I decided to look up some numbers and do some math.
So the CEO earns 362x the average employee at GM. Basically if they took the CEO’s pay and redidsteubuted it, they could double the pay of 362 lucky workers at GM. Or take twice as many workers as that and increase their pay by 50%.
But how many workers are there and how far will this CEO’s pay go?
GM has 167,000 employees. Collectively, their pay totals 167,000x the salary of the average employee. Very basic.
Now let’s add the CEO’s pay to that sum: we are now up to a sum of money equal to 167,362x the average salary.
And if we distribute that amongst all the employees, that’s:
167,362/167,000
Get out your calculator and you’ll see that this would fund a two-tenths of one percent raise for all employees. That’s 0.002%
The pay is very unfair. But we should be realistic that the CEO is one person and their fat salary doesn’t actually go very far in terms of worker raises.
Let’s do the math in reverse: to give all GM employees just a 2% raise would cost 9.2x the CEO’s salary. And the workers want a 40% raise over 4 years.
I hope they get it. I believe that money is there and currently going to the entire executive layer, the board, and shareholders. But when anyone tries to oversimplify and it make it all about the CEO’s salary, I cringe a bit because it really isn’t that meaningful a sum of money, unfair as it may be.
We should be looking at profit or better EBITDA and showing how easily it could be used to raise worker pay.
It’s not about taking the CEO’s pay and redistributing it, like some game of lotto.
The point is that the culture and structure of the company is geared towards rewarding the dickhead at the top, for squeezing their workers.
The companies don’t see their workers as assets but instead as adversaires that are to be exploited and paid as little as possible, no matter the cost to quality, loyalty or morale.
Somehow there is no money for the workers, yet the car prices have exploded and the board makes shit loads of money…
You’re right. I’m only saying that Robert Reich’s framing “there’s money for” this not that isn’t great: it’s like saying “Oh so we have money for a new blender but not a car???”
Your framing is superior
Tbph this is why Reich has a reputation for kind of populist pseudoscience. Tries to bank on sounding like he’s pushing an “economic justice” angle but a ton of what he says doesn’t really hold water. It’s actually really annoying cause you can’t push for a correct take without people just automatically assuming you’re defending CEOs and megacorps.
It’s because he positions himself as an economic expert despite having no degrees in economics
Looked it up when you replied, he does have some kind of multidisciplinary degree that sort of covers it. Not that it really changes anything.
The board makes money? Isn’t that a conflict of interest? What are the board, and c Suite paid? It’s not just the CEO here…
I click for the outrage, but stay for the rational discussion.
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While the CEO salary is often the talking point, the bigger number is often the stock buybacks.
Did basic digging, no idea where the tweet’s numbers come from.
Ford CEO Jim Farley received ~$21mil in total compensation in 2022, mostly in stock awards. Source
Average salary of Ford employee: ~$67k a year, derived from $37k in the bottom 10th percentile and $120k in the top 90th. Source
Which gives a ratio more like 313 to 1.
Lol so even higher than stated in the pic
Another thing about automotive (and probably most industries) is that large portions of the labor are contracted through agencies. Even most entry level engineers are contract now. So that figure doesn’t include many of the lower paid positions in these facilities.
Stock awards aren’t exactly normal compensation, though. If everyone got equal stock in the company, everyone would be incentivized to work towards the company’s success.
So why are most employees given salary or hourly pay without stock rewards? Shouldn’t the company want to incentivize employees for the company’s success? I understand there are a lot of people who defend their companies or corporations without much investment incentives given. I still don’t see why it is not a common benefit to give.
I will never care about any company I work for. They can give me stock, sure, but I know it’s not my company and I don’t want to work harder for one extra peanut. I rather get time off then. :)
Give everyone 6 weeks vacations and 4 day work weeks to start with. It’s more than fair. Let people have time off and enjoy their lives. But not going to happen.
Hopefully it’s a whole bag of peanuts!
I get what you mean though, and I’d say it’s a personal preference. Equal stock in a company or a similar measure of profit sharing IMHO is just getting employees a fair shake in compensation. Others like yourself might place a shorter workweek at a higher priority.
Edit: frankly I’m not sure which I’d take first.
Stock grants are pretty common in tech. Wonder if the UAW has ever proposed a fair grant program with a favorable vesting schedule. Maybe a grant that immediately vests quarterly over 3 years, 20% of base salary? Build wealth for your long time employees while increasing the value of the stock.
Do you know who Robert Reich is? I don’t know where he got these numbers either, but there’s pretty much zero chance that a former US secretary of labor and current Berkeley professor just pulled them out of his ass. Like his politics or not, the guy does know what he’s talking about.
I’m a fan of Robert Reich, I just meant it as a preface for why my numbers were different.
Who the hell is Stellantis? Checks web
Who the hell though renaming Chrysler to a misspelling of a Paradox 5X space game was a good marketing move?
Chrysler was bankrupt.
Stellantis is much more than Chrysler, Jeep, Dodge and RAM.
5X? what am i missing?!
Explore, Expand, Exploit, Exterminate, and Twitter obviously
Oops, I meant 4x. Explore, expand, exploit, and exterminate. Maybe ParadoX is Stellaris’s fifth X
Add another X and you’ll have double the fun!
Have you considered that the CEO is working 300 times harder than the worker you are comparing them to??
Yeah, they work an entire year for every one normie day.
Yeah I considered it… But then saw that a CEO can be a CEO of multiple businesses and I realized that it isn’t true.
Oh they are also in the board for other businesses as well. You ever wonder why a while industry will make the same sweeping changes or all have the same pay? It’s because they all “work” together on each other’s company’s boards. The IT company I worked for had three “competitors” CEOs on the board, along with CEO from a fast food company and one from a bank. These people are the true power in capitalism. Not the elected officials. Me and a coworker did the math in how much of the US work force our board had direct/indirect control over. It was 45% of the IT Management field. 10% of the fast food. And about 4% of banking. 5 people not counting our CEO shouldn’t be that interconnected when they have that much power.
you forgot the /s lol
The /s is that entire account. It’s satirical 😁
Another MrBusinessMan banger™.
Lol, how is that even possible
Hard for mere mortals to fathom the abilities of a top tier CEO.
You don’t get paid based on how hard you work. You might get bonuses based on productivity, but productivity is not always tied to how hard you work.
365x the average workers salary divided by 150,000 workers.
Like the math is written out.
The company can pay more for sure, but Reich should know enough to look at these publicly traded companies’ cash-on-hand.
As an example:
According to Ford’s latest financial reports the company has $42.82 B in cash and cash equivalents.
CEO pay needs a cap but not because workers are paid less. CEO pay is not that big a drain on these companies’ resources.
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Seems like a pretty arbitrary number you picked there.
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CEO pay and worker pay aren’t intrinsically linked. Paying a CEO less doesn’t mean workers will magically get paid more.
Workers are paid based on the market value of their labor cost.
CEO pay should be capped, but because the market is unhinged from reality and needs a check for overall business health, not because of anything to do with worker salaries.
If CEOs made $0 there is no reason to assume employee wages would increase.
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Why do you think so?
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CEO pay should be capped
Probably the best way to do this is to have a union with a strong enough position within the company, forcing the owners to distribute the companies profits more equitably.
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They literally are. That’s how labor markets work.
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Whats the actual worth of a competent CEO? Do you think you can calculate his value after reading two articles and some arbitrary numbers?
I know I am stupid but not that stupid to think I can judge a persons salary within minutes.
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I’m honestly not trying to be antagonistic, I think I agree with you for the most part here.
But how can you have an interpretation of math? Isn’t math objective? Isn’t math the key to all rationalization?I don’t understand how there could be “neofeudalist” or capitalist or communist interpretations of math.
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Looks like I replied to the wrong comment here. Apologies.
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You’re right, it’s only the CEO that’s overpaid, no one else.
I didn’t specify that at all?
Do you understand what cash on hand is?
You say the math is written out, and then compare one overpaid person to the number of striking workers. Pretty dumb.
And you’re the one that doesn’t understand cash or shareholders.
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I do exactly the opposite of that, actually.
You literally have as much time as you’d like to read and parse that post, and can even ask me questions if the words are too confusing.
Hint:
365x the average workers salary divided by 150,000 workers.
This is suggesting robbing the CEO to pay Paul is not the slam dunk win people (including NIMBY Robert Reich) think it is.
You don’t even understand your own words, amazing.
Are you actually illiterate?
You’re the one who thinks that the CEO to worker pay ratio is literally only about the CEO. You also think that cash on hand can be freely distributed to workers if that’s what management wants. I’m not the idiot here. You are.
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You’re goddamn right, dividends and buybacks both.
If we took the 29 million the GM CEO was paid in 2021 and broke that up equally across the roughly 167,000 employees they each get an extra $173-174 dollars for the year.
They are getting paid too much but their salary isn’t enough to correct the shortages in worker pay. There are other places that need to be looked at in addition to CEO pay to find the money workers deserve.
CEO pay, stock buybacks, likely a large company savings, all the C-suite executives, and more im sure.
One of the UAW’s demands is $2 per employee for every 1 million in stock buybacks.
likely a large company saving
This is what should be talked about. Cash-on-hand is public knowledge of publicly traded companies.
Ford has north of $40B in the bank.
Now do that for the president, vp, directors, and board, hell the whole Suite is over payed, not just the ceo
You’ll still end up giving people an extra $10 fir the week. It’s bonuses, the inefficient packages made for “consultants” who are doing the job of regular employees at 3x the price. Executive pay isn’t what is behind the issue here.
Sure, but the point still is valid, the difference is shameful
While the OP is about CEO to lowest employee pay, they are hardly the only overpaid people.
Even if you take the whole executive suite it isn’t going to amount to much. The real areas to focus on are the perks, the projects that get handled by “consultants” that were ex-employees who did that same job for less before etc. If they really want to pay these workers it’s going to make more sense togo after other things in addition to high pay.
And your point is? Obviously Reich knows this. He’s talking about the way these companies are set up to funnel ridiculously disproportionate salaries to those at the top, he’s not literally arguing that redistributing CEO pay will somehow magically solve the problem.
Your point is accurate, it’s just irrelevant nitpicking at the cost of grasping what’s really being said.
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Seizing all the stock held by outside people would tank the value of the stock and company if it was legal which it isn’t.
Stocks have value that increases or decreases because outside people can trade them. If you own a share of a business that you cannot sell then it will not provide you any value unless the company sells otherwise you just have a piece of paper stating you own a piece of that company which has no worth. .
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Not entirely as if you sold the company then you would receive a share of the profits as you are part owner so it does in a sense represent the value of a company but not really and only if sold. In your example they cannot sell so those specific shares wouod yave no value making getting investment difficult.
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Shares right now can be sold, but if you stole all the stock from outside sources and gave it to the workers no one would purchase that stock ever again as there would be no reason to think you would not steal again.
In CEO’s cases if they get paid $1 they either take loans against the value of the stock that they can later move or the business provides them a series of allowances and an expense account. It is usually the latter where the business gives them a home and a credit card that covers everything.
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CEO’s are only good for one thing and one thing only. A balanced diet.
They’re mostly fat. Make sure to also eat plenty of veggies
You haven’t seen seen member of United Russia. Those are whales compared to sticks.
Out of curiosity, how is worker pay being defined here? Is it just average salary of non-management employees?
No… generally, it is the salary of the lowest paid worker
Did you just make that up
That is a common metric: lowest paid worker compared to CEO. There have been many failed attempts to legislate limits on this ratio.
100% of facts are made up
is this a fact?
“We don’t have the money, because I want the money.”
Remember the CEO is the second most powerful position in a public Corporation. The major Shareholders and director boards are the top. The CEO is there to take crap so Shareholders and the board don’t have to. CEOs are the embodiment of corpo-shilling but they’re not the top.
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All three should be seized and the stock redistributed to the workers. Workers should own the companies they work for.
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Communism moment
Socialism, but close enough.
Workers owning the labor is at the center of communist theory. Socialism is just one part of communism, these aren’t two distinct theories.
Not to be confused with state management of the economy, the actual defining feature of real-life-not-in-theory “communism” that actually overrode worker control of anything in the first place.
I blame the board of directors and shareholders. The ceo is hired by the board the make money for the shareholders. I think shareholders need to realize their ROI is lower than they think it is, because of the externalities that are not reflected in balance sheets and income statements. But of course that’ll never happen until something calamitous causes it to.
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They could if any of them made decent products. Out of all of the products that all of those companies offer, the only things worth half a shit are Ford’s F-150 and GM’s Vortec engine line-up.
It’s gross
This is every corporation in America.
