Comment by komali2 | Hacker News Reader

Comment by komali2 | Hacker News Reader

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> If they could just decrease executive pay, why aren't they doing that already?

Counterpoint: if they could extract more profit from the market by increasing prices, why haven't they done so already?

Market determines viable price for service, not cost. If the cost of doing business can't find a balance at rates the market will pay at acceptable profit margin, the business simply doesn't exist. Many aspects of our lives suffer from this reality: renewable energy companies in many places survives only because they're propped up by government subsidy.

The answer to "why aren't the executives cutting pay" is obvious: it's up to the executives, and why on earth would they cut their own pay, when they could instead simply decrease worker conditions and cut cost of labor? Without a union, executives have literally all the power.

Executive pay + shareholder profits (through stock buybacks, dividends) are where all the massive margins go to right now. There's no more profit to extract from the market (unless the finance team is terrible at their jobs and have been leaving money on the table) so that's where the money to cover increased cost of labor needs to come from.

I'm not really upset at the idea of CEOs making less money, I don't get what the big deal is.

> and why on earth would they cut their own pay

So market set the pay for services however executive pay is not affected by the market at all?

Uber pays its executives what it does because other comparable companies pay the same. If they cuts that people they’d want to hire will choose to work for other places and they will have to find someone who agrees to work for less (which might or might not be bad a thing)

Thanks for making my argument more explicit.

And arguable, executive pay is perhaps a lot more elastic than ordinary workers' pay. Companies aren't shy about paying huge bonuses to their CEO one year, but cutting them to nothing the next. Ordinary workers have a much steadier pay check, even when working for Uber.

Similarly, most companies are also quite willing to hire and fire CEOs. Statistical distribution of CEO tenures is a well studied subject.

> The answer to "why aren't the executives cutting pay" is obvious: it's up to the executives, and why on earth would they cut their own pay, when they could instead simply decrease worker conditions and cut cost of labor? Without a union, executives have literally all the power.

No. Uber still has to compete for workers with other companies looking for labour. Unions presence or absence doesn't change that dynamic.

> Counterpoint: if they could extract more profit from the market by increasing prices, why haven't they done so already?

Not sure that's a counterpoint to anything? Yes, I assume that they are setting their prices to maximize long term profits.

However, if regulation increases costs across the industry, supply curves will recede, and if demand curves stay roughly the same, prices will rise (because the point where the curves meet will be at a higher price point).

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