. The smart and able-bodied are going to get more, and they will resist any effort to prevent this. Corruption and workplace theft were rampant in the Soviet Union.

Suppression of this resistance requires violence.

If you care about the world you live in, you should want the people in it to be good at things. If you’ve studied the world you live in, you’ve likely discovered that this is more readily achieved with material incentives than with propaganda about one’s duty to the state.

It's a guardian article :)

The Graun comprises writers with double-barrelled names earning 6-figures, and unpaid interns. It’s headquarters are offshore in a tax haven. Draw your own conclusions.

I'd be interested in the economics of founders selling to their employees from a founder's point of view. It seems like a way to protect a founder's legacy after they exit.

Where does the money come from? Do the employees get a loan and then the money from the loan go to the founder? Does the founder provide a loan to the employees and receive regular payments on the loan? Do the employees have to have cash? Do all employees own equal shares regardless of role of employment length? Do employees buy businesses at the market rate?

Employee Stock Options Programs (ESOPs) are the way most conduct this transaction. It's frequently a way for a founder to sell to employees due to relationships/promises, to get a higher valuation than the market offers, or, like with options, to incentivize productivity and retention.

The employees can get a loan with the business as collateral but the founder/s is going to hold a note as well. Assignments of stock are similar to options - customizable but more valuable employees get the lion's share.

That’s what Bob and Charlee did with Bob’s Red Mill when he decided to retire:

https://www.bobsredmill.com/bobs-way-meet

It's probably easier to raise capital an owner run business -- think of it like a crowdfunding.

German companies are pretty great at finding the balance between corporate profitability and worker interests.

In the post-WW II economic "golden age," roughly up through the early 1970s, American manufacturing workers and the corporations they worked for were also both doing well. That fell apart as America went from a net exporter to net importer. I'm unsure if the importer/exporter transition is a direct cause, because a lot of things changed in the 1970s, but that's about the time the party ended.

I wonder if Germany will do better when/if Germany no longer has a substantial export surplus. I hope that it can. It's mathematically impossible for every country to run an export surplus, so "look to Germany" is a useful prescription only if there are other good ways to imitate Germany.

I find worker-owned businesses very interesting. Obviously getting paid the same regardless of role may be an obstacle to attracting highly skilled people, but if salaries are competitive and established in function of role and experience, in a transparent way, that could be great.

Yea, i wondered the same thing. I like the idea of a worker owned Co-op in general, but it's subject to them actually being functional. I don't see how that could be the case with industries with large productivity/talent gaps, like software. Most of the co-ops I've come into contact with are smallish restaurants or grocery stores, which makes sense: most tasks can be handled by anyone and those that aren't can be judged a lot more effectively.

I don't see how that could be the case with industries with large productivity/talent gaps, like software.

And yet: https://github.com/hng/tech-coops#coops

The gaps problem seems self-correcting; anyone who thinks they are underpaid will leave, and conversely the team will probably push out those badly underperforming. You'll still have gaps, but only among people who don't mind getting paid the same despite them.

Thanks for that link.. lots of good resources...

I want to start an MSP (Computer Repair / Maintenance as a Service) + Hosting + Development Business as a worker co-op someday, when I get the free-time and money to do so.

> I don't see how that could be the case with industries with large productivity/talent gaps, like software.

There are a number of large coops in industries where the firms require everything from professionals to manual labor; equal pay isn't common in those kind of coops, though the pay ranges are probably flatter than conventional firms. A co-op, ultimately, can be very much like a conventional firm, where the voting stock is held equally by the employees, so that management is ultimately accountable to the employees.

Right, I was being imprecise. I didn't mean to refer to coops in general, but rather equal-pay xoops

Worker cooperatives tend have the problem that it's hard to compare contributions of labour. The coop model tends to work best when most or all the workers are of a similar sort. More cohesion and less resentment that way. That's probably why the company has everyone do every job.

Specialists are hard to employ like that, but the trick is that you don't need to hire them. Rather than keeping an accountant in house, you can just contract an accounting firm to handle it. You might not have an in-house lawyer, but you'll be a client for a law firm.

That being said, there may be some soul searching when Jim the Janitor complains he's basically a second-class employee because technically he just works for the company you're leasing the building from.

> Worker cooperatives tend have the problem that it's hard to compare contributions of labour.

Insofar as that's a problem, it's a problem for any firm compensating labor, not just labor cooperatives.

Labor cooperatives are perhaps less prone to adopt ad hoc wage differences through mechanisms which permit personal bias to manifest without a good metric with the excuse that it's necessary to reflect differences in contribution.

I was part of a worker owned company as a contractor. I believe it started with a lack of funds to pay employees so they had to trade pay for debt. In the end the Indian division bought out the parent company and closed down the north american offices.

There is an excellent book called 'Maverick' about a Brazilian manufacturing company that, while not owned by the workers, gets much closer than almost any other business. I highly recommend that all founders read it

https://www.amazon.com/Maverick-Success-Behind-Unusual-Workp...

Very interesting.

The first successful non-hierarchial company that comes to my mind is Valve.

I recall reading that Valve has a higher revenue per employee than any company in the world...

Edit: profit, not revenue

Seems to me the causality works the other way. Industries where companies are formed from a small number of employee who are individualy quasi-millionaries (elite SV talent) are more likely to function well without a heirarchy than industries built on coordinated entry-level manual labor (Walmart).

Also, I don't really get this claim. Valve has ~360 employees with annual revenue under a billion dollars,

https://en.wikipedia.org/wiki/Valve_Corporation

whereas there are ten companies in the S&P 500 with over $3M in annual revenue per employee.

https://priceonomics.com/which-companies-have-the-highest-re...

Perhaps the comparison is only supposed to be to other tech giants like Apple, which are roughly $1-2M per employee.

> Also, I don't really get this claim. Valve has ~360 employees with annual revenue under a billion dollars,

Looks like I was wrong: Newell claims that Valve has the highest profit per employee.

I'm sure the numbers are not accurate, but that is still a very impressive figure for revenue/employee.

I'll recount a short twitter conversation I had with some engineers who wanted to be in a collective, I suggested them all being equal partners, and was promptly blocked...

> My company laid off 17 engineers including me when we tried to unionize. Now I’m having a hard time finding a job. Any leads for junior-to-mid software developers in the DC area or remote, send em my way. And please share. #LanetixUnion #jobsearch - Sara J. Martinez ‏

> Software developers are generally well treated and compensated. What drove you to attempt unionizing? - Me.

> There should be interviews with Lanetix engineers coming out soon which will go in depth. For a quick overview, here is what we wrote to management: - Björn Westergard ‏

> If you're a collective of software engineers worth bargaining with, you should all form your own consultancy firm, and forget about that "client". This might be your best, realistic solution. Thank me when you're making 2x, in nicer conditions and fewer hours... - Me

> This “solution” doesn’t scale due to the competitive race to the bottom dynamics of capitalism. Unions demonstrably do work at scale. Everyone is “worth bargaining with” for those who don’t to serve mammon alone. - Björn Westergard ‏

> You have limited options as I see it, and you probably need to ask yourselves what's more important, getting back to work (but apparently not at Lanetix), or grinding an ideological axe? If you're so egalitarian, make everyone an equal partner, and start looking for clients. - Me (https://twitter.com/aaronchall/status/970717102465323008)

Björn promptly blocked me at that point.

> "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

In this case, his non-existent union salary, I suppose...

This has been tried multiple times. All of those attempts failed, regardless of the scale. It won't be different this time.

https://news.ycombinator.com/newsguidelines.html

I found the comment to be insightful. I'm trying to find his violation, and I can't really. There are a few things that are close, maybe, but not really.

"political or ideological battle" and "shallow dismissals" seem most plausible, but neither really fits. It's not as if the entirety of his comment was "more dumb leftist shit". There was more substance to his comment.

???

It's a shallow dismissal. It makes a grandiose claim without support. More importantly, it doesn't teach us anything. An example or two could have rectified that.

Do I need to provide an example that water is wet? But ok, just for you:

Largest scale:

USSR North Korea Cuba Recent entry: Venezuela Recent entry: South Africa

Smaller:

https://www.economist.com/news/business/21589469-collapse-sp...

Even smaller:

https://munchies.vice.com/en_us/article/gvkqnm/marxist-vegan...

Maybe an example or two wouldn't have rectified it. Would you please read the site guidelines and abide by them when commenting here?

https://news.ycombinator.com/newsguidelines.html

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