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Comment by tysam_and | Hacker News Reader

There is an equation with an equilibrium:

CEO's pay rate = (some multiplier) * median salaried worker's pay rate

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.

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It's also been suggested that Congressional salaries be a fixed multiple of minimum wage, and for similar reasons.

Honestly I think that would probably fix things a lot faster.

Congress already makes more money from cutting deals with their power & influence than they do from their salary...

Yes that should be illegal too.

If you underpay elected officials then 1. they just start taking bribes 2. only rich people will run in the election.

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.

THEY ALREADY DO

Nobody said the multiple has to be 5. It could be whatever the current ratio for Singapore is.

I am always suprised at how people think that elected official then have to get bribes in order to survive like its a doctor prescription, and how it seems that when they do we can’t do anything about it ffs

Just look at most countries around the world.

Corrupt elected officials is more of the norm, than the anomaly world-wide.

They mostly don't, people just like being cynical.

Though, legislators don't have individual power to take action to be worth giving specific bribes to; what may happen is that if someone is friendly to your business, you want to keep them motivated to keep re-running for Congress and do the awful annoying job of being a legislator, when they could instead quit and go back to industry or retire on the beach or whatever.

It's like selling your data to ad tech companies. They'll do it no matter how much you pay for the product.

They don't, but the important point is:

> 2. only rich people will run in the election.

Which is not true unless you think AOC is rich. It's not unheard of that congresspeople sleep in their office i.e. are homeless because DC rent is high.

https://www.npr.org/2022/12/09/1141635119/the-first-gen-z-me...

> congresspeople sleep in their office i.e. are homeless because DC rent is high

any source for this? your link just mentions a representative who has bad credit, it never claims he is homeless.

It's in the second half of the article.

> Dozens of members of Congress have even turned their Capitol Hill offices into their makeshift apartments.

https://nypost.com/2018/05/01/these-politicians-are-sleeping...

Of course, sometimes they're just weird and like it. Mitt Romney lives in a small apartment and only watches TV for fun and he's a multimillionaire.

America's GDP allocated per congressperson is like $50 billion each.

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.

GDP per Congressman is a new statistic

You need to pay congressmen enough money so they can have upper middle class lifestyle - without that pressure to take bribes is dramatically higher. You have nice 5bdrm house in good school district and enough money for nice vacation + savings? Refusing bribes is easy - you are comfortable. Kids are taken care of. Wife does not have to work. This lifestyle requires 300-600k in DC.

You live in shitty 2bdrm apartment with wife and two kids in poor school district? With no savings and vacation? Your life is hell and you are that much more likely to take bribes.

It’s all about incentives.

Is there an actual source for this logic? Not a huge fan of arguments-via-intuition.

What happens when they want more? That upper middle class salary won’t be enough anymore and they’ll seek bribes.

We should have about 1000 representatives by now but I think they just didn’t want to retrofit congressional buildings to do it. Of course that would still be 20 billion per congresscritter.

But GDP is a bit misleading. A lot of it is financial services lately. It’s not real goods or services.

That literally is already what's happening. Bribing officials through lobbying is legal, and only rich people can afford to take on the instability of an election run.

And idk where you got the idea that people don't make minimum wage. They absolutely do. Go look at a job board.

> suggested that Congressional salaries be a fixed multiple of minimum wage

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.

Why do you think it matters where the money comes from?

Congress is responsible for raising the minimum wage. That’s the connection.

People in congress are millionaires, and it's not from congressional salaries. It's due to it being somehow legal for them to insider trade, and bribes in other guises.

100% agree.

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

IMO an equation like that would be fine as long as you made it possible for CEOs of larger companies to make more money than CEOs of small and medium sized companies.

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.

Well that's simple, larger companies that want to pay their CEO more can pay their lowest paid employees more.

That's moronic. A good CEO at a fortune 500 company could have a $100M revenue impact. That same CEO could never be worth $100M to a local restaurant. The idea that the bigger company can't offer more to attract a better CEO just because both businesses employ janitors that make market rate is mind-numbingly stupid.

I thought janitoring was all contracted out these days.

But the fortune 500 company can offer more for its CEO. It just has to pay its janitor more. Which it totally can, being a fortune 500 company.

If they can afford to pay the CEO 100M they can afford to pay above market rate to the janitors, no?

Do you have arguments or are you just going to call someone a “doo-doo head”?

Business's exist to make money, not give it away.

Fascinating.

So why are we entertaining 100M salaries? That sounds like giving away money.

The board of directors believes the CEO adds more shareholder value than they cost.

That's so fascinating.

The janitors don't?

They certainly dont add $100 million of value. Probably add at least as much as they're paid but that's not saying much

How do you come to that conclusion?

The cleanliness of an office space is a gigantic force multiplier for productivity. I wouldn't be surprised if janitors had a bigger impact.

value is about opportunity cost. If anyone off the street could replace you your value is the lowest amount a competent person would demand on the market.

Do you really think anyone off the street could be a top-performing janitor?

I guarantee you California will find a way to legislate this view into existence within the next year, with horrendous results.

> 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.

"Should" by what standard? Minimizing deadweight loss?

And hence median vs minimum, median scales well, but minimum is more aggressively equitable -- after all, it's a nice 'soft scaling lock', which we currently seem to struggle with.

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 :'))))

> There’s a job market for C-Suite employees

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.

No. There is no financial stress in a CEOs life. The CEO that can't afford private yacht lessons for their daughter is not the same as the single mom working 2 jobs to feed her children. Stop drawing a false equivalency.

Total straw man

No. Financial stress comes from not being able to meet your basic needs. Everything after that is a choice, and choices are reversible.

I agree but would phrase it differently: C-level stress is often self-created – gotta have a bigger mansion, longer yacht, hotter trophy wife, etc. than my frat buddies - whereas many of their employees’ stress is externally-driven - hoping the car doesn’t break and cost you a job, worrying that the cost and time of a return to office mandate will take a big chunk of what’s left of your margin after inflation, etc.

I think of that whenever I’m back in San Diego and remember the tree poisoning lawsuit where these two rich guys were feuding because the one whose mansion was in front had a tree which kept growing and the other guy thought that was depriving him of a fractional sea view. This ended with the twist that he paid his gardener to poison the tree, but was caught and … I just couldn’t get past thinking about how this guy was a millionaire, living on the cliffs over one of the world’s better ocean views, and all he could do was think that it wasn’t a degree wider.

I'm married to an exec and I can tell you both that

(a) The stress is very real, and (b) It's not self-created, it arises due to the responsibility and magnitude of decision-making coupled with having to deal with other execs that are promoted beyond their ability yet somehow still have absolute faith in their ability to lead and execute despite their limited experience, worldview, or both, and (c) It seems to be about the same amount of stress as those worrying about tight finances, but less than those worrying about where the next meal is coming from.

Having said that the majority of CEOs that my spouse and I have worked for cannot find their asses with both hands but a minority of them have been incredibly good and well worth the compensation they were paid.

"About the same" is not the same. I'm sure it's a stressful job, but it's also self imposed. If you're getting paid a CEO salary, you can quit and live off investments after a single year of doing it.

It is in no way comparable to people that need to work to live.

>C-suite career people

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.

The problem with this is that the CEO of Walmart is a much more important job than the CEO of McKinsey but under this formula they would get paid a fraction of the amount, no matter how well they did for Walmart workers.

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.

> 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.

More typically, this results in the outsourcing/contracting away of lower value work.

The CEO of Walmart doesn't do anything for the Walmart workers, he works for the investors.

I would say it would be a huge upgrade to get rid of investor CEOs and put in a worker CEO in place instead.

Who decides how important a company is to the economy?

I would love it if my brokerage would show me that multiplier for the companies I invest in.

What about CEO pay * Widgets shipped?

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.

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