Federal Reserve chair says decline in workers' share of profits 'very troubling'
latimes.com
latimes.com
I was the #2 engineer hire when I was hired five years ago. Since then, we haven't become super successful -- yet -- but we're at least at breakeven. We have three engineers and we're working on a huge new project that hopefully will really grow the company.
I have 1.8% equity.
Sometimes when I'm working late or working on the weekend, which is often, I wonder: Is this really worth it?
I'm totally fine with taking a pay cut to build something new, in order to have the chance at making life changing money. But at the equity I have, we'd need to be quite successful in order to get that.
The VCs who funded our seed and series A (the only funds we've raised) will see the lion's share of the profits. Emotionally, that feels odd. We've thrown a significant percentage of our lives, and they've only thrown in money -- and a pretty small amount of it, really. I know it's supposed to make sense from a financial perspective or whatever, but emotionally it doesn't feel fair.
But hey I guess it worked, I have what feels like a small percentage and yet I'm throwing everything I have at this company. I'm likely an outlier, though. I suspect that if VCs and founders gave employees a bigger piece of the pie, they'd have a much more motivated workforce.
Most startups don't get to first hire. Most startups have founders that don't just make nothing, they lose money. First hires don't lose money.
Which makes the argument that being an early hire at a startup doesn't make sense at the current low equity and salary commonly offered.
> first hires are at least as likely to make $500k to $3m as founders
I know too many startups where early hires failed to make anything close to $500k, and in fact didn't cover the difference between their salary and market rate even for a single year.
Exits in which early hires make even just $500k are very rare nowadays.
> First hires don't lose money.
But of course they do! They lose the difference between what they could make elsewhere, and what the startup is paying them.
Non-technical founders have far lower opportunity cost.
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.
If the founders control the company, then they can dictate the terms of employee compensation. To a degree at least... I guess they cannot unilaterally make decisions that completely piss-off and alienate their investors, or good luck with series B.
If the VCs control the company, then I'm sure their response would be "we offer industry standard x% of equity, so there's no reason to offer more".
Chicken and egg problem. It won't change until someone changes it.
Another thought: Where would the increase in employee equity come from? Would the founders dilute their share, or expect all shareholders to dilute? If it's just the founders deciding to be more generous, then why should the board have a problem? The board should be absolutely in favor of founder-only dilution, since it costs other investors nothing, and ostensibly results in a more motivated workforce.
The matter at hand is: does he believe you deserve more equity at this point in time? If yes, then commit to fighting for you (and if equity is somehow impossible, explore other options). If no, explain why & how to improve.
To be fair, nobody is perfect in every interaction, and there are a million rational reasons why a founder would sidestep a question like that (terrible board relationship, you or others at the company have a hard time hearing negative feedback, distracted that day, etc.). If you feel like the matter wasn't resolved to your satisfaction, it is worth bringing back up.
Practically, from what you describe (startup not doing very well after 5+ years of active development), I'd be very surprised if you see any serious money from that 1.8%.
> He doesn't believe we're in a position to go to the board and make any changes to stock compensation at this time.
The board isn't some harsh unreasonable committee. They would quickly grant you equity if they thought it was important enough to do so.
This really is a BS excuse. He basically told you "I don't want to give you more equity, and I'm going to blame it on some external entity rather than own up to it".
Were you coerced into this agreement?
The other part is I have seen people fall for titles. 'Senior VP of X', while in reality you neither good exposure into org management, and let your tech skills go down the drain at the same time.
Often because of these things people lose their prime years. In most cases working for a big company, and then having a good savings and investment driven lifestyle will put you ahead of most of this kind of work opportunities.
The VC is thinking "I'm paying this guy's salary to work on something that may or may not ever pay for itself", and he's got dozens of companies that he's funding and they won't all hit it big... or even survive.
Or, another option, don't throw everything you have at a company -- join a later stage startup where the work-life balance is better, but you can still expect a decent payout if it succeeds.
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 get from working at the big boys.
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 :-(
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.)
Speak for yourself. Wages in tech is highly consolidated into tech owners, tech engineers, and then tech support. Anyone on the periphery is not getting their fair share whatsoever.
If the company has millions of dollars in not just revenue but profits and a significant number of its employees are below poverty level and/or on welfare, is that fair? No, definitely not.
If the company's profit per employee is more than a certain percentage of a given employee's salary, is that fair? No, probably not.
If the company were to distribute a 10% salary bonus to all employees, would that bonus eliminate profits?
If the company were to distribute 10% of profits to all employees equally, how much difference against their salary would that change be?
And yet, like, at the end of the day the engine that drives the economy forward -- and humanity forward -- isn't cash. It's individual human beings sitting down and putting in the hard work in creating something new and nurturing it for years.
It feels like our economy gives most of the rewards to the people who put in money, and not enough to the people who put in the actual hard work. Even here, where things are amazing for employees.
However overall, the economy is a mechanism for rewarding risk, not hours spent in front of a keyboard. "Hard work" in general is a meaningless concept. What drives humanity forward is risk taking.
The system is designed to encourage holders of capital to risk losing it for the potential reward of even greater wealth. Without incentives for owners of capital to take risk, our society and technology doesn't progress.
Why? Because the founders gave you 1.8% pre-dillution equity, vesting over 8 years, and told you that's "very generous"?
You're an engineer in a market where engineers are in high demand and short supply. Being one of 3 engineers developing a product and getting just 1.8% of the equity - coupled with high demands and (I would bet) under-market pay isn't such a great deal.
You're shouldering quite a bit of risk spending your best working years in a place that likely will never be able to promote or pay you fairly. Your potential reward for that is very limited.
Yet after all this time, you still think you're getting an "incredible" deal...
Both things can be true - your comment is comparing up, as he did in his first comment, while his second comment compares down.
It sounds like you are unhappy with the amount of late nights and weekends you’re spending.
If you’re still spending backbreaking hours even after the product has been going for awhile, or simply used to like the idea but are not liking it anymore, it might be time to have a heart to heart with your boss. Different companies have different expectations, but at my own company, we’ve always had a strong desire to avoid that sort of intense and demanding work schedule. We’ve thankfully not needed to ask people to come in on a weekend... ever, I believe. We’ve had to fight a fire or two here or there, but it was typically a pretty quick troubleshooting session, and then taking a thoughtful approach during the workweek to figuring out a way to avoid that emergency scenario in the future.
Life is more than work, and it sounds like you’re feeling resentful of your employment situation. Life is short, so do something about it, whether better work life balance, requesting money that will make you happy (if that amount exists and the company is willing to pay it), or something else.
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 could have walked away and accepted another job. If the owner put on chains of debt, walking away means losing a house, other significant assets, or payments for years into the future. If the company is at breakeven and debt was involved up front, not much of it has been retired. The debt may be gone, but memory of the burden and stress is not.
Everyone wants equity. Lots if not all employees feel like the deserve it, even the person who answers the phone and could be most easily replaced. The owner presumably took the risk up front with the objective of making money. To make sense, giving away equity should come with an expectation of adding to the owner’s wealth, not subtracting. Employees and consultants who clock out at the end of the day do not fit this criterion and are already being paid in exchange for their time and effort. The people who will add to the owner’s wealth are the people who will bring in new customers, sell more to existing customers, and generally work on the business — not just in it — to make it more valuable.
This is not a moral question of who deserves what. Compensation is a business issue, not a moral one.
The question is whether OP is getting as much as he could get elsewhere, and the answer is likely "no".
If startups could compete fair and square with non-startup comp, employees like OP wouldn't be discovering that their equity stake is tiny and they are therefore underpaid after 5 years of working for the same startups every day.
> Put yourself in the shoes of the owner who took risk up front.
Why should he? Is this "would-be millionaires sympathy hour"? You're saying the founder took more risk. Maybe he did. That's actually not always the case, when you factor in opportunity cost for a non-technical founder vs an engineer - I've seen founders earn as much as they would elsewhere in base salary, without factoring their enormous equity at all.
But even if the founder took more risk, how does that compel OP to work hard to make him a millionaire, while foregoing fair market compensation for himself?
You are implying it's OP's moral duty to compensate the founder for the supposed risk he may (or may not) have taken.
OP's only duty is to do what's best for himself. The founder and investors are certainly doing that by making OP work weekends for what is likely below-market comp.
The point of looking at it from the owner’s perspective is to elevate thinking above “It’s so unfair! Harumph!” that is so often the case. As you wrote in your reply, it’s a business decision. Imagining oneself as the owner makes this plain.
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.
The key problem in your (all too common) story is that you're only waking up to reality now.
I'm guessing that like most startup employees, you were swayed by initial aggressive courtship by the founders / chief-execs, with lots of vague handwaving and hyperboles telling you that you'll definitely become a zillionaire with your "generous" equity.
After 5 years (!) of hard work you finally crunched the hard numbers, and realized your best-case exit might cover a bit of what you lose in one year of overworking yourself for a below-market salary. Your founders and managers forgot to tell you this, and probably stuck to hyperboles without divulging much real info about your equity. Far from making it easy for you to understand your equity value, they probably made it hard or impossible.
I wish your story was some dysfunctional exception, but unfortunately it seems to be the rule nowadays. In fact, I know all too many engineers who faced this sad music only after the exit, for which they got shockingly modest returns.
I can also tell you to forget about your equity being 1.8%. It's incredibly unlikely you'll actually get 1.8% of whatever monetary value your startup exits for - if any. Like most startups, certainly in your position, you are looking at more funding rounds. The investors will get additional shares, you will get diluted. Of course, the founders will tell you nothing about this, you'll just see it in your bottom line - if there ever is any.
In fact, in your place I wouldn't be so sure you actually have that 1.8% right now.
You should do one of two things:
1. Ask for a lot more equity, with transparency into the amount and valuation. 2. Start quietly looking for an employer that will pay you better, and work you less.
From your perspective, you are already fully vested. There's no reward for you taking additional risk. No sense in staying to be underpaid and overworked. Even you want to stay in startup-land, find a new startup to diversify your equity portfolio, which currently consists of one tiny slice of a risky startup.
Your current startup likely won't collapse if you leave, so you're not risking your existing equity. If your departure would be so devastating, they should give you a lot more equity.
Either way, do a clear cost-benefit analysis, and do what is right for you. Your founders are doing what's right for them, and so are the investors. Follow suite.
Employees usually have to buy their vested options if they leave or lose them. That means you have to raise the cash for the options there and then and you might incur a tax liability for the capital gain (in some jurisdictions it's actually taxed as income!). This doesn't usually make sense if the company isn't near being acquired or IPO'ing (and who does that any more?).
I doubt the tax burden is so bad, but if it is, then the decision to join the startup in the first place was even worse than it seemed before. OP should just treat it as a sunk cost, cut his losses and leave.
Staying just escalates his investment and near-certain losses.
I haven't worked for startups in a while, but if the tax situation got to a point that it's compelling employees to stay put, then working for a startup is even less sensible than I thought.
So, um, about that. I should not have said I have 1.8% in the bank. I actually just have about half of that vested so far. I won't be fully vested until three years from now.
I don't really want to quit. I'm excited about what we're working on and I think it could be really useful for people. I just wish that the upside was a little bigger. I also really loathe the idea of walking away from something that isn't finished, you know?
Plus, all the intangibles are nice: I like my co-workers, I like our full-remote office.
Did you do a bit of searching, and failed to find anyone who would pay you substantially more?
Are you OK with working hard, including these weekends you mentioned?
If the answers to all these questions is "yes", then by all means - stay.
Otherwise, you may have a reason to leave. This is your decision. Think about what is best for you.
> I just wish that the upside was a little bigger.
Either take action, or just forget about it.
If you have a realistic chance of getting more, for example by threatening to quit, then go ahead and do that. I saw below you already asked your founder, who declined with a BS excuse ("the board won't like it" - read: I don't want to give you more equity).
There's obviously risk in pushing it, especially after you already got denied twice.
So either accept it and stay, or push for more, taking the risk you'll be denied again and possibly they'll look to replace you since they'll realize you're not happy.
> I also really loathe the idea of walking away from something that isn't finished, you know?
Man, this is software. Nothing is ever finished :)
Always that extra feature, another platform to support, that other scaling target you wanted to hit...
this generally isn't a malicious act--meant to make the task more manageable--but it does set up the board to be advantageous to the capital holder (in this case VCs, and to a somewhat lesser extent, founders). the capital holders aren't bad people per se, just that the emergent property of the system is tilted toward capital and away from labor. this is the version of capitalism as we have it now.
you've implicitly accepted that game when you took a salary and an equity stake. capital holders are exceedingly motivated and practiced at squeezing value out of a transaction--that is why they got into the game in the first place. within this game, you'll need to either find leverage points (like a unique skill or asset) to get what you think you deserve, accept what you've got and appreciate your relative comfort, or find another opportunity (which is a potential leverage point in itself).
(part of) the medium-term solution is to bend the regulatory environment toward fairness. things like making the capital gains tax rate the same as ordinary income, and holding corporations and executives responsible for their actions, just like regular persons.
in the long-term, is there another system of figuring out who deerves what and how much? how do we allocate resources fairly so that no one feels shafted? it's the ultimate (dynamic systems) optimization problem. capitalism is attractive because it's decentralized, but is there a system better at solving this optimization problem without losing this attractive property?
People who want to avoid violent revolution, which historically has occurred when inequality has reached a certain threshold.
https://www.marketwatch.com/story/want-to-level-income-inequ...
https://www.economist.com/books-and-arts/2017/03/02/the-less...
When you grind people down so much that tens of millions have nothing left to lose, watch out.
They have an escape plan when it gets real. You and I probably don't.
Peter Thiel's jockeying for New Zealand citizenship however is an escape plan.
I bet if lawmakers said capital gains tax is bumped to 20% everyone of them would bitch and moan for 30 minutes, and then pay the damn tax.
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/wiki/Susan_Bayh
Personally, I don't think it's the worst. I would rather they had to do this than get huge retirement packages as they do in my country after their service. Also, if their spouses can make a living being involved in business so politicians can't use sympathy for their poor family as leverage to get higher compensation that would be good too. But we can't handwave the issue of corporate influence over politicians however we choose to deal with this.
The old "you pass legislation that we want, and we'll have a seat waiting for you on the board after your term is over, with a nice paycheck attached".
Brazil
Mexico
Argentina
Venezuela
Ecuador
2 have a problem paying their bills on time. If you don't like Mexico I have some unfortunate news for you regarding Ecuador.
So that leaves Venezuela...
Regulatory capture is the biggest enemy of free markets.
That's not a law of nature, just an artifact of the current legal regime. It would definitely be a challenge to update the law to make it harder for capital to hop between jurisdictions to avoid tax, but it's also a challenge to collect individual income tax, so I think it'd be doable if the political will was there.
Historically this was not the case at all. It's only during the modern neoliberal era that this is true.
Thing to remember Capital isn't a primary resource like energy, infrastructure, materials, and labor.
Sweden has a capital gains tax of 30%, two to three times that of America and they have a similar GDP per capita, depending on the year.
Old people. Retired people live on money gathered from ownership of things. Since old people have the most political power it should be no surprise that the tax code favors their capital gains over working wage earners. In the days when the boomers were young and in work (50s 60s) the tax code was very different.
The system is one where back-scratching, ass-covering, and kickback-giving is the norm. It's surprising there's any tax on capital at all. A few more rounds of conservatives in power might take care of that.
Conservative anti-tax crusader Grover Norquist once said, "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub."
These are the kinds of people who are running the show these days.
Conservative pundits from the 1990s are rabid leftists by the standards of the current regime. Richard Nixon would be branded a communist!
> Grover Glenn Norquist (born October 19, 1956) is an American political advocate who is founder and president of Americans for Tax Reform, an organization that opposes all tax increases. A Republican,[4] he is the primary promoter of the "Taxpayer Protection Pledge", a pledge signed by lawmakers who agree to oppose increases in marginal income tax rates for individuals and businesses, as well as net reductions or eliminations of deductions and credits without a matching reduced tax rate.
Sounds like he wants to lower individual's income taxes. Letting people keep the money they earn hardly seems anti-labor.
Typical individual income tax: 30%. [2]
[1] https://www.thebalancesmb.com/corporate-tax-rates-and-tax-ca...
[2] https://www.fool.com/retirement/2017/03/04/whats-the-average...
[1] https://www.cbpp.org/research/federal-tax/actual-us-corporat...
[2] https://www.forbes.com/sites/eriksherman/2017/04/24/trumps-c...
Do you?
The recent tax cuts were touted to generate big raises for American workers. A few companies made some news with one-time payouts, but then the rest of that is just being funneled to shareholders.
If a government creates laws that incent shareholder givebacks, you wonder why workers' share of profits aren't increasing?
There are ways to make judgement that are not based on results, but they always subject to their own biases.
I am sure it has always been this way but I don't know if it has always been this unbalanced.
https://web.archive.org/web/20100304170139/https://www.nytim...
The Fed has an interest, and influence, on labour conditions, if not direct legislative input.
Unemployment is the other of its dual mandates.
(Though, and crucially, not wage levels.)
This is an honest question whose answer I ponder. Why doesn't the stock market act as a great redistributor of capitalistic wealth?
Because workers don't have money to buy stock, so they don't get the gains from stock appreciation. And because workers are taxed vastly more heavily than investors at the same income level, people who don't stay out living off investments rather than wage labor are, even if m with the same pre-tax income, greatly disadvantaged at accumulating the resources to become others of capital sufficient for their own support (the lucky worker manages to accumulate enough for a modest but decent retirement by the time they are incapable of further wage labor, but many do not.)
It's a lot easier for a modestly wealthy capitalist to become a very wealthy capitalist than for a worker to become even a self-sufficient capitalist.
> Why has the market not created such an instrument to supplement the "worker" who has low wages but could ultimately profit from the ever-increasingly efficient economy?
Because that would involve the people who have disproportionate political and economic power handing over the tools of accumulation of that power to the people they spent considerable effort denying it to in order to accumulate it themselves.
> Why doesn't the stock market act as a great redistributor of capitalistic wealth?
Because that (at least, in the direction of redistribution you propose) is literally the exact opposite of its purpose.
Nonsense.
Where the hell are they going to get the money to become investors in the first place?
"Why has the market not created such an instrument to supplement the "worker" who has low wages but could ultimately profit from the ever-increasingly efficient economy?"
What employer, and it's the employers that are the ones this would have to be directed toward, has been asking for this?
I'm finally at a point where I have enough liquid cash to finally start investing, and I'm finding the whole process very daunting. Trying to get enough information to make the "right" decision has filled me with analysis paralysis.
This right here. While the audience here should be able to invest, based on income and education levels, the sad fact is that a vast majority of people have never been taught to save or even budget. I am very much in favor of self-reliance, but when you have an entire generation raised by a generation that doesn't save, what do you think is going to happen? Add on to this ever increasing prices in rent and basic necessities (food, utilities), and it's not a surprise when the vast majority of people don't own stock, even in an index fund. Shit, pensions were created over half a century ago because our grandparents couldn't be trusted to save for retirement!
I will say this: scrape together $1k USD, open an account at Vanguard and put it in a total stock market index fund. Keep putting money into it, as much as you can afford. There are other better websites out there that go into more detail, but that's the gist of it.
Why would it arise naturally?
However you do need to have a retirement account to share in this, the lower your wage the less likely you are to have such an account.
High-flying Wall Street types are ultimately dealing with regular people’s money (often through indirections like pension funds).
Annual reporting has nothing to do with how people response to the value of a company.
>Ryssdal: I want to get to the regulatory part of your job, which you address right there in a second, but I want to first talk about some of the things that came out of the financial crisis that we're still dealing with. And maybe the most relevant for consumers in this economy is the idea that wages now for a decade or more really have been stuck. And the question is: As you consider your dual mandates of price stability and maximum employment, where are wages on your list of things to worry about? And what really power do you have?
>Powell: So wages were low, and that was understandable after the financial crisis because unemployment was extremely high. Unemployment was 10 percent in 2009. As unemployment has declined — now all the way down to 4 percent, the lowest it's been in 20 years — we would have expected wages to move up fairly significantly. We now just in the last year or so, we have seen wages move up.
>Ryssdal: A hair, right?
>Powell: We look at a range of — there's no one wage indicator. We tend to look at sort of the four big ones in particular. And if you look back to five years ago, they were all in the low twos — this is annual rate of increase — and now they're all close to three. So there's been this very gradual move up. I think, you know, part of that is that wages should reflect inflation plus productivity. So if you're delivering more output per hour, it should be reflected. Productivity has been very low. But there is still a bit of a puzzle in that we're hearing about labor shortages now all over the country in many, many different occupations in different geographies. And one would have expected, I would have expected, that wages would move up a little bit more. So I think we don't directly look so much at wages as we do price inflation, but I think we're looking very carefully at maximum employment, and that is one of the things that pushes up wages and price inflation.
>Ryssdal: Right. But why are they stuck? Is it just that we're not producing enough widgets per hour? Is it robots? I mean, what is going on? Because that's the thing that people want to know about.
>Powell: So, one big part of the explanation is certainly that inflation has been low and productivity has been low. So productivity just means how much your output per hour increases. And that's what you should expect as a worker to get paid for, is enough to cover inflation plus how much did your output go. So if you take that at the aggregate national level, if you add those two up, that's actually pretty consistent with what's been happening with wages. So again, there's no — I wouldn't call it a mystery, but I would say that it's a bit of a puzzle given how tight labor markets appear to be. And what we're hearing from employers really is that they can't find workers, and you're wondering, well, why aren’t wages going up faster?
>Ryssdal: Why aren’t they paying them, right?
>Powell: It’s a good question. It’s a good question. We don't really have the answer to that question.
>Ryssdal: Which is a little troubling, if you're the guy running the economy.
>Powell: I don't think of myself as the guy running the economy. You know the economy is a $20 trillion economy.
[0] - https://www.marketplace.org/2018/07/12/economy/powell-transc...
Globalization.
No one is going to pay workers here more when they know that workers are getting paid $2/hr in China or Cambodia.
It is harder for people to argue against the logic for manufacturing which is why I only mentioned that.
If anyone knows of other activist groups supporting better voting systems, I'd like to know about them.
Maybe there’s not a “conspiracy,” but there’s certainly a class war.
Or maybe worse, if they are from middle class or lower.
I worked for a couple of NY financial services firms and saw first hand how easy it was to get internships, interviews and jobs for kids with connected parents while the rest of them struggled.
I think the worst result of this is, people might (maybe they already have?) just stop trying. Very few people are gonna put up with years and years of crap just to get ahead a little bit, most people aren't just built that way.
...which are toothless, especially in Republican-controlled states.
Which is necessary to avoid having to vote for one of two shitty options.
A big part of the Republican electoral strategy is disenfranchising working-class voters through any number of tactics, especially those subcategories of working-class people who they expect won’t vote for them. And that doesn’t even begin to address the structural and intentional hurdles to working class people’s participation in American democracy, from disenfranchisement via mass incarceration to fear of losing their jobs if they leave to vote.
Depressing turnout by demoralizing constituencies that lean to the other side and, particularly on one side, outright voter suppression, is something that the rich (both independently and acting through the major parties) fund lavishly, so why wouldn't they get blame when turnout is low?
No, it doesn't. It lowers the threshold for dictating policy, and biases it to particular interests; that makes tyranny of those interests more likely, including when they command a bare majority (or even large minority) of support.
You don't fight tyranny of the majority by unequal representation; you fight tyranny of the majority with constitutional limits on what government can do at all, or by requirements for supermajorities or (as some state constitutions do) multiple time-separated votes (or both!) for particular kinds of action.
Crafting campaign finance laws in such a way that those with more wealth can disproportionally affect election outcomes is anti-democratic.
Voter suppression/disenfranchisement in the form of impediments to voter registration, voter ID laws, felon disenfranchisement, misinformation about voting process/procedures, closure of DMV offices, etc. are all anti-democratic tactics used by political parties to reduce/refuse voting access by constituents.
If a party can make voting inconvenient/inaccessible to a targeted population they can win electoral outcomes that do not match constituency desires.
Voter suppression is real. Voter suppression works.
The problem isn't polarization: the problem is that the wrong pole is getting elected.
Saying "this isn’t a conspiracy by one party or group" is pretty silly though. The economic policies advocated for and enacted by the two parties point in completely opposite directions.
The U.S. accounts for 35% of the world's defence spending, more than twice that of Russia and China together.
I sleep well at night because of a roofer who risked his life to fix a hole, not because the US spend an obscene amount of money on its military.
P.S the military isn't that dangerous. The largest killer is suicide, then transport accidents, then other accidents. Truckers are in a far more risky job, because of the danger of driving, and because of the sedantary lifestyle. Next time you see a trucker at the gas station remember to applaud him and thank him for his service.
The kid fixing broken windows does good too, but isn't exactly risking their life and limb in such an explicit manner as the way a member of the armed forces may.
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.
Also, what triggered me was your “leftist” comment. The military is essentially a social welfare system funded by tax payers. I’ve never met a person who joined because they wanted to be a hero or because of some sort of prestige. Almost everyone joins because of the benefits or travel or because their families forced the issue, among other reasons. It would be great if our government offered similar incentives using tax money for other career paths. As I understand it, it’s a “leftist” ideal that is constantly being shot down by the “right”. Maybe I’m wrong about that.
Anyway, you seem like a decent man and your daughter sounds like she was raised well. I’m sure she will make a fine officer someday.
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.
The issue in our country is that we are increasingly making the default way of life for average Americans be one of more anguish and stress when we do not have to. None of the options for success in the US that we currently have are going to handle the mass group of unemployed people that something like automated cars or fast food resturaunts automating will bring, especially when so many are already doing so poorly
I have a lot of respect for the military, and part of that comes from the incredibly high cost most military members face. Not only the potential to lose their life, but to come back carrying a strong mental weight, and to typically have to fight tooth and nail to get the benefits they were promised for signing up for in the first place.
To say your posts in this thread are disingenuous would be putting it lightly.
People should have a sense of personal responsibility, certainly. People should also be financially educated and make good career decisions. We should also look to our political and financial organizations to find problems in the large and do what we can to fix them. And since we live in such a diverse society with drastically different values (the very values your daughter and her colleagues nobly fight to protect), the answer is not "everyone else should adopt my way of thinking". Even if you're "right", that is simply not a realistic path for policy makers, who need to deal with problems in the large.
Maybe this will highlight my thinking - I'm an engineer who went to engineering school and chose a rational career path with high expected gains. I have friends who majored in art at a very expensive school and will likely never be able to pay off their debts. I would say they did not manage their career well and perhaps should have made a different decision. However I would not want to live in a world where we did not have artists. Art education of some type is necessary for us to maintain our culture, so if everybody did the personally "rational" thing where would we be as a society?
I knew quite a few officers who planned on doing the 20 year office career and then retirement. None of them made it. I knew plenty of officers who wanted to be stationed in Hawaii. They got a taste and then were redeployed elsewhere. The Air Force you think you know does not exist. They are as cut throat as any corporation. And like a corporation the closer you get to retirement the harder they try and spin you loose.
Your daughter may do all 20 years of service. But do know that one day she will plateau career wise and when she does that is when the sharks circle. [0]
[0] https://taskandpurpose.com/military-needs-abandon-promotion-...
This arguably would be only valuable for people in the middle class to upper middle class.
EDIT: the statistic is 46%[0]. Okay, it's not "most" people but it's a good fraction. I wouldn't be surprised that >50% can't weather a $1000 emergency.
[0] https://www.washingtonpost.com/news/wonk/wp/2016/05/25/the-s...
Sure, but do these mooc/online courseware platforms teach one how to apply these new tangential skills and translate them into CV language and personal development actions that will get them hired? Especially if one is not already mentally inclined to join a 21st century workforce?
I'm asking this coming from the perspective of someone born in rural South Carolina (in a portion of the United States known as 'The Bible Belt') who is an entirely self-taught programmer, versed in a couple of languages-and realized I had to go to an entirely different part of the world to even make use of what I had learned. So my mind is going out to those people who don't live in dense urban areas and are maybe looking for a relatively 'future-proof' job that may as well be asking the to learn an alien language.
It was only by circumstance alone that I got exposed to the kind of entrepreneurial thinking needed for me to realize early on: I'm not gonna do jack shit with these computer skills, there's no market here, I live in a town that used to be a booming textile center and is now an economically depressed shithole (I say that lovingly, it's my economically depressed shithole), and has been for the last 30 years-forcing me to pack up and leave.
Do you think a substantial number of people who have internet have the same circumstances I did to know "I have this skill now, thanks to an online course, and now I need to follow up on it by making this sacrifice to put myself in a position where these new skills will get me hired. I need to be having these discussions with recruiters and hiring mangers, and doing these things to stand out"? Or even have the resources to pack up and plant their butt in a different part of the country?
Personally, I don't know if all of these code camps and online training programs do more than say "Here's a wrench, here's how to use it, good luck with your future as a wrench turner".
Can anyone speak to career development as an extension of this wealth of online knowledge? I just have hesitations of what utility these programs offer beyond here's how to do x with n.
Understand, there are people in this country who have been working since 16 to provide for themselves, they work for less than 9 dollars an hour, and still pay rent, utilities, medical bills, car payments and more. They didn't have hours during summer to sit around and play video games that they could have spent watching MIT courses instead. They today, still don't have the time to game the system and get ahead that others have.
The ability to get ahead by shear will is far beyond the will and patience most people who write medium posts about coder burnout have to contend with, the difference is instead of possibly not becoming a more well off person with higher net worth, the possibility is dying or incurring more debt.
Regardless, even if single individuals can get ahead, that's fine and commendable in some sense, but there will be many more who won't, the shear majority won't because the system itself produces these circumstances, and in fact, profits off it. What we see is the function of the way we set up companies and society in general.
We know they don't have enough money to invest. Average income + average cost of living < amount needed to safely invest.
We've quite literally known about if for years on a national scale. He doesn't have to show anything.
I got frustrated at face value because increasing wages would do more to alleviate a lot of American's financial woe's -- now and later -- than (rightfully) helping to educate Americans about investing money. You're right, even small bouts of investment can net large gains in the future. I jumped the gun and took it as "if you just stopped being dumb with money everything would be better!"
Wage increases are not only largely (historically) objectively justifiable, but wage increases would be more consistent and easier to "implement" than educating an entire populace in a better manner. There would also be the enormous task of changing purchasing habits. We know that even when people understand "doing X is bad for future results", that doesn't mean they'll make the more rational choice.
Neither perspective is exclusive. We can increase wages and we should also invest in educating Americans about sound financial practices. But wage increases can happen now, would be immediately beneficial to everyone, while also making it easier to invest and take on the risks associated with investing.
I agree with everything else you said here. More money is always going to be the quickest and simplest fix for this. I was simply pointing out that financial education should also be part of an ideal solution and that education alone is "better than nothing."
Prove that is possible. Find an investment that will do that.
For a reasonable return on investment you would be looking at 10k-15k final total depending on your luck.
And I bet it is a combination of the two. Just I think it is probably 0.1% of because people don't do something they've generally never done and 99.9% that real wages haven't kept up with inflation.
Retirement isn't something to leave to chance. Social insurance applies the law of large numbers to eliminating much of that.
The US pensions crisis is going to be devastating beyond all belief.
You could teach them the "value of money" all day long, but if they don't have money to save it won't do them any good.
Many people who enter a program to learn how to budget quickly learn how all the monthly bills in their life add up quickly to consume their income. Examples are spending too much on cell and internet service plans, too many subscriber entertainment services, gym memberships, eating out wastefully, and more. Even the knowledge the buying a car with a term over 42 months is too much car is important to know.
Yes there are some in society who truly are at limits but we have to follow a different means to get them back to functional levels. It still benefits them immensely to learn strict budgeting that they can take forward when their income stabilizes.
Where is your post about how million dollar CEOs need to cut their executive pay budgets, stop paying for new yachts, and pay their workers a higher share of profits instead of taking higher pay, in order to encourage the economy?
Why is it the people who have the least who have to tighten their belts?
As long as you can regard being poor as a moral failure you can tell yourself you're still a good person (and not an insensitive, selfish one).
What could go wrong with millions of people believing in a simplistic investment strategy that always works. Kinda like buy a house real estate prices always go up. Well, for all the private equity funds that picked up real estate and banks at pennies on the dollar.
If everyone invested as much as they could, people wouldn't buy enough to drive company profits like you see today, or to be the last people holding the bags when a recession occurs.
Also stock markets don't go up forever, Japan's Nikkei topped in 1989, and as of now, has barely recovered half the value. Do you really think even index funds are risk free when you can have a 50% loss for 30 years?
What I'm saying is, how are they just now "troubled"? This is all but inevitable barring drastic measures to enforce the opposite trend, at which point it's no longer any recognizable sort of capitalism. Honestly it just seems like a bunch of people receiving numbers they expected and pretending to be surprised.
https://outline.com/http://www.latimes.com/business/la-fi-fe...
Nowadays even college graduates struggle to achieve "liftoff."
Globalization has led to a race-to-the-bottom situation where jobs flow across borders, to the places where desperate poverty allows wages to be as low as possible, and the greatest degree of worker exploitation is allowed.
Which is great for those people being lifted out of poverty. And it's great for companies who can more freely exploit workers, and maximize their profits. And it's great for consumers, who get lots of cheap new stuff.
But it totally wrecked our economy's ability to provide a good standard of living for the ordinary person.
Those chickens finally came home to roost in the last US presidential election. There's a lot I don't like about Trump, but I think his tariffs really will make America great again (if they aren't just repealed by the next administration). Because we're finally doing something about this situation.
This taught me to get off my own butt and make it on my own, which I have. I paid my own way through college (impossible now), bought my own car, married a woman who did the same. We are largely debt free (mortgage), but will be free soon. Except for property tax, we owe no man anything, and this is the way it should be. Pull yourself up by your own bootstraps. Big daddy government is not the answer and technically owes you nothing. As Gerald Ford once said, "A government big enough to give you everything is big enough to take it all away."
Sadly, this young generation has embraced the notion of entitlement. No one is owed anything except human dignity. Americans have lost the sense of doing it on their own. Te military is a great choice for kids who cannot afford college. I'm not babying my kids. They will need to make it on their own. My dad did it, I did it, my wife did. None of us were rich, and by today's standards, we would have been considered poor.
I'm fairly certain that young persons don't feel that anyone "owes them anything" - they only want the same opportunities that those before us had. The facts that those easy gains aren't possible anymore isn't a fault of those with the misfortune of being born 30 years later. Even in your own post, you admit that your platform of success isn't possible for current youth (can't afford college, can't afford a new vehicle, can't afford housing, etc), but yet, you still find a way to blame it on their "entitlement".
I'm not really sure what you are trying to say here. A safety net is entitlement? How so? What's the correct cutoff here, should we end social security and medicare as they exist today? Are you prepared to retire without either right now (kudos if you are)?
Should the US summarily shrug at people with disabilities that can't reasonably work? What will become of them? Homeless? Death? Should their families take care of them? What if they can't afford to? What should people do if they can't join the military?
You correctly point out that expenses are _much_ higher now. Is my generation entitled because we generally want a fair wage to pay for those expenses? Are we entitled for desiring the return of unions -- unions that did much to create those high wages out of the exploitation of the 1800's & early 1900's. Have you really thought any of this through?
Look, I'm part of this generation you're disparaging. I could wax poetic about how I "pulled myself up by my bootstraps" because I'm doing quite well. But I know it is bullshit, because I've also been fortunate enough to choose the right career, at the right time, and had remarkably few setbacks in life. Also I'm a white male in the US. I'm playing life on easy mode and to say otherwise is a lie.
That isn't true for everyone, and standing on your soapbox calling on everyone to "pull themselves up by their bootstraps" is both ignorant and dishonest. You've done well in life, but it appears to have bred a stunning lack of empathy.
If wage growth matched productivity gains, a lot of these problems would be non issues. Nothing in here has anything to do with entitlement.
An older person talking about how the younger generation is "entitled" is the quickest way to say that you don't actually know what's going on.
Take steel for example: https://www.statista.com/statistics/268683/us-steel-demand-s...
In 2017 the US needed 100M metric tons of steel as raw material. We only produced 23M tons. Where is that difference coming from? Purchasing it from other countries. We just don't have the production to make what we need, so why on earth would anyone force the price of that upwards?
So now the cost of everything goes UP 25% or more due to tarriffs, and we no longer can sell our exports of soybeans or whatever because they're now 25% more expensive overseas.
Explain how that makes "America Great Again."
Devil's advocate: who else will actually buy that steel?
I don't agree with this strategy, but it does have some sense in its own way.
You may as well claim raising fees at the DMV will MAGA because think of all the DMV workers who will have pay raises.
Tariffs won't do that.
Trade negotiation aimed at trade deals with strong common (not necessarily identical but converting over time) labor and environmental protections—where the partners with weaker protection in reach sub-area catch up over time to those starting out with stronger protection—so that competition is on a progrrssively leveling field, rather than a race to the bottom, would help.
Tariffs might have utility as leverage in such negotiations, but while this administration may make noises a better trade deals, they haven't shown interest in labor or environmental protections domestically or internationally, so they don't seem likely to use tariffs in the only way in which they might contribute to solving the problem rather than making it worse.
I don't agree with Trumps' strategy, but I can see what he is trying. We will see if they work long term.
IP is a capital issue; tightening IP protections reinforces the relative power of capital on all sides of a trade regime.
> That is, exactly what your third paragraph was saying, except that he isn't talking about labor or environmental protection
Yes, it's exactly what I'm talking about except for being completely different and benefitting a narrow interest rather than a broad one.
> which you seem to be implying are the only two places where they can work.
No, they can work as leverage on any issue; labor and environmental issues are just the critical ones where they would have broad benefits to the Sheridan public because they would address the problem of the choice between making local conditions worse and losing jobs.
Not that it helps people today, but eventually this trend leads to reductions in poverty and their children demand more. Look at China's middle class. I don't doubt that in 50 yrs they'll be equally as entitled as American and European labor.
So I agree this is a hard time, but I think it's the result of non-smooth changes in protectionism and the ability to globalize the workforce.
The tariffs are at best misguided and most likely highly counterproductive. In the steel sector, the main problem boils down to China massively overbuilding steel production in the past decade and dumping (subsidized) steel on the world market. Building a coalition of nations to confront China on this matter wouldn't be very difficult... but Trump manages to make it about attacking Europe, Canada, and Mexico instead. And the fact of the matter is that there are far more jobs in manufacturing sectors that are at risk because of sudden increases in raw materials brought about by tariffs than there are job prospects to be brought back. On top of that, the resulting trade war is going to cause more pain in the labor market in unrelated segments.