The average price of a new car these days is $48K. This is insane. For that price tag to make any kind of sense at all, you have to have an income of nearly half a million per year. Median household income in the U.S. is around $75K meaning most of these households, if they're even purchasing a vehicle at all, would be buying used.
It would mean financial ruin to borrow two-thirds of your income for a car. The automakers have forgotten Henry Ford's lesson. He payed his workers enough so they could each afford the products he was selling. Our companies don't pay their employees enough to afford their products any more. <Surprised Pikachu!> Sales are down.
>It would mean financial ruin to borrow two-thirds of your income for a car. The automakers have forgotten Henry Ford's lesson. He payed his workers enough so they could each afford the products he was selling.
I agree but the problem is that business owners don't like how much money comes from that system and prefer competing for people's lines of credit, because an economy where everyone has $40k in debt literally has more money sloshing around it than one where everyone buys their car outright, and that means more profit, which is the entire goal of every CEO everywhere, so of course every CEO wants you to go into debt for them. Unfortunately, a lot of people can leverage themselves farther than they can actually afford for long enough that some CEO can extract profit before the entire system collapses.
A shitload of profit and CEO salary was made in the run up to 2008, and none of the people who extracted that wealth from the system went to jail, so why are we surprised they're trying to do it again?
Scientology managed to distill this down to the bones; They simply had people sign up for credit cards and max them out buying scientology stuff. Since the penalty for debt goes to the people who took it, instead of the place the money the debt went, there's infinite incentive to do this. CEOs look at that system and get extremely jealous.
It's even simpler than that, and "greed" doesn't come into the equation anywhere: any market where goods/services are subdized will lead to more expensive goods and services, by simple economics.
Even industries where companies are "good", and try to provide quality goods to customers at an affordable price point (while still turning a small profit) will see this happen, because the excess capital will push the apparent "affordable" point up - its effective, unwitting collusion for entire markets.
This is happening in healthcare (insurance that has transformed from being actual insurance in case of catastrophic injury, into cost-sharing), home prices (cheap mortgages), cars (cheap financing), and education (cheap student loans).
Debt needs to be more expensive. Insurance needs to only be for catastrophic events.
"Greed" isn't the answer - we have greedy companies in every area of the economy, yet somehow the prices of phones, computers, desks, large appliances, televisions, and many other types of goods hasn't skyrocketed in the same way as cars.
What makes cars different? I know that the cost of labor has significantly increased (which partially motivates the stratospheric increases in education and healthcare costs), but I thought that cars were mostly manufactured in an automated manner.
The auto companies whose profit margins I checked are in the single-digits, sometimes negative. If it was just greedy price gouging, we'd expect them to see much healthier profit margins.
I don't understand why people don't check these figures more often for these publicly traded companies when offering the 'companies are being greedy' narratives.
Rank and yank originated at GE to the best of my knowledge. Where it also "worked well."
The stack ranking is primarily about rewarding high-performing employees with higher bonuses. It also puts a low-performing employee at risk of getting let go, but it doesn't magically absolve GM of its unemployment law obligations, because any layoff pursuant to this planned workforce reduction would be grouped together and at GM's size the 5% reduction would trigger WARN Act obligations long before they got to 5%.
Seriously guys: if stack ranking were a magical way to avoid the WARN Act or other unemployment laws every company would be claiming that layoffs were performance based. That no company tries to claim performance as the basis for avoiding severance should tell you something about how the law works...
And in the medium and long term solidifies a self-serving culture rather than individuals working towards the group’s and firm’s success.
After that, you’re selecting for corporate psychopaths.
Surely, if I was an employee here, self-preservation would be of the utmost importance. If I fix something to make my job easier, I will keep it to myself. If I have the opportunity to sabotage a teammate, I would. If I can lie easily, I will.
https://www.ncsl.org/labor-and-employment/at-will-employment...
What happens if stack rank->pip is too obvious is that people and teams will not cooperate with newer fresh meat. They're incentivized to keep knowledge protected for their job. New people struggle to get above the pip mark and it becomes a revolving door.
This keeps getting repeated on this thread but its not true. U.S. WARN laws require severance or 60 days notice for mass layoffs (which would definitely include 5% of a company as large as GM). Only terminations for cause are exempted, and performance is only grounds for cause in a very small handful of "right to work" states.
Only for-cause terminations are excluded the WARN Act, and for-cause in this context means specifically behavior that violates the law, or the employee handbook setting forth company rules (which are binding on both the company and employee, which is why companies make you read them every year). Also note that companies can't make poor performance a violation of company rules; this has been tried before and smacked down pretty harshly even in right-to-work states.
Thus, those 5% laid off due to stack ranking are entitled to 60 days of severance, or 60 days notice of an impending termination.
Think of this is as a continuous process of evaluation -> pip -> fire. This means no WARN and no severance.
And the part where rolling layoffs at a company the size of GM will all involve multiple layoffs exceeding the WARN threshold.
And the part where no general counsel will let their company knowingly subject itself to a $500 daily fine per employee, in addition to full back pay for the mandated period.
And the part where GM satisfies its WARN obligations by paying the mandated severance (or more) in lieu of providing advance notice...which is what most companies do...