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Income Inequality

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If a picture is worth a thousand words, a clever graphic, chart or other image can say a million words. Here's one of them.......

 

INEQUALITY AND NEW YORK’S SUBWAY

 

New York City has a problem with income inequality. And it’s getting worse—the top of the spectrum is gaining and the bottom is losing. Along individual subway lines, earnings range from poverty to considerable wealth. The interactive infographic here charts these shifts, using data on median household income, from the U.S. Census Bureau, for census tracts with subway stations.

 

http://www.newyorker.com/sandbox/business/subway.html


"Those who can make you believe absurdities, can make you commit atrocities."-Voltaire

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A hardcore Socialist Leftist Marxist Communist suggested tracking this ratio in 1960. Who? Peter Drucker. He also once said a ratio exceeding 1:25 is justifiable only in extraordinary times.

 

SEC to unveil CEO pay ratio rule, adopt municipal adviser rule

By Sarah N. Lynch and Lisa Lambert

WASHINGTON, Sept 18 | Wed Sep 18, 2013 1:00am EDT

 

(Reuters) - U.S. corporations will need to disclose how their chief executive's paycheck compares to that of their average worker under a proposal set to be unveiled on Wednesday by the U.S. Securities and Exchange Commission.

 

The SEC's CEO pay ratio rule is championed by unions and labor advocates who say the disclosures will help investors identify whether a company's compensation model is too top-heavy.

 

But companies and business organizations such as the U.S. Chamber of Commerce, as well as, the Center on Executive Compensation, which represents human resources executives, have vehemently opposed the measure, saying it is too costly to compile the data and will not be useful for investors.

 

They have urged the SEC to scale it back, possibly by allowing companies with global offices to compile the median annual pay of average workers using compensation data from only their U.S.-based employees.

 

READ MORE AT:

http://www.reuters.com/article/2013/09/18/usa-sec-ceopay-munis-idUSL2N0HC10Z20130918


"Those who can make you believe absurdities, can make you commit atrocities."-Voltaire

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I wonder if the unions will adopt a similar rule themselves.  Back when Ron Gettlefinger was head of the UAW, it was common knowledge that he was making over $3 million a year in total compensation.  Seems terribly out of whack

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Sure why not the unions.

 

But there are just a few more CEO's than UNION bosses in this great wide world we call the United States where false equivalency is still false.  Or maybe it's where apples are not oranges, I cant decide.

 

 

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I wonder if the unions will adopt a similar rule themselves.  Back when Ron Gettlefinger was head of the UAW, it was common knowledge that he was making over $3 million a year in total compensation.  Seems terribly out of whack

 

If only CEO "total compensation" was limited to $3 million per year......

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Solve the problem of inequality or face unrest in the future, according to futurist Vivek Wadhwa:

 

If we don't we will have major upheaval and unrest. We will have to learn how to share. We will have to learn how to distribute prosperity because we are entering a time when we will have abundance and prosperity, there won't be shortages of food, there won't be shortages of water, there won't be shortages of energy. (Remember, Wadhwa is a charter member of the technologically starry-eyed Singularity University.) We will have enough to feed the whole world and to look after our people. The question is: Will we have the greedy investment bankers and the greedy politicians who are going to horde it all for themselves? If we do, we will have social upheaval, social unrest and upheaval. I'm optimistic that we won't, that we will evolve in the society and learn how to share this, that we'll work 20-hour work weeks, and people won't go hungry, and they'll have good housing, they'll have enough food and living that they can now pursue intellectual pursuits like what you used to see in Star Trek, and in science fiction movies. I'm an optimist.

 

http://www.pbs.org/newshour/businessdesk/2012/10/can-you-compete-with-baxter-ye.html

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So what is the "fair" level of compensation for an individual who oversees all aspects of an organization, research, production, marketing, acquisitions, etc?  How many times have we seen a new CEO essentially tank a company in a few short years?  Product cycles are ever shorter & the marketplace is increasingly competitive.  Organizations have to pay top dollar to attract & retain the best talent. 

 

Why does it really matter how much these handful of people make?  I mean, we aren't even talking about the 1% here, more like 1/10%.  How does the compensation package for these individuals affect the folks at the bottom of the rung?

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So what is the "fair" level of compensation for an individual who oversees all aspects of an organization, research, production, marketing, acquisitions, etc?  How many times have we seen a new CEO essentially tank a company in a few short years?  Product cycles are ever shorter & the marketplace is increasingly competitive.  Organizations have to pay top dollar to attract & retain the best talent. 

 

Why does it really matter how much these handful of people make?  I mean, we aren't even talking about the 1% here, more like 1/10%.  How does the compensation package for these individuals affect the folks at the bottom of the rung?

 

Japan apparently thinks it's 11 times that of their workers.  Are American CEO's over 40 times as good?

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So what is the "fair" level of compensation for an individual who oversees all aspects of an organization, research, production, marketing, acquisitions, etc?  How many times have we seen a new CEO essentially tank a company in a few short years?  Product cycles are ever shorter & the marketplace is increasingly competitive.  Organizations have to pay top dollar to attract & retain the best talent. 

 

Why does it really matter how much these handful of people make?  I mean, we aren't even talking about the 1% here, more like 1/10%.  How does the compensation package for these individuals affect the folks at the bottom of the rung?

:

Japan apparently thinks it's 11 times that of their workers.  Are American CEO's over 40 times as good?

 

Vast generalization.  What industries and business sectors is Japan reporting CEO pay with that 11:1 ratio?  At any rate, how long has Japan been holding this ratio in place?  Is there penalties for exceeding it?  Who's enforcing the penalty? 

 

What happens when highly talented executives leave Japan for higher compensation in the US or elsewhere?

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What happens when highly talented executives leave Japan for higher compensation in the US or elsewhere?

 

I think you're confusing "highly talented" with "highly skilled." Doctors, engineers and scientists are highly skilled and can up-and-flee political persecution or economic hardship for greener pastures, and more money, taking skills with them that are truly universal.

 

These "highly talented executive" unicorns you refer to are mostly a myth perpetuated by American corporatists. But even the ones that are real, have skills that are deeply ingrained in their cultures, their industries, and their social networks.

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I don't like it, but I'm afraid we are seeing supply and demand at work here.

 

i wish thats what it was, but its not because you're locked out of the game. we're seeing a caste system at the top nutured by support in dc and the destruction of unionism and workers rights at the bottom. its almost destroyed the middle class in america and its the greatest threat to our nation.

 

strange how a place like brazil is recently developing a middle class and we are cultivating brazil's formerly traditional wealthy-favela divide.

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These "highly talented executive" unicorns you refer to are mostly a myth perpetuated by American corporatists. But even the ones that are real, have skills that are deeply ingrained in their cultures, their industries, and their social networks.

 

Take a look at what a guy like Alan Mulally, CEO of Ford, has accomplished in turning Ford around and making them profitable and not taking billions in bailout money.  http://en.wikipedia.org/wiki/Alan_Mulally

 

Now tell me again, what you think he's worth.  Keep in mind how many others before him could not do the same thing, neither could CEO's at GM & Chrysler...

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>have skills that are deeply ingrained in their cultures

 

There is definitely a culture that exists amongst senior management people.  They see "one of their own" at age 25 and that guy is put on the track to become one of them.  They go on executive retreats out of the country where insider stock tips are shared and rigged stock purchases/sales are coordinated.   

 

Also the massive wealth disparity in the US is in part due to our incredibly low taxes on the highest income earners, especially capital gains.  Highest bracket income taxes have been as high as 92%, now they are 39%.  Capital gains have been as high as 52%, now they are 15%.  Corporate income taxes were 45% during the postwar decades when GM recorded back-to-back-to-back 20%+ growth years, now they're 35%.  Moreover earnings above $107,000~ pay no social security tax, and neither do capital gains (actually that might have changed, somebody please check I'm going to be late for work!). 

 

 

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Take a look at what a guy like Alan Mulally, CEO of Ford, has accomplished in turning Ford around and making them profitable and not taking billions in bailout money.  http://en.wikipedia.org/wiki/Alan_Mulally

 

Now tell me again, what you think he's worth.  Keep in mind how many others before him could not do the same thing, neither could CEO's at GM & Chrysler...

 

While I think he has done a great job, he hasn't done 10x+ the job the CEO of Toyota has done - http://wallstcheatsheet.com/stocks/does-toyotas-ceo-provide-the-best-bang-for-your-buck.html/?a=viewall

 

But, regardless, I think there are a few points lost in your analysis.  Here in the States, a CEO's "salary" is usually only a fraction of his/her actual "compensation."  Also, I don't think it is too wise to try and compartmentalize this analysis into one industry, let alone one company.

 

As just a side comment, I suppose it shouldn't surprise how the same people who constantly harp about teachers, firefighters, cops, etc. being paid too much, are all too quick to defend the overinflated salaries of these CEO fatcats

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Take a look at what a guy like Alan Mulally, CEO of Ford, has accomplished in turning Ford around and making them profitable and not taking billions in bailout money.  http://en.wikipedia.org/wiki/Alan_Mulally

 

Now tell me again, what you think he's worth.  Keep in mind how many others before him could not do the same thing, neither could CEO's at GM & Chrysler...

 

While I think he has done a great job, he hasn't done 10x+ the job the CEO of Toyota has done - http://wallstcheatsheet.com/stocks/does-toyotas-ceo-provide-the-best-bang-for-your-buck.html/?a=viewall

 

 

Totally disagree.  Toyota hasn't been losing money for the last 40 years the way Ford has, they don't have the entrenched corporate culture to overcome and stagnant product lines needing revamped or a perception of questionable quality to combat. 

 

You can't put a value on totally transforming a global operation from failing to success, and if you could, it would be worth a lot more than the $20 million or whatever Mulally earns per year

 

Ford is only one example.  There are others across a variety of industries, be it retail, IT companies, clothing, etc.  Just as easy to find dozens of high profile examples where individual CEO's tanked the company in a short amount of time due to bad management decisions.

 

Organizations have to find proven winners.

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I think you are giving too much credit and blame to CEOs for the failure or success of companies.  There are many factors which contributed to Ford's turnaround.  Mulally was but a piece of the puzzle.  As for the Toyato CEO, read the article before you comment.

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That chart isn't comparing "highly effective CEO's of the US to all CEO's in the other nations", but all of them in all those nations, including the folks who run Chrysler and GM, so your entire argument is moot, gottaplan.

 

As for executive compensation being a factor of the free market, that notion has been attacked from pretty much all angles.  Especially troublesome is the conflict of interests that arise from the fact that executive pay is largely determined by consultants who stand to gain more business from currying favor with those same executives.

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One problem is that companies these days as a rule are much more interested in specialists that perform the same task over and over again rather than those with entrepreneurial ability -- especially with young people. So they don't have anyone internal with entrepreneurial ability and if they do wind up by chance with someone who has it the person eventually ends up bolting as they aren't rewarded for it and get told that they are inferior to the specialists. They go do their thing and become, ta da, entrepreneurs! Hence the shortage of people in the U.S. capable of taking on entrepreneurial roles at large companies. And of course it takes decades to reach that level anyway since large organizations are so complex.

 

But if they are lucky enough to have exposure to CEOs and others with high-level entrepreneurial roles within companies, what mecklenborg said does indeed happen. Of course in large organizations that kind of exposure rarely happens -- young entrepreneurs end up having more-experienced specialists as their direct management that aren't impressed with the entrepreneur's slightly inferior work at the specialty.

 

Hence the lack of supply of those capable of running a large company. It's also why it's often the salesmen who rise to the top. Salesmen generally have the most entrepreneurial ability at a large company.

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That chart isn't comparing "highly effective CEO's of the US to all CEO's in the other nations", but all of them in all those nations, including the folks who run Chrysler and GM, so your entire argument is moot, gottaplan.

 

My entire argument wasn't about highly effective CEO's, it was that free market determines what these people make.  Companies will spend whatever they think it takes to hire & retain the best people.  Some people have proven track records of successfully managing large corporations & command a huge salary. As soon as someone comes up with a lame-brain idea about a cap or a ratio of CEO pay tying them to the average worker's salary, there will be a work around or loophole.  That's reality.  Deal with it

 

 

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^I agree companies are likely to work around any simplistic CEO pay ratio cap, but that's a separate issue from whether or not executive compensation is determined through "free market" practices. In addition to the endemic corupution that X highlights (the existence of which is widely accepted), there's also the issue of evaluation metrics.  "Proven winners" are probably a lot more elusive to spot than people think, because of all the non-managerial factors that factor into corporate performance. For this reason, there's growing energy to tie compensation not just to share price, but how share price compares to industry peers, and for longer term share price trends.

 

And let's not even get into compensation in the finance industry...

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As long as this debate is corrupted by the extremes of the ideological spectrum with the use of gimmicky catch-phrases like 'free market', we will not get anywhere and the gap will continue to widen.  IMHO it is absolutely essential to determine the root causes of this growing discrepency, not simply chalk it up to the free market doing what the free market does.  If that was the case, then each and every argument conservatives have made about the free market and its effects on the wealth gap, economic mobility, etc. is all a giant pile of doo-doo. 

 

There are several issues to discuss, but I would first and foremost start with the interwoven conflicts between CEOs and corporate compensation committtees.  I would propose a rule that you can't be a CEO of one company and serve on a compensation committee for another company.  I don't want CEO X getting a vote in favor of increased compensation from committee member Y, who happens to be the CEO of the company for which CEO X serves on the compensation committee.  In no event should CEO X be able to appoint the members of the compensation committee.  There are hundreds of tweaks you can put into the system which would actually PROMOTE the free market system, albeit the Koch Brothers would spend millions on advertising suggesting otherwise.

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^agreed, I didn't even touch on the fact that it is largely other CEO's on those compensation committees.  If pizza delivery boys got to "consult" to determine what other pizza delivery boys were paid, our pizzas would come delivered to us in Porsches.

 

^^^Unfortunately, CEO pay doesn't correlate very well with corporate performance across the field, and their pay growth is well outpacing corporate profits, which are outpacing GDP, which is outpacing wages.  There is clearly a market breakdown.

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These "highly talented executive" unicorns you refer to are mostly a myth perpetuated by American corporatists. But even the ones that are real, have skills that are deeply ingrained in their cultures, their industries, and their social networks.

 

Take a look at what a guy like Alan Mulally, CEO of Ford, has accomplished in turning Ford around and making them profitable and not taking billions in bailout money.  http://en.wikipedia.org/wiki/Alan_Mulally

 

Now tell me again, what you think he's worth.  Keep in mind how many others before him could not do the same thing, neither could CEO's at GM & Chrysler...

 

Whatever YOU think he's worth, you're probably vastly overrating his importance--as an individual--to the recent success of Ford.  There's vast amounts of luck involved (Gladwell) and natural statistical fluctuations (Wheelan) that seriously undermine the argument that one man can wave his hands and create a miraculous turnaround for a company, sports team, mutual fund portfolio, etc., etc.  That's not to say that there aren't talented people doing brilliant things on a large, it's just to say that it's not as clear-cut or as frequent as some have been lead to believe. 

 

I know this only muddies the conversation, but in my opinion it's justification enough to seriously reconsider how income is dispersed in country.  And yes I realize that I sound quite socialist talking like that, but I do see this as a problem and not one that any market is going to correct.

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One thing that went on at Ford over the past 10 years is that they didn't decide to make their small cars medieval torture devices. Meanwhile the other two make anything that's not a V8 or a big-ass truck out of trash in order to make sure you don't buy anything small from them again.

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One thing that went on at Ford over the past 10 years is that they didn't decide to make their small cars medieval torture devices. Meanwhile the other two make anything that's not a V8 or a big-ass truck out of trash in order to make sure you don't buy anything small from them again.

 

Riiiiiiiiiiiiight.  Guess you haven't read any reviews of the Chevy Cruze or Sonic lately...http://www.caranddriver.com/comparisons/2012-chevrolet-sonic-vs-2011-honda-fit-2012-hyundai-accent-2012-kia-rio5-2012-nissan-versa-2012-toyota-yaris-comparison-test

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I don't like it, but I'm afraid we are seeing supply and demand at work here.

 

i wish thats what it was, but its not because you're locked out of the game. we're seeing a caste system at the top nutured by support in dc and the destruction of unionism and workers rights at the bottom. its almost destroyed the middle class in america and its the greatest threat to our nation.

 

strange how a place like brazil is recently developing a middle class and we are cultivating brazil's formerly traditional wealthy-favela divide.

 

Bingo. It's breeding a culture of entitlement among those with wealth -- and contempt among those who lack it. And if corporate executives say "Well that's tough," I say "What goes around comes around." The last time we saw income inequality like this, which was prior to the Great Depression, unions capitalized on that and grew in economic and political power. Private sector managers lost power and in some cases, lost the ability to manage their own companies in the manner they wished (ie: labor-friendly work rules, restricted outsourcing, stringent safety regulations, etc).

 

The pendulum WILL swing back in the favor of labor. It is inevitable. It is up to the corporate executives to decide how gently and painlessly that pendulum swings back again by how well they treat (ie: compensate) their workers.

 

Crazy? Not at all.....

 

A Fast-Food Joint Thrives, Even by Paying $12 an Hour

by Daniel Gross Aug 2, 2013 4:45 AM EDT

 

At Detroit’s Moo Cluck Moo, the healthy burgers and chicken menu come with another twist: a living wage for employees. Daniel Gross reports on their ethical bottom line.

 

In an article Wednesday about fast-food joints that purposely pay more than the minimum wage, I linked to an a piece about Moo Cluck Moo, a burger-chicken-shake place that started just outside Detroit in April. There, employees start at wages of $12 per hour. It’s not exactly a living wage, but it’s significantly better than the $7.40 Michigan minimum wage.

 

On Thursday I called one of Moo Cluck Moo’s founders and owners, Harry Moorhouse, to find out why he pays what he pays and how he makes it work. Moorhouse, who cops to being in his 60s and has worked in business development for a bunch of corporations, and his partner, Brian Parker, had a simple idea: affordable burgers and chicken sandwiches made out of quality ingredients and pitched to working-class customers. Working with their friend, chef Jimmy Schmidt, who was a columnist for Gannett newspapers, they came up with a brief, basic menu with a slight twist: natural beef, no hormones, sunflower oil for frying. And pay would start at $12 an hour. “I wasn’t tuned in to the whole living-wage movement,” Moorhouse told me. “We just felt that, for a variety of reasons, it was the right thing to do.”

 

READ MORE AT:

http://www.thedailybeast.com/articles/2013/08/02/a-fast-food-joint-thrives-even-by-paying-12-an-hour.html


"Those who can make you believe absurdities, can make you commit atrocities."-Voltaire

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One thing that went on at Ford over the past 10 years is that they didn't decide to make their small cars medieval torture devices. Meanwhile the other two make anything that's not a V8 or a big-ass truck out of trash in order to make sure you don't buy anything small from them again.

 

Riiiiiiiiiiiiight.  Guess you haven't read any reviews of the Chevy Cruze or Sonic lately...http://www.caranddriver.com/comparisons/2012-chevrolet-sonic-vs-2011-honda-fit-2012-hyundai-accent-2012-kia-rio5-2012-nissan-versa-2012-toyota-yaris-comparison-test

 

I know a little bet more about cars than can be passively learned by reading magazines. The way you framed that shows that you know little about automobiles. Let's see how the cars are perceived in 5 years once the newness wears off and the cars age poorly. I like C&D, but the way they write about models when they are fresh is vastly different than how the cars will be perceived later. Like back in the '80s when they slobbered all over the Pontiac 6000STE, only to admit that the car was pretty mediocre only a few years later. The same things happened with the Chevrolet Citation.

 

I realize up in NEO that Chevy small cars are the "home team", though.

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I think you are giving too much credit and blame to CEOs for the failure or success of companies.

 

CEOs are definitely not as important as most CEOs (and many conservatives) seem to believe, but they're definitely critical players.

 

Also worth noting is that in the USA, where you have a lot more startups, you'll find a lot more CEOs who also still own the business as well as running it.  That can make a significant difference in income and wealth.  The Google co-founders actually get almost nothing in salary, yet they're both billionaires many times over.

 

However ...

And let's not even get into compensation in the finance industry...

 

This, this, a thousand times this.  This is among the most perverting influences in our entire economy.

 

Alan Mulally was the <a href="http://www.freep.com/article/20120331/BUSINESS0102/203310419/Ford-CEO-Alan-Mulally-again-ranks-No-1-in-auto-CEO-pay-with-36-29-5-million">highest-paid automotive CEO</a> last year with a total compensation package (i.e., including all the bonuses and stock options that really turbocharge the pay packages) was $29.5 million.

 

Looking locally here in Akron, <a href="http://www.forbes.com/lists/2012/12/ceo-compensation-12_Anthony-J-Alexander_6VLL.html">FirstEnergy's CEO's 2012 haul was $6.16 million</a> and <a href="http://www.forbes.com/lists/2012/12/ceo-compensation-12_Richard-J-Kramer_RPCF.html">Richard Kramer's was $8.19 million at Goodyear</a>.

 

Sounds like a lot of money.  It *is* a lot of money.  But ...

 

In 2009, with basically the whole world going to hell in a handbasket, natural gas futures trader John Arnold is <a href="http://en.wikipedia.org/wiki/John_D._Arnold">estimated to have made about $900 million</a>.  That's more than most Fortune 500 CEOs make in their entire working lives, counting their tenures as CEOs and every position they ever had in their careers leading up to it.  And there are a handful of private equity and hedge fund managers making even more than that; Arnold's name was just on my mind because he was the target of Rolling Stone's ire today.

 

The pernicious effects of this aren't just on potentially socially disruptive income-inequality effects.  The long-term incentive structure they create for our most gifted students--the real topmost <0.01% of the IQ curve--is incredibly perverse.  While there is some luck involved in successful management (and certainly in successful investing, especially with high-leverage, high-volatility securities like derivatives), a lot of the traders on Wall Street really were among the best in their classes at the most elite schools in the world (which remain overwhelmingly American).  On Wall Street today, there could easily be hundreds of people who could have done far more good captaining the helms of some of our flagship corporations and startups that either failed or never even started.  They have much less reason to do so if they're going to be making ten times as much buying and selling companies rather than actually running them--you know, creating jobs, making products, delivering services, and the other real-world-relevant stuff that actually makes a difference in regular people's lives.  These Wall Street firms profit so much in part because they're so tiny.  The income they generate is not only taxed at preferential rates, but the outsized after-tax haul only needs to be split up among a small handful of people.

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I don't like it, but I'm afraid we are seeing supply and demand at work here.

 

i wish thats what it was, but its not because you're locked out of the game. we're seeing a caste system at the top nutured by support in dc and the destruction of unionism and workers rights at the bottom. its almost destroyed the middle class in america and its the greatest threat to our nation.

 

strange how a place like brazil is recently developing a middle class and we are cultivating brazil's formerly traditional wealthy-favela divide.

 

Bingo. It's breeding a culture of entitlement among those with wealth -- and contempt among those who lack it. And if corporate executives say "Well that's tough," I say "What goes around comes around." The last time we saw income inequality like this, which was prior to the Great Depression, unions capitalized on that and grew in economic and political power. Private sector managers lost power and in some cases, lost the ability to manage their own companies in the manner they wished (ie: labor-friendly work rules, restricted outsourcing, stringent safety regulations, etc).

 

The pendulum WILL swing back in the favor of labor. It is inevitable. It is up to the corporate executives to decide how gently and painlessly that pendulum swings back again by how well they treat (ie: compensate) their workers.

 

Crazy? Not at all.....

 

A Fast-Food Joint Thrives, Even by Paying $12 an Hour

by Daniel Gross Aug 2, 2013 4:45 AM EDT

 

At Detroit’s Moo Cluck Moo, the healthy burgers and chicken menu come with another twist: a living wage for employees. Daniel Gross reports on their ethical bottom line.

 

In an article Wednesday about fast-food joints that purposely pay more than the minimum wage, I linked to an a piece about Moo Cluck Moo, a burger-chicken-shake place that started just outside Detroit in April. There, employees start at wages of $12 per hour. It’s not exactly a living wage, but it’s significantly better than the $7.40 Michigan minimum wage.

 

On Thursday I called one of Moo Cluck Moo’s founders and owners, Harry Moorhouse, to find out why he pays what he pays and how he makes it work. Moorhouse, who cops to being in his 60s and has worked in business development for a bunch of corporations, and his partner, Brian Parker, had a simple idea: affordable burgers and chicken sandwiches made out of quality ingredients and pitched to working-class customers. Working with their friend, chef Jimmy Schmidt, who was a columnist for Gannett newspapers, they came up with a brief, basic menu with a slight twist: natural beef, no hormones, sunflower oil for frying. And pay would start at $12 an hour. “I wasn’t tuned in to the whole living-wage movement,” Moorhouse told me. “We just felt that, for a variety of reasons, it was the right thing to do.”

 

READ MORE AT:

http://www.thedailybeast.com/articles/2013/08/02/a-fast-food-joint-thrives-even-by-paying-12-an-hour.html

 

You certainly get what you pay for when it comes to employees. But would it play on Wall Street? These guys set their own standard of living that Wall Street shareholders might find unacceptable.

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You certainly get what you pay for when it comes to employees. But would it play on Wall Street? These guys set their own standard of living that Wall Street shareholders might find unacceptable.

 

That's the problem in places like McDonalds or Papa Johns.  Wall Street takes $.50/hour and makes it into $15 million on a P/L statement.  Pay for healthcare?  No way!  We'd have to raise our prices by 40 cents a pizza!

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You certainly get what you pay for when it comes to employees. But would it play on Wall Street? These guys set their own standard of living that Wall Street shareholders might find unacceptable.

 

That's the problem in places like McDonalds or Papa Johns.  Wall Street takes $.50/hour and makes it into $15 million on a P/L statement.  Pay for healthcare?  No way!  We'd have to raise our prices by 40 cents a pizza!

 

So open your own pizza shop/burger joint/car wash etc and pay your employees a "living wage" and advertise the heck out of it.  Should be a boatload of people lining up to support you & your new venture

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Hmm, I wouldn't recommend that for someone new just starting out. But if someone has a lot of money already they would be more likely to make it work. Especially since advertising in a major city is quite expensive and there are also a lot of different channels to do so -- some of which are much more effective than others.

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>Hmm, I wouldn't recommend that for someone new just starting out.

 

Typical CEO compensation doesn't compare in the least to the value of companies -- either privately held or public companies where the heirs retain significant stock holdings.  The four children of Sam Walton are currently worth as much as 30-40% of the U.S. population:

http://www.washingtonpost.com/blogs/blogpost/post/wal-mart-heirs-have-same-net-worth-as-the-bottom-30-percent-of-americans/2011/12/09/gIQAkg6FiO_blog.html

 

There is absolutely no reason why people should be able to win the lottery in this fashion (better at inheriting things than you are) and actually pay A LOWER TAX RATE THAN POOR PEOPLE WHO WIN THE STATE LOTTERIES.  Actually, I believe that is finally changing this year, with the federal estate tax going from 35% to 55% (the top earned income tax is currently 39%).  But keep in mind that in Ohio, Kasich just eliminated the state estate tax in response to the federal estate tax hike, meaning the children of the wealthy in Ohio will now pay 55% total, not 35% + whatever Ohio's inheritance tax used to be.   

 

 

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So what is the "fair" level of compensation for an individual who oversees all aspects of an organization, research, production, marketing, acquisitions, etc?  How many times have we seen a new CEO essentially tank a company in a few short years?  Product cycles are ever shorter & the marketplace is increasingly competitive.  Organizations have to pay top dollar to attract & retain the best talent. 

 

Why does it really matter how much these handful of people make?  I mean, we aren't even talking about the 1% here, more like 1/10%.  How does the compensation package for these individuals affect the folks at the bottom of the rung?

 

It doesn't.  Plus, these people have to regularly justify their compensation to Boards of Directors, which are typically composed of very economically shrewd individuals.

 

Indeed, it could be said that a CEO who justifies their compensation effects the compensation of their people at "the bottom of the rung".  Upwards.

 

Here's a topic on which Rush Limbaugh is deal on accurate.  This is all about the use of envy as a political tool.

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On topic article stating the obvious about the marriage cycle that is helping drive income inequality.

 

 

How America's Marriage Crisis Makes Income Inequality So Much Worse

The rich and educated are more likely to marry, to marry each other, and to produce rich and educated children. But this virtual cycle turns vicious for the poor.

Derek Thompson Oct 1 2013, 8:35 AM ET

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The familiar story about income inequality and the lost middle class often starts with bots and boxes.

 

Technology and automation (often summed up as "robots") have destroyed routine-based middle-class jobs, widening the gap between the rich and poor.  Globalization (i.e.: international trade, symbolized by the container box) has eliminated a swath of well-paid work, like manufacturing.

 

But forget about technology and trade for a moment. There is a more human story to tell about middle class woes. It's a story about marriage.

 

 

 

Read more at:

http://www.theatlantic.com/business/archive/2013/10/how-americas-marriage-crisis-makes-income-inequality-so-much-worse/280056/

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