Striking auto workers want a 40% pay increase–the same rate their CEOs’ pay grew
cnbc.com
cnbc.com
https://en.wikipedia.org/wiki/Mondragon_Corporation#Wage_reg... https://en.wikipedia.org/wiki/Worker_cooperative#Longevity_a...
[0] https://www.researchgate.net/publication/290978631_The_Mondr...
some ideas about how to offer "founder incentives" in workers cooperatives."
From a recent HN comment: https://news.ycombinator.com/item?id=37304911
But worker cooperatives is known as "one worker, one vote" and anarcho syndicalists like Richard Wolff wouldn't consider that a worker cooperative anymore.
I've been in and started several worker cooperative businesses. I don't try to do it anymore because of what I perceive as a fundamental issue: the people that are the most explicitly attracted to worker co-ops are also the least business saavy or willing to put the business's existence ahead of ideological values. In my experience, it is a recipe for almost certain failure.
In the same way that anarchists point to Revolutionary Catalonia, workplace socialists point toward Mondragon, ignoring that these are both statistical aberrations rather than the normal state of affairs. The normal state of affairs is a bunch of naive ideologues that hand-wave away planning critical details. This isn't unique to worker co-ops; founders do it all the time, but the difference is that new ventures require flexibility and leanness, but worker-co-ops are exceptionally rigid and fragile.
Generally if worker co-ops "succeed" it's directly because they are being subsidized by similar ideologues rather than business efficiency. The actual product they sell is good feelings rather than products or services.
It's a little weird that tech-folk are generally ok with the idea that groups can yield good predictions in the context of a non-owner community that is harnessed to improve a product, or in the context of a prediction-market, where people placing bets in disagreement can lead to a more accurate outcome than the participants taken separately would produce -- but somehow think this mechanism will fall apart if workers who have an interest in a firm's ongoing revenue are able to vote.
There is also the thrill of making something happen together. Like barn raising with 200 people is quite different from building a shed alone.
> On September 14, the contract between the United Auto Workers and the Big Three carmakers (GM, Ford and Stellantis) is expiring — and the possibility of a strike is real. This comes at a delicate time for multiple reasons. The labor market is tight, which means workers have other options. Inflation is high. And the auto industry is undergoing a major shift to the electric vehicle market, which may change the composition and pay of the labor force. The stakes are high. So what does the union want and how does it fit into the goals of the broader labor market? To understand more, we speak with Dan Vicente, the director of UAW Region 9, as well as Alex Press, a labor reporter at Jacobin magazine.
* https://omny.fm/shows/odd-lots/what-the-uaw-wants-from-its-f...
* https://www.youtube.com/watch?v=LBP8_8_S7Ls
There were some items that the unions conceded in 2008 when the US automakers were going bankrupt that have still have not been restored.
When they get it - right now every reports that they are asking for 40%
TFA conveniently points out to you that 20% has been offered to them and was rejected.
Also they are asking for more than pay raises and shortened work week. They're also demanding health benefits for retirees and defined benefit pensions among other things.
40% is table stakes.
Why has the supply of CEOs not kept up with the demand for them? Surely, with the improvement in education and in increase in MBA programs, there must be far more CEOs today than in 1978. Why has the ratio of CEOs to Companies fallen by 14x for their wages to rise this much? /s
As many argue, wages are only set by supply and demand. And if workers are underpaid, then it is because they are replaceable. Use the same framework to explain CEO pay.
Most of the time that I see people invoke "Econ 101" concepts, they are wrong. Supply and demand does not account for the power imbalance between workers and leadership, which unions specifically attempt to address. It does not account for the class differences between workers trying to make ends meet and the board of directors who believe they deserve much higher pay than workers. We are free to change the perceived value of workers through the power of worker solidarity - ensuring that individual workers are not so easily replaced to keep wages suppressed. You can simply say "it's supply and demand" and do nothing to support the workers whose labor is so clearly needed for our economy to function, or we can support collective bargaining rights to make sure that individual workers are not crushed under the power of company leadership. How you view this is up to you, and not a simple fact of natural laws of economics.
Yes, it does, in each scenario you presented.
> We are free to change the perceived value of workers through the power of worker solidarity
It's more like using the power of government to ensure the company has no alternative to the union.
Company leaders have no actual power over the workers. They cannot force anyone to come to work. They cannot have you arrested. They cannot confiscate your property. They cannot beat you. They cannot prevent you from accepting a job at another company. They cannot prevent you from leaving. They cannot extort, libel, slander, blackmail, or threaten you. They cannot put a hit on you.
All they can do is offer you money in exchange for your labor. That's it.
You’re both right. Power dynamics and supply and demand are interrelated.
Most forms of human organization involve hierarchy. Even co-ops have a CEO and that CEO makes a multiple of base worker pay.
What that multiple is and how it gets decided is a fair question: in co-ops, voting rights are built-in, but for private corporations you need collective bargaining
It's not that they're wrong. Worse, they're thought-stopping.
They're mantras we all know and we are trained to "accept their wisdom" and stop questioning.
Supply and demand is the imbalance. The workers, individually have no control over supply. The whole point of a union is to control the supply of labour and shift the balance of power.
There was an example in Money Stuff this week where a CEO got a pay package "worth $110 million". It's actually made of stock options that vest if the share price went above $150, but the expected value was $110 million so that's what was reported.
…But the share price only reached $66. So in fact he was paid zero, and he quit. (Well, $1.5 million in cash.)
https://www.wsj.com/business/ceo-with-110-million-pay-packag...
> paid $1.5 million in cash
These are two wildly different things.
It gets a little weirder than that I suppose since you might have a great deal of shares in a company, which you never exercise so you could say that money doesn't really exist until exercised.
You can however use those shares as collateral for a mortgage or other line of credit which is a pretty common tactic for wealthy people to avoid paying income tax that they otherwise would if they were to sell said shares.
I'm fairly sure I could achieve the same results for considerably less.
Moreover making compensation dependent on stock price movement encourages corruption and fraud - look at the numerous Enrons and other financial claims. All of which left the majority of those responsible enriched while destroying the lives of others.
How many companies really break that relationship in their market sector?
So tldr, ceo pay is based on the economic cycle rather than how the company does.
I've seen this in my career, the closer I get to "SRE" or "platform engineer" the more decoupled my salary has become from my actual measurable value.
I'd articulate the thinking as, roughly:
We know this role is important. We know that having a bad SRE team (or CEO or platform team) is expensive, it could cost us the 100% of the business. And we don't know how to measure the value a good one provides. Therefore we are willing to spend as much as we can afford to make sure we get a good one.
The elite/ownership/"capitalism winner" class are playing on an entirely different level with their power and influence. Don't kid yourself into drawing comparisons with your situation and miniscule in comparison compensation. It's always heads they win, tails you lose.
This is pretty much it. Everyone wants to avoid hiring a bad CEO so it’s a bidding war for executives with track records at large companies.
And when you’re making billions a year the CEO compensation is a drop in the bucket.
And who are "we" in this train-of-thought? If it's shareholders, that's where the root of any problem lies. If shareholders are real businessmen and entrepreneurs who built up the company or similar companies, they will have a clue as to what is a good CEO. If the shareholders are real workers who believe in the company they're working for, they will have a clue as to what is a good CEO.
Today, shareholders are no longer real businessmen or real workers, but retirees represented by bureaucratic investors. That's why they have no clue as to what is a good CEO.
Worker pay is set by the leadership, leadership pay is set by the leadership.
Public unions seem more undesirable. There we have the gov negotiating with itself with no external accountability, unlike your example.
That said, the CEO pay is easily explainable:
> Profits at the struck auto companies increased 92% from 2013 to 2022, totaling $250 billion, according to EPI
> CEO pay at the Big Three has grown 40% in the last decade, according to EPI
If you're the CEO of a company and you increased profits by 92%, I don't know seems pretty fair to me. There's a lot of other businesses that suck and haven't raised their profits in the meanwhile.
I think talking about the CEO pay is the wrong path (though I do admit it's marketable in the mainstream news). Just ask for what you think you deserve and don't work if you don't get it. It's as simple as that.
Did you? Attributing all the success a company achieves to the CEO feels shortsighted.
Aside from anything else: if all these companies saw their profits grow by so much surely there’s an external commonality there? “The CEO did it all” would be slightly more plausible if only one company experienced that success.
This assumes that the increase in profit is attributable primarily to the CEO. Well, that at least 43% (40/92) of it is.
> Just ask for what you think you deserve and don't work if you don't get it. It's as simple as that.
This only really works with unions. Fortunately, these workers have one.
If it's a company of one than I agree. In any other scenario the CEO led the company to a 92% increase. The CEO didn't do this alone. They maybe managed that increase and had a part in it but others most likely did the vast majority of all the work.
Now, how do you feel if the CEO fired 50% of the workers and maybe the remaining work twice as much to make up the slack. This leads to a 92% increase in profits and the CEO deserves the vast rewards?
Who's to say that the various attempts to "chart a new course" and change business strategy for the shareholder's benefit during that time didn't actually make these corporations underperform vs locking the executives in the boardroom and cutting off all their decision making ability for the same time period?
If a ceo grew front line employ pay and also profits at the same rate, the ceo pay should naturally follow that rate.
On the other hand, if they grow profits by suppressing wages, then they should eat the same pudding they served everyone else.
YOU, the CEO, didn't single-handedly increase profits by even a single percentage point. One employee out of 1 million, take your millionth of a cut of the profits, that's still $150K.
From 2013 to 2023 GM was beat in innovation by both Tesla (Model s,X , Y, and 3) and Ford (aluminum f150 and electric f150, mustang mach e) and has only recently been producing vehicles that look like their 2030 lineup - on the competitor's charging network technologies.
GM was even particularly slow on ice adoption of things like independent rear suspension. Or, the Corvette - where they basically pulled a Nissan and bought the competitor's engine.
Slow to innovate, early to fail (Volt/bolt), purchase from the competition is not what we should define as a good CEO.
And that's not even touching the fact that the workers are clearly valuable and irreplaceable enough that they can halt production like this.
look at tiny barely profitable companies, the gap between median wage and CEO is sometimes less than 2X.
all these takes on CEO pay when the reality is simple - CEOs are paid a lot because they the cost of being wrong is more than their pay. this results in companies that have a lot of money competing, driving up the price. the end. it's the same reason lebron james is paid 10X more than NBA average.
This is a statement that there is low quantity demanded by the market. It's actually a great example of how the naive supply-and-demand argument doesn't make a lot of sense.
I invite everyone here to raise their hand if they're just as hard-pressed as me to think of any job that they wouldn't do for a million per year.
Instead, the board has approved that compensation based on very real business needs: growing the company, acquiring competitors, changing business models, etc. It's actually hard to find a leader who has experience doing that thing and is also the right fit. Hiring the wrong CEO is a quick way to kill the whole company. On the flip side, to the board, a CEO that can drive meaningful growth is worth the risk, even if they have to fire with a golden parachute two years later.
I'm not trying to justify pay disparity (in fact I think there should be minimum AND maximum FT salaries when currently there are neither), but that's what's going through the board's mind when they set CEO compensation.
https://www.motorbiscuit.com/how-much-money-does-ceo-of-hond...
What separates the good CEOs from the poor CEOs isn't something you can readily teach. Some of the best ones have a preternatural ability for the role in the same sense that Lionel Messi has a preternatural ability at his sport, and are equally rare. The majority of CEOs are journeymen with the skills to do the job but not to be great at it. This doesn't mean that average employees are fit to be CEOs; you don't have to look further than startup CEOs, which are pulled from an above average pool of semi-random people, to discredit that notion. It is a highly specialized skill set that is difficult to acquire and most people aren't mentally cut out for what is required to be good at it. The experiment of promoting rando employees to CEO has been tried on occasion across industry with almost universally poor results.
This is true of most professions that command a high wage. Thinking that anyone could be a CEO is like thinking any dev can be Fabrice Bellard. Even if that turned out to be the case in a specific instance, no one should expect it to generalize.
If you ignore Pelé, the top soccer player had a similar increase in the same period. https://www.expensivity.com/soccer-salary-inflation/ Compared with the median income, they went from 10x in 1979 to 1300x in 2020. Why has the supply of Messis not kept up with the demand for them?
"Star" pay has exploded across all industries (entertainment, sports, and yes, business) and it's not hard to see why. Technology has vastly grown the size of markets, and the "winner take all/most" dynamics of these star-driven occupations means the winners are able to take an outsize chunk of the revenue.
I think there are some other things going on with CEO pay (CEO salaries are basically set by other CEOs, for example), but the parent comment absolutely gets it wrong when they say "the supply of potential CEOs has increased". In the competitive market for CEOs (as well as actors, musicians, sports stars, etc.), people are not interchangeable commodities. Someone who is only slightly better can be responsible for their corporation completely "winning" in some industry, and thus companies are willing to pay top dollar for this chance at getting the brass ring.
What they need to do is to publicly disclose the performance of their CEO. Have CEOs rated by staff and publicly distribute this info worldwide. They also need to implement clawback dating as far as a decade depending whatever products they in charge during their tenure. And lastly, always put full jail offenses directly on CEO without any plea bargain. Not doable? Then workers need to get retrenched as they rightly deserve it when they didnt bother to hop away.
If you expand your horizon somewhat to C-suite in general, it seems that demand for C-suite has tended to increase over time. If you also consider that C-suite is to some degree a Veblen good (demand increases as price goes up) [1], that makes sense under economic laws. Worker pay, unlike executive pay, is going to be considered a significant cost center, and business will higher fewer workers if individual pay is growing too quickly, making worker pay act like regular goods and not Veblen goods.
[1] The framework for setting CEO salaries tends to be "take the median CEO pay, add a little extra because our CEO's clearly better than average..."
Sure. It's the same framework that explains the pay of Lebron James. The NBA became a massively popular global game during the era of fast growth globalization, in which billions of consumers entered into the active global economy.
Now you've got like 50 players earning $30m or more per year in the NBA. To play a game in just the US market.
~450 active players earning around $5 billion per year in just league salary (not counting endorsements).
Now do it for global football, NFL football, Nascar, Major League Baseball, Hockey, F1, and so on.
Who knows the insane total compensation figure. $30 billion?
The economic force producing that comically massive figure, is the exact same reason Tim Cook is worth every dollar he's getting paid to operate the juggernaut that is Apple. The same goes for Nadella at Microsoft.
The top 450 NBA players earn more in salary every year than the CEOs of the S&P 500. Why shouldn't a CEO get paid extraordinarily well, as well as an NBA all-star, for operating a $10 or $20 billion market cap corporation? Obviously they should.
The only time I see arguments against high CEO pay (speaking generally), it's from people that know absolutely nothing about what a CEO does or how exceptionally difficult it is to operate a very big company.
And should mediocre CEOs that fail or otherwise perform poorly get golden parachutes? No, of course not. Exceptional CEOs should get properly exceptional pay. They deserve to earn drastically more than the average worker.
The common Redditor railing against CEO pay, looks at a Tim Cook and thinks they can maybe do what Cook does (he just sits in his chair in a big office while other people do all the work, dur dur dur), or what Nadella does, or a random S&P 500 CEO does. In reality they can barely do their own basic job, much less one ten tiers above them. The average Redditor is further away from being able to do Tim Cook's job than they are being able to do the job of Lebron James. The issue is the average person doesn't know anything about what a CEO does at all, they're entirely ignorant of it. However they can watch Lebron James play basketball and immediately understand they can't do anything like what James can do, because they get the physical visual display immediately, meanwhile they know zip about the job of a CEO at a big company. As usual the issue is extreme ignorance and mediocre education.
The most common argument I see is that the ceo pay has increased relative to the common or average employee salary. I doubt being a ceo has become that much more difficult over the same time period though.
Does this mean that I have been missing the CEO tournaments? surely they must compete with one another after all how else can you compare who is better without a direct face off?. It seems like the big companies always get the best CEOs so they must have scouts all over the place on the lookout for that great undiscovered CEO talent.
Or could it be that big companies always produce "great" CEO because its a lot harder to fail and a lot easier to win when you are stearing the biggest ships.
CEO wage negotiations have nothing in common with employee wage setting.
The NBA compensates workers based on the value they bring to the team. Isn't that what the UAW is arguing for?
The top 450? There's only 450 players. 30 teams, 15 players on the roster.
> earn more in salary every year than the CEOs of the S&P 500.
No, they don't.
There are 30 teams, with a salary cap of $136M, i.e. $4.08B.
I'm looking at the top CEO salaries and I'm already at $2.6B and I'm only at number 20.
So start there instead of making it seem like your few specific examples speak for the entire population of CEOs. Talk about the CEOs who fumbled completely during COVID despite having a great position, demanded benefits despite their huge reserves and are now crying about having to pay it back while their profits are up.
Talk about the CEOs dumping their toxic waste straight into the rivers to avoid having to pay costs. And the CEOs who push for every trick in the book to pay a close to zero net tax. And the ones who will lobby and keep almost any potential upstart from ever becoming a threat. And those who have solidified themselves in their branch thanks to first mover advantage, and can do whatever they want and still succeed despite our 'competitive free market' (yeah right).
>They deserve to earn drastically more than the average worker.
They already did in absolute terms. Percentages compound. How about explaining why CEOs need an even bigger advantage in both absolute and relative terms than they had before? Did the workers not contribute to their success?
And why are the workers the first to feel the headwind whereas the CEOs are the first to feel the tailwind?
Oh but they do! That’s the rub. Also it’s very hand wavy to say “the CEO’s job is exceptionally difficult”. But that person has a whole bunch of people bringing him ideas and trying to improve the company. In fact, that’s how you even get promoted. So they pick a bunch of things to do. If it doesn’t go well and the stock tanks, the first person to leave are the workers and not the CEO. In fact, in almost every case the CEO is the last to get affected. Win or lose for the company, the CEOs only win.
Is that performance related pay?
Or is it Crony Capitalism?
We should remember that CEO pay is often equity linked, and thus can vary. Not sure if workers want large portions of pay equity linked. I remember I was once in discussion with a hedge fund for a job and they offerred a sliding scale of pay that was cash vs equity. The more equity I opted for, the greater the pay, since of course there was risk involved.
CEOs are much different. A bad CEO can cost a large company 10s of billions in stock valuation. If you have a decent CEO, and you fire and replace him with a poor replacement, the damage to the company will be tremendous, so the board won't want to risk it. This gives good CEOs the leverage to demand massive compensation. A CEO can basically hold the company hostage by saying "I want a $10 million raise this year, and if I don't get it I'll quit. Have fun rolling the dice with my replacement!" (Though they would never actually say it that way) And the company will basically have to choose to pay an extra $10 million or roll the dice on potentially losing billions. This is why they almost always pay CEOs a massive amount.
Obviously.
If Steve Jobs—who first created and then basically rescued Apple and started it on the path to where it is today—can be 'replaced' then any other leader can be replaced.
Similarly there are plenty of CEOs that are paid oodles of money that were or are absolute garbage: see Boeing for the last 15+ years as Exhibit A.
That's the entire process of creating the professional corporate managerial class - you have reliably shown that you care more about the financial success of the company, and yourself, than you care for your employees and coworkers.
I mean how many movies and characters have we made that are precisely calling out this exact behavior:
Gordon Gekko
Bill Lumburgh
Mr "Coffee is for closers" Blake
Richard Chesler (Fight Club boss)
etc...
Like...we've been roasting this precise kind of corporate myopic psychopathic forever as what precisely not to be yet it's like an entire generation used them as pathfinders
Why would it?
If you want to hire a CEO, you either usually are looking either at A) A CEO of another company with experiences relevant the current situation, at a size similar to the current company's size. Or B) A senior exec (CFO, COO, etc ...) at the same company, or more rarely an involved board member.
These are self-limiting pools.
Hold on there chap! How is this obvious?
Looks like only one NBA GMs is paid over $10M.
If the CEO go on strike and don't come to work for a month, how many cars will not be built, and how money will the company lose?
If the union factory workers go on strike and don't come to work for a month, how many cars will not be built, and how much money will the company lose?
Therefore, who is actually more important to the earnings and success of the company?
Put differently: 336 workers’ per annum amounts to the pay the CEO gets. There are three CEOs in this case so that’s about 1,000 workers to equal their pay.
If I recall correctly there are about 12,000 workers striking, so their cumulative salary is about 12x that of the cumulative CEOs.
I don’t know why, but that doesn’t feel “way higher” to me. I guess I just expected something along the lines of 100x for some reason.
Also makes me wonder how this scales when you look at C-Suite as a whole v. workers.
0: https://fortune.com/2023/09/17/uaw-strike-highlights-carmake...
To keep the equation in check, surely they need to increase at the same rate
Obviously large corporation will be more robust, and have things like attorney of power that - so that there's no single point of failure. But, these things happen.
https://www.theverge.com/2015/10/8/9481651/volkswagen-congre...
I can imagine a bunch of roles that are more costly to replace than "someone with accountability".
So much for that whole capitalism thing.
CEO's pay rate = (some multiplier) * median salaried worker's pay rate
OR
CEO's pay rate = (some multiplier) * minimum salaried worker's pay rate
We've been conditioned to think it's not fair somehow, but the discrepancy is just....engorgingly terrible. I'm not arguing for how this metric would be enforced, only that it would be a good one to have. Especially in a time when greed is the lowest common denominator in the race to the bottom for some of these large corporations.
It wouldn't fix the stockholder "value" chase, but at least it would shore up one part of the system weak to corruption.
Honestly I think that would probably fix things a lot faster.
This is why Singapore pays them even more than we do.
Anyway, minimum wages (despite being ok policies) aren't what people are actually paid, and of course aren't especially what non-working people are paid. And remember that non-working people, namely children and the elderly, are poorer than workers.
And idk where you got the idea that people don't make minimum wage. They absolutely do. Go look at a job board.
Nobody said the multiple has to be 5. It could be whatever the current ratio for Singapore is.
Salaries wont fix bribes for someone with that much to command and even the already rich can make a lot of money getting into politics. Their salary means nothing to them.
Serving in public choice should for duty, not a career.
Make a fixed salary. If you dont like it, get a job elsewhere just like everyone else.
And oh, you wont get qualified candidates - nonsense. We had a movie actor, a silver spoon heir, a community organizer, a real estate broker and a lifelong politician as presidents.
There's nothing in technical expertise that they have in common. They were just good orators with some charistma and a penchant to lie with a smile...on their face.
Oh, you are worried of a bribe? Good thing we have FEC disclosure forms etc. Make them audited every year. Have more bite. Increase sentences. Put bounties on whistleblowing. Then sit back and relax
That's insane no matter how you look at it.
Minimum wage is paid by individuals, private businesses and their owners. Congressional pay is paid for with your money - an effective infinite of your money, or they'll just poof new money out of nowhere to continue to pay themselves.
Correlating the two is plain wrong.
There’s a job market for C-Suite employees (whether we care to admit it or not). At a certain point you won’t get qualified candidates if you can’t reward them enough, same as engineers or any other role.
The answer for how much CEOs should be paid is the amount of money you would need to pay to employ the most optimal person to run the company. Figuring out what that number is is difficult.
And it can sometimes be VERY illiquid. Headhunters help to provide this liquidity and get paid for it.
Sometimes C-suite career people can go years without a job. Not every CEO or CFO makes fortune 500 comp and many people falsely assume low compensation volatility as e.g. a "career CFO". It can be extremely stressful, especially with family/dependents.
How do these people get to be C-suite career people? Seems like you basically have to be born into modern nobility. I've asked people who work with them about this and they make these vague claims about 'ultra drive & competitiveness' but I don't buy that those things are magically statistically concentrated in Ivy League grads.
If we can hit a nice logarithmic return on investment for company size, I think that would be nice. Like many things, perhaps impossible to easily achieve, but it's a nice thought in idea at least methinks <3 :'))))
"Should" by what standard? Minimizing deadweight loss?
The end result of this situation would probably be a mad dash to automate away any blue collar work, which may not be such a great thing.
It’s a tough problem.
More typically, this results in the outsourcing/contracting away of lower value work.
I would say it would be a huge upgrade to get rid of investor CEOs and put in a worker CEO in place instead.
I always think "I can clock out at 5pm" or "If I screw up it'll only cost me my job and not 1,000 people their jobs"
C levels deal with stuff I am not interested in and the while the pay is appealing the added life complexity is not. Thus I W2 while seeing my kids 90+ hours a week.
Google says: 167,000 GM employees Mary Barra salary: $29M
Distribute that salary across the whole workforce: $174 per employee
They should really be talking about it in terms of inflation or profit margin. GM profit for 2022 was $21B
No one is saying the CEO is taking money the employees would have otherwise earned. When you divide it out like that of course its a pittance per employee.
The statement is about the relative scale of the CEO pay to one employee. I don't care about the difference applied to all employees.
An absurd parody I always imagine: John is 7ft tall. His group of 6 other other friends are only 6ft tall. Wow John is really tall! Nah, if you distribute his tallness between his friends they would only gain 2 inches! That has nothing to do with John being 12inches taller than any one of them.
If the employees really only care about that ratio, then they should accept that outcome from their strike. That's not why they are on strike, they also want to be paid more, just like the CEO.
the same logic applies to CEO pay. you can either pay the CEO a lot, or you can pay everybody else an amount so slightly different that it's unnoticeable. there's value in paying a CEO a lot, or you can not pay them a lot, and not pay anybody else any more either. surely you can see how there might be value in offering a high salary for a role that can have a big impact on the company, and how simply not doing that and essentially erasing that money instead would be a bad decision?
$2 million, actually. The $29 million is total compensation; mostly stock awards.
I suppose I should be paid 167,000 more per year as a software engineer at GM because it's only 1 dollar per employee?
Are there any examples where this isn’t true?
I know someone who works as an engineer cleaning up nuclear waste. The workers who do the job he engineers are paid more than him. He is ok with that but did pass the comment that it’s an unusual situation.
He said someone offered to buy the company for $60M cash I think it was? Which is astounding.
I think NPR does a lot of damage not questioning assumptions like this. Or, often times, putting them out there themselves.
Even better, if they're managing their pensions via investment houses, why not just build their own investment house and leverage their negotiating position that way?
But beyond that, meaningful equity in the hands of labor should surely be the goal — it aligns interest in a way that cash can’t.
It would be interesting to see what happened when the shoe was on the other foot.
I thought I read that at Japanese companies the CEO doesn't make 300 times what the workers make. Maybe the CEO made 10 times at most?
Why is that obvious? This foregone conclusion stuff is just notes cribbed from the aristocracy. You're not aristocrats, you're citizens.
...Akio Toyoda, was paid ¥999 million ($6.9 million) last fiscal year...
"Owing to culture or corporate structure, the salaries of American executives and foreign executives in Japan have historically been much higher,” a Toyota spokesperson said Friday. "We’re aware of the gap and we’re working to fix it.”
Nissan, which has just shuffled its leadership, also published salaries Friday, showing that former Chief Operation Officer Ashwani Gupta was paid ¥726 million last fiscal year. CEO Makoto Uchida made ¥673 million.
Honda said last week that its CEO Toshihiro Mibe was paid ¥348 million and Chairman Seiji Kuraishi got ¥138 million.
Wages are theoretically a market, and probably it's often easier to replace a skilled manager/business bro than it is a skilled engineer/artist/salesman, and often it's more important to your business.
Basically, the story goes that when an individual rises into a significant leadership position at a large enough company that the economic calculations become different. There's still an element of domain expertise, but, for the most part, leadership is leadership wherever you go. This implies that a leader could (potentially) move across sectors and still be effective which results in a wider pool of companies that are interested in competing for this person when contrasted to the ICs. Since some sectors are very profitable they end up "bidding up" quality leadership. The combination of this effect along with the fact there are objectively fewer CEOs than ICs results in a mismatch in salaries.
I think there's an element of truth to this, but probably not to the extent that it justifies the widening pay gaps everywhere?
It’s why when Intel was floundering a few years back they got rid of CEO and brought on a CEO with deep engineering expertise.
Tim Cook is a wizard of supply chain, and in many ways that’s a large part of Apples current success, IMHO. The list goes on.
To the extent that it truly doesn’t matter, the ceo is a glorified mascot.
Not all CEOs are built the same. Only a minority are able to cross industries successfully, the majority fail miserably. This is because elements that drives success are different between industries. Most of the time, if the CEO is successful one way in one industry, he/she would pursue the same path in another industry, without acknowledging that the second industry is different. What's worse if when they bring their previously successful team. Now you've got a bunch of people doing more the wrong things at the same time.
So what if I don't get my contract renewed if I have $50 Million, that's more than most people make in their entire lives. See you at the beach!
what is leadership other than being stern, following up, driving projects to completion or up/down the org chart as needed (escalation, etc.)?
Auto workers aside, this is always a crappy stat that is thrown about.
"Top US companies" is rife with survivorship bias. It's like saying "the CEOs of the most successful companies had their pay increase..." Well yeah, when a company is successful, compensation rises.
Average CEO pay across all companies in the US is like $250,000.
Honestly, if the union wants similar compensation as the CEO, they should have the same pay structure as the CEO - 10% in cash salary and 90% in options or stock. When the car company does really well, they make a ton of money, when it does poorly, they make almost nothing.
But I would guess they wouldn't go for that.
Only for the C-suite apparently.
> When the car company does really well, they make a ton of money, when it does poorly, they make almost nothing.
That’s already how it works. Workers took pay cuts in 2008 to keep the companies going. It worked and now the UAW is asking for the same pay recovery that the C-suite already received.
Seems like you missed the point entirely, but ok.
But anyways, that's false, US autoworkers have a profit sharing component to compensation.
https://www.freep.com/story/money/cars/general-motors/2023/0...
> That’s already how it works. Workers took pay cuts in 2008 to keep the companies going. It worked and now the UAW is asking for the same pay recovery that the C-suite already received.
Workers did not take pay cuts in 2008, the autoworker unions actually created a multi-tier compensation structure that protected existing union workers (surprise!) and penalized all the new hires.
And CEO compensation, at least at GM dropped by ~80% after the 2008 crash.
https://www.reuters.com/article/us-gm-compensation-idUSTRE73...
• Ford F-series(F-150 being the most popular car in the US)
• Chevy Silverado
• RAM Pickup
• Tesla Model Y
• Toyota Rav4
• Honda CRV
• Toyota Camry
• GMC Sierra
• Nissan Rogue
• Jeep Grand Cherokee
So 6 out of 10 are American.
What's the list globally?
I guess American non-Tesla cars still are popular in places like Texas then?
I believe that workers and non-CS engineers are horribly underpaid around the world. They are underpaid in the US's Aerospace, they are underpaid in Russia's military industrial complex and they are also underpaid in China which actually supplies the stuff that everybody uses. Don't doubt they are also underpaid in Japan and Korea.
If both Wal-Mart and Amazon drivers strike we might actually have a shot a taking a bite out of capital finally.
what do you think will happen to the cost of goods? what companies do you think are operating with enough margin that they can just afford a 20% rise in their payroll costs?
A better question to ask is what will happen when a larger portion of the profit that these workers created now flows back into their communities?
Workers spend their money at family run business, and small to medium size businesses in their community and contribute to the local economy. The economic implications of this effort are not just beneficial for the 150,000 UAW workers but their communities and local economies as well.
In contrast the board members who are reaping those profits are not spending money in those communities. Even if they theoretically lived in the same communities and frequented the same businesses they would not buy anywhere close to the same quantity of goods and services that the 150,000 uaw workers would with those same profits.
Companies are profitable, by definition. If they aren't profitable, they die (eventually). As long as there is a profit, worker pay raises does not need to be completely covered by an increase in price. Where does profit go? Into the hands of the rich.
Thus, workers demanding raises is simply a progressive wealth redistribution, from lining the wallets of fatcats, to rewarding the people who actually created that wealth.
Sounds acceptable to me.
It’s not about a one time 20% raise
Think more like:
“4 day work week”
“Return to 1945-1949 tax rates”
“convert corporate to cooperative ownership”
An employee’s value is relative to a gear, cog, or assembly of them.
A CEO is akin to an engine, infinitely more valuable, a requirement for functionality, is the force behind a company’s goals and provides locomotion.
The automobile itself is the company.
While an auto may function without gears and assemblies the performance will be sub optimal.
An auto functioning without an engine is said to be coasting. A company without a CEO is also coasting.
The value is supposed to be performative. A great CEO provides direct value, direct movement, and is rewarded thus.
A CEO that delivers alpha deserves a big cut of that. The board exists to hire leaders that can deliver alpha. A good deal fail to. But the ones that do are more than worth their compensation.
And btw you have 0 chance of attracting the kind of CEO that can deliver alpha by offering peanuts. It doesn’t always work out and there’s plenty of snake oil CEOs, but the good and great ones are worth every cent to stock holders.
Businesses compete against each other and the CEO orchestrates the strategy and is accountable for the the execution across a broad spectrum of functions. There is a power law distribution where the very best CEOs are vastly superior to the good who are to the replacement level ones. So like in the NBA you may overpay for a guy in the hopes they are great or you pay handsomely for a good player that is above replacement level or you pay the highest for the best to run your company. Sometimes it pays off and sometimes not.
But the value that great CEOs produce is astronomical. Well more than a basketball player could ever hope to produce.
CEOs are often overpaid by a lot. If I had as regular access to the books and the board of directors as C-levels do, I bet I could be paid a lot more too.
On a per-unit cost, what’s labor vs CEO?
there’s 160,000 employees
$72.50 a year per employee
a $1/hr raise for a full time employee is $2,080/year
they makes $17/hr and UPS makes $21/hr on the low end part time wise
lots of employees want at least $8k/yr raise ($4/hr on the low)
a bit different from $72.50
It starts with a good idea, but if you let it fester, then it quickly becomes more of a drag than a productive addition to your organization.
While its not exactly a vindication, I feel super vindicated right now and I'm not gonna be reasonable this time.
These companies have no way out, they are going to die! All these people will lose their livelihood and worse their options to monetise their skillset/experience will be next to zero. Is this your utopia?!
I've been researching Ford for a while, they have so much debt and an extremely small margin for error for the EV transition. It was gonna be so tight and now their fate is sealed.
I'm not proud of this but a part of me find a bit of joy in what comes next. There is this Thanos side of me that feels like a grave injustice have been done here. These people have no right to have this much power over a company.
You really think a CEO isn't worth 300-400x more than a line worker? Honestly I can't fathom that level of ignorance/cognitive-dissonance.
Replace CEO with any sort of leadership role in any kind of organisation/entity with skin in the game (where outcomes can hurt). Whether if its football coaches, generals, head of state etc.
I know nobody (sane) disputes the difference between a c-suite employee vs a line worker but what I'm talking about is the exponential nature.
These people are barely human. Imagine the stakes, the leverage, the consequences and the sheer amount of context you need. Being in the top percentile of IQ, EQ, competence, industriousness etc are just tablestakes. You need to be ruthless while at the same time have an immense capacity for empathy. You need to be extremely conscientious/industrious while at the same time having a large reservoir of creativity. Its like the infinity stones, you can't just be a galaxy brain or just have the gift of the gab or be a psycopath. You need it all and more while competing against people just like you for rarified roles.
To top it off, all of this just gets you into the ring, you also need to actually win and win consistently over period of time. Usually this requires sacrificing your entire life. Btw this where the barely human part comes in, these people thrive on this. All these CEOs have enough money to retire on a beautiful ranch or oceanfront mansion, instead they work 70 hour weeks.
And you think these people are somewhat similar to the guy who screws in car parts? You think society should value these people in somewhat the same realm? like a linear nature (50% or 300% more).
This kind of thinking is what leads to the end of civilisations. These people should be revered. We should be grateful.
I still can't accept there are people in the world who think its somewhat similar. This is not an IQ thing, its not even a being well read thing.. This is common sense. We all have met people in our lives where we go "oh there are level to this game", like freaks of nature.
How can you not think its the same for you know, leading a multi billion dollar public corporation with hundreds of thousands of employees.. Its mind boggling. How can people no see the asymmetry!
But many execs are not. They work just as obsessively as the first type, but only to increase their own power inside of the organization, at the expense of the organization's cohesion, trust, productivity, and quality. They live in a bubble, totally disconnected from the organization's purpose. They make strategic mistakes over and over again. They fail to truly understand why even a single dollar of revenue happens; instead they take it as a given that the money is coming in and only think of ways their unit can siphon off more of it, at the expense of all the others.
If just one of these type 2's enters your organization, you can typically get by, as long as you recognize them quickly enough. If even a small handful enter your C-suite, they will metastasize, cause your type 1's to leave, and put your org on a death spiral.
Many execs are of the second type. You can tell: if you use a product or service, and it sucks, that's probably what's going on at the top.
In a civilized society I would say maxing out the top paid employee of a company to 20-30x of the average of the salaries of the bottom half of all salaries in the company is what should be done. Anything more than that creates a system of perverse incentives to take action that is against the greater good of the community.
There isn't enough margin in the R&D + logistics of producing cars as is.
Ford's stock is up 25% in 5 years, vastly underperforming the index
GM stock is -5.6% over 5 years
Stellantis stock is +3.55% over 5 years.
Where is the argument that the greedy capitalist meanies at the top are doing nothing but buybacks with the millions in profits inflation the stock?
The consumer will buy a car from a non-union automaker that charges less.
The pendulum of globalization is bound to swing backwards for a multitude of reasons.
https://www.statista.com/statistics/743563/china-average-yea...
https://www.china-briefing.com/news/average-salaries-in-chin...
We should all be lucky enough to have the chance to earn in a few months what we'd normally make in a lifetime. I'll gladly accept the extra risk that goes with that.
Used to be the best warrior had skin in the game. We have them resources so when the lions came or the boars got into the crops, they were ready to kick some ass, even if the rest of us were undernourished due to a drought.
Now they just "take full responsibility" where that just means they have to announce that something dumb happened on camera. Truly a gruesome fate. So brave.
What? The CEO of any substantial company is going to have a golden parachute in their contract. Literally the opposite of putting everything on the line, just merely "Will only make X, not 10X, where X may well be more than median lifetime earnings, even if the company completely collapses."
So despite GM paying the CEO millions, they couldn’t prevent him from making mistakes?
The car market is extremely ugly right now.
Between UAW Strike, SWG Strike, barely avoided UPS Strike, and probably a few I'm leaving out, we're going to be inundated with half truths, misdirection, selective statistics and even the occasional outright lie.
UAW opening demand isn't just a 40% pay hike - but also a four day workweek (when combined is ~70% increase in pay). Nobody expects for UAW to get everything they demand (that's not how negotiations work of course) but still, it's a particularly unreasonable starting position and is likely demonstrating just how far apart both parties are.
It's become a sort of meme to bag on C-Suite salaries - with a lot of folks fundamentally believing C-Suiters don't earn their pay or at the very least don't earn the extreme pay gap between them an your average line worker.
Anyone thinking a C-Suiter clocks out at 5pm and doesn't work after hours has no experience in the C-Suite (or even upper management for the matter). There isn't really a such thing as "off hours" for these folks on average. Correspondingly, decisions made by your C-Suite can earn a company huge returns, or doom the company and all of it's employees and stake holders.
Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.
Why? Why is it that CEO pay reflects company performance but not the line workers? It seems incoherent. How does the collective performance of line workers, which we can predict somewhat from salary, not impact company performance? Where did this idea that only in upper management does salary correspond to company performance? What research was done?
Aside from the rare company built by the CEO wholly or largely, CEOs just seem to come from wealthy families, are tall handsome men, and have all the right connections. These are not brilliant geniuses. Being a c-suite executive is not a meritocratic thing most of the time, it’s an inherited privilege.
Compensation is not a function of their performance, it’s a function of their ability to hold their businesses hostage and threaten to tank their companies unless they’re paid high salaries. Rotating out the c-suite will at least temporarily tank company profits. It’s about power not merit. So why uh, doesn’t the union do the same thing and also hold the business hostage? 40% is not wild at all, it’s a drop in the bucket for shareholders because salaries are so low to begin with.
"By 5 p.m., I'm like, 'I can't think about that today. Let's try this again tomorrow at 10 a.m,'" he told the Economic Club of Washington, DC.
https://www.businessinsider.com/jeff-bezos-daily-routine-201...
I’m not saying SREs are poorly paid, but they often are keeping entire companies afloat, and their pay is nowhere near that of the C-Suite.
If the entire SRE team quit / went on strike, there is a non-zero chance the next incident would utterly break the company.
If the entire C-Suite quit, uh… what exactly would happen? People would continue doing what they had already been doing?
Executives are overpaid. Period.
"Yes, but the C-suite is responsible for $zillions"...
Are they personally responsible? If they fail in their job do they get to reimburse the investors for money they lost? Hardly, they tend to get a golden handshake and move on to another company whereas that vet, the farmer or the mechanic tend to be punished for failure in some way - by loosing their accreditation, livestock or livelihood.
C-suite remuneration has far outgrown its justification.
> Comparing C-Suite compensation, pay scale, growth rate and disparity from line workers is disingenuous at best. They cannot be compared, nor should they.
Why should they not be compared? Why should it not be discussed whether an hour of a systems engineer's life is worth far less than an hour of a CFO's life? What great sacrifice does the CFO make which the farmer does not to explain the disparity in remuneration? An hour in a life is an hour in a life no matter your profession, you won't get it back when it is gone.
Their demands are only unreasonable if they lose. This is a strike. It's fight, not a discussion. The goal is to give the company no choice but to give in. The strikers are under no obligation to be fair. They can make whatever demands they want. They don't have to give an inch if they don't want to.
>They cannot be compared, nor should they.
Comparing them is pretty simple, actually.
$ units
You have: 21 million USD / year
You want: (28 USD / hour) * (40 hours / week)
* 359.35059
/ 0.0027827977
you're ignoring the contributions of people in the company that make the C-suites job possible. Why should the C-suite be entitled to this just because they work long hours?
I work long hours. I've had jobs - salaried, mind you - where I worked past 5 PM, well into the evening, and no stock options are not the same. At any rate, one of those jobs the stock options weren't worth anything anyway.
CEOs get golden parachutes and gobs of money and for what all, exactly? What do they actually contribute?
I'd love for there to be an experiment where you take a senior operations person, for instance, and put them in the CEO role, and see, if given the same support and onboarding, if they can't make good or possibly better decisions than the someone with "CEO experience"
I've met alot of CEOs, and they don't tend to be very in touch with their workforce, they simply see what they want to see, most of the time, few exceptions.
For everything besides growth rate I can see arguing that they can't be compared—I don't agree, but I can understand where you're coming from—but why should a CEO's salary go up dramatically faster as a percentage than line workers'? Is the CEO somehow working 40% more hours than they did last year? Working 40% harder? What is that 40% tied to that line worker salaries shouldn't be tied to?
That's not the standard, though. The criteria is cost above replacement, and quite frankly modern executives show up extremely mediocre on that measure. Companies flip executives all the time, and it almost never results in significant changes to revenue (and when it does, it's down as often as up). In fact there's almost no measurable meritocracy among salaried executives.
The reason executive salaries got so high is simply that the class the makes up the C-suite residents (the major investors and board members) got jealous that the outgoing founders of these companies got so rich, and wanted to play in the same sandbox. It's only fair, right?
But that's exactly the moral argument UAW is making: these companies got fabulously wealthy over recent decades owing to GDP growth and stock market booms, and they should share that wealth with their employees and not just keep it for the owners. The only difference is in how you define "employee".
CEOs make big decisions... but they get paid more money than they'll ever need even if they do doom the company. In fact, many CEOs against union workers are torching their own companies to avoid a fair deal which would cost their businesses less.
The only way CEOs would justify their high pay is if we were able to hold them responsible for their company's misdeeds and throw them in jail. But since Sundar Pichai is still a free man, we clearly definitely don't do that either.
CEO is a completely zero-risk, massive return job that you get largely for knowing the right people and having a deeply flawed moral fiber that enables you to sleep at night after doing unusually cruel things to everyone else. That's really all there is to it.
Trying to justify exorbitant C-suite salaries because they often work hard (in conditions significantly easing working hard due to having a litany of assistants to handle boring stuff, private jets, drivers, Michelin starred meals with regulators, lawyers an executives counting as "work") is silly when you look at how hard so many working class people work. But I know you know this, so it seems you're just blaming them for being born poor, unconnected and not having the "big business brain" that all C-suite executives must have.
Other benefit: less environmental impact, more time for people to improve themselves and their mental health, etc.