CEO pay-to-minimum wage ratio soars

[pprimeau1976]

This thread is not to discuss the hiring of illegal immigrants, it is to discuss whether businesses have the right to say that there is not enough cheap labor. All the talking heads in the media and the government are saying that there is not enough cheap labor to do the work that is required. I think that is a load of bull. There are too many highly paid executives!

If this is not so, look at the fact that in 1965, average CEO salaries were 51 times the minimum wage. Guess how much the average CEO salary was in 2005?

821 TIMES THE MINIMUM WAGE

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If the USA had a minimum ratio (ratio of maximum to minimum wages) instead of a minimum wage, think of what that would do! A person might not need to go to college to make a decent living! What a novel idea!

Source: CEO Minimum Wage Ratio Soars

My only question is, how come politicians of both parties have only been raising minimum wages and doing nothing about the ratio? Could it be that the campaign donations are just too much to overlook?

 

[rlg94086]

How do you think our elected representatives are supposed to do something about the ratios? I don’t think our federal government should be involved in setting salary caps, and I’m pretty certain it would easily be challenged and rejected as being unconstitutional.

But then again, I’m against a federal minimum wage, as well.

 

[pprimeau1976]

How do you think our elected representatives are supposed to do something about the ratios? I don’t think our federal government should be involved in setting salary caps, and I’m pretty certain it would easily be challenged and rejected as being unconstitutional.

But then again, I’m against a federal minimum wage, as well.

I never said a salary cap. A salary cap would set a maximum wage. I don’t like maximum wages or minimum wages because they do not adjust with inflation and it requires another act of legislation to adjust. Once a minimum ratio is set, it is set for good or at least until the government adjusts it. If a corporation wants to give a raise to the lowest wage earner, the highest wage earner can get a raise as well, as long as they stay within the ratio.

As far as enforcement goes, this would just be one more statistic that publicly traded companies would have to supply in order to remain a publicly traded company. As for private businesses, this would just be something that they would have to report in order to renew their business licenses.

As far as enforcement goes, little enforcement would be needed. The fear of a labor strike/loss of the ability to sell stock/loss of the legitimacy of the business would make the law self enforcing.

 

[Sr_Sally]

Interesting idea. I agree that many CEOs and other high-level people at large corporations make truly astronomical salaries. I’m not sure though that your idea would work.

First, many of the very largest corporations are international–how would the ratio work compared to wages paid in other countries? And would this be a reason to move headquarters to another country?

Also, many, many low wage jobs are for small business. There was an article recently in the Washington Post about crab fisheries in MD hiring foreign workers! Whouda thunk? The owner of the business outlined things he had done to try and get American labor including hiring released prisoners and kids from vocational schools. None of them wanted to do the work for the wages he could pay. It’s hard work! But I also don’t think this man is getting super-rich of the back of his legal foreign workers.

 

[vern_humphrey]

This thread is not to discuss the hiring of illegal immigrants, it is to discuss whether businesses have the right to say that there is not enough cheap labor. All the talking heads in the media and the government are saying that there is not enough cheap labor to do the work that is required. I think that is a load of bull.

What’s the connection between what you wrote above and what you wrote below?

There are too many highly paid executives!

If this is not so, look at the fact that in 1965, average CEO salaries were 51 times the minimum wage. Guess how much the average CEO salary was in 2005?

Interesting. Guess what happened to cause that?

My only question is, how come politicians of both parties have only been raising minimum wages and doing nothing about the ratio? Could it be that the campaign donations are just too much to overlook?

They have been doing something about the ratio.

You see, back about the time you cite – 1965 – there began to be a lot of failing businesses. They were failing because they wer bloated, mis-managed and so on. There were pople called “Takeover Artists” who would buy these failing businesses, straighten them out, break up unmanageable conglomerates,
cut out the deadwood, and often sell the resulting smaller, leaner, better managed businesses.

But in the process, they laid off a lot of people who weren’t contibuting. And that was bad!

What do do? What to do?

Aha! The “Takeover Artists” actually bought the businesses. They used their power as owners to make the businesses more efficient. Obviously Congress needed to do something to take power **away **from the owners, and let the managers of the businesses run things (into the ground0.

The result is that business management can now set its own salary, and the owners – the stockholders have little to say about it.

Congress gave the power to the business managers and now Congress (and others) complain because they misues it.
Whoda thunkit!

You want to change that? Restore power to the owners, the stockholders.

 

[pprimeau1976]

First, many of the very largest corporations are international–how would the ratio work compared to wages paid in other countries?

In other countries, the ratios are much lower than in the USA. According to a Motley Fool article confused: which justifies CEO minimum wage ) the ratio in Japan is 11 to 1.

Would this be a reason to move headquarters to another country?

It could. But the thought of CEO’s moving their own jobs overseas would be a major twist of irony. The business income taxes that eventually get passed down to the consumer does that already.

Also, I don’t say that immigrants shouldn’t work in the USA. That is a separate issue. The USA needs to do something about the immigration problem. I don’t understand why there has to be all the red tape in order to work in this country personally. My great-grandfather had very little red tape and had no problem being a legal immigrant because the laws were simple. You got off a boat, you stood in line, they checked for diseases, and then they let you in. It was so simple that they WANTED to assimilate and learn English.

Now, things are so complicated, it’s no wonder people choose not to learn English. They would be responsible for sifting through the fine print!

 

[MichaelTDoyle]

Is cheap labor just labor?

Employers should not have access to people who are willing to take slave wages becaause they are desperate or ill informed. Those who employ labor in an illegal manner to profit from the misfortunes of others are criminals and should be prosecuted to the fullest extent of the law.

It is hideous that consumers are willing to let their fellow man live in abject, back breaking working poverty so that they can have toys or pay cheaply for foods.

Immigration in compliance with the law is a good thing, but breaking just laws is not. Profiteering from poor people’s misfortune is reprehensible.

 

[pprimeau1976]

You want to change that? Restore power to the owners, the stockholders.

If we did that, you know who the owners would be? Mutual Fund Managers!

 

[vern_humphrey]

In other countries, the ratios are much lower than in the USA. According to a Motley Fool article confused: which justifies CEO minimum wage ) the ratio in Japan is 11 to 1.

That’s because in Japan, the stockholders – the owners of the company – set the compensation for management.

That used to be the case in the US, too – until Congress put a stop to it.

It could. But the thought of CEO’s moving their own jobs overseas would be a major twist of irony. The business income taxes that eventually get passed down to the consumer does that already.

It happened here in Arkansas. We had more trucking companies per capita than any other state. So we decided to raise taxes on trucks. Guess what happened?

Do you really want to export more of our companies, send more American jobs overseas?

 

[mary_bobo]

How do you think our elected representatives are supposed to do something about the ratios? I don’t think our federal government should be involved in setting salary caps, and I’m pretty certain it would easily be challenged and rejected as being unconstitutional.

But then again, I’m against a federal minimum wage, as well.

We tried fixing wages and prices in the 70’s and the result was what we have now. Companies that wanted to reward an employee could not give him a raise so bennies were substituted. That’s when employers started paying for health care and other things. Result, the big freebies given by corporations to employees. The result of unintended consequences.

 

[griehle1]

There has to be limits set, because we continue to ignore the poor in this country. Every person for instance who works at wal mart is trying to make a living for their families. They are struggling to make a decent living. If Wal Mart execs would be more sensitive to the working poor this country could surpass where we are now. Wal mart is just an example of exploitation going on in this country, there are many others. Board of directors setting CEO pay is a joke. How about workers and stock holders combined setting pay based on profit. Every company has to make a profit to stay in busness, but giving it to the elite is slowly ruining this country. I’m 65 years old so it is to late for me, but what about my children and grandchildren. Will they have to leave this country to earn a decent living. Yes, they have went to college and earned degrees.

 

[vern_humphrey]

There has to be limits set, because we continue to ignore the poor in this country. Every person for instance who works at wal mart is trying to make a living for their families. They are struggling to make a decent living. If Wal Mart execs would be more sensitive to the working poor this country could surpass where we are now.

A thing is worth what a willing buyer will offer and a willing seller will accept. If I go to work for Wal-Mart, that means Wal-Mart and I have come to an agreement as to what my labor is worth.

Wal mart is just an example of exploitation going on in this country, there are many others.

No. Wal-Mart is an example of a company that creates jobs where there were no jobs, and provides a reasonable selection of goods at fair prices.

And people hate them for it.:whacky:

Board of directors setting CEO pay is a joke. How about workers and stock holders combined setting pay based on profit.

Actually, that is done more than you realize – most of a CEO’s “compensation” is based on stock options. The CEO is given the right to buy stock at its current price at any time in the next 5 years or so. If the stock goes up, he buys at a low price and makes money. And if the stock goes up, the stockholders make money, too!

But stockholders are limited in what they can do – to prevent eeeeevil takeover artists from buying badly-run companies and imposing good management on them.

Every company has to make a profit to stay in busness, but giving it to the elite is slowly ruining this country. I’m 65 years old so it is to late for me, but what about my children and grandchildren. Will they have to leave this country to earn a decent living. Yes, they have went to college and earned degrees.

If your children and grandchildren cannot make a living in the world you leave them, you might want to say some stern words to the Man in the Mirror.

 

[vern_humphrey]

If we did that, you know who the owners would be? Mutual Fund Managers!

And who are the owners of the Mutual Funds?

The people who invest in those funds!! That is to say, the owners of the Funds – people like you and I.

 

[pprimeau1976]

That’s because in Japan, the stockholders – the owners of the company – set the compensation for management.

That used to be the case in the US, too – until Congress put a stop to it.

It happened here in Arkansas. We had more trucking companies per capita than any other state. So we decided to raise taxes on trucks. Guess what happened?

Do you really want to export more of our companies, send more American jobs overseas?

I don’t understand the logic in that. You honestly believe the businesses will regulate themselves? I own company stock for a long time and never paid attention to those “proxy forms”. Do you think that people actually take the time to read those given how busy people are these days?

I think government enforcement of a ratio that can move with inflation is a much better option. I would hate to see jobs moved overseas, but jobs are already moving overseas for many reasons. Businesses will not leave once they realize that they can make a profit by cutting exhorbitent wages! And do you think stockholders will allow them to leave when their companies turn profitable?

 

[vern_humphrey]

I don’t understand the logic in that. You honestly believe the businesses will regulate themselves?

I don’t understand the logic in that. You honestly believe the government made things better when it took the power away from the owners and allowed the management to do as they liked, including setting their own compensation?

I own company stock for a long time and never paid attention to those “proxy forms”.

That’s a lick on you, then!

Do you think that people actually take the time to read those given how busy people are these days?

There is a word for people who don’t read the fine print – but we’re not allowed to use it on these forums.

I think government enforcement of a ratio that can move with inflation is a much better option.

Riiiiiiight – instead of letting the owners (who have a stake in making business profitable) make policy, turn that power over to some bureaucrat who never held a real job in his life.

I would hate to see jobs moved overseas, but jobs are already moving overseas for many reasons.

And if government starts setting compensation, that move will accelerate.

Businesses will not leave once they realize that they can make a profit by cutting exhorbitent wages! And do you think stockholders will allow them to leave when their companies turn profitable?

How can stockholders prevent it? After all, the government has emasculated them, and you, yourself said

I own company stock for a long time and never paid attention to those “proxy forms.” Do you think that people actually take the time to read those given how busy people are these days?

 

[griehle1]

A thing is worth what a willing buyer will offer and a willing seller will accept. If I go to work for Wal-Mart, that means Wal-Mart and I have come to an agreement as to what my labor is worth.

No. Wal-Mart is an example of a company that creates jobs where there were no jobs, and provides a reasonable selection of goods at fair prices.

And people hate them for it.:whacky:

Actually, that is done more than you realize – most of a CEO’s “compensation” is based on stock options. The CEO is given the right to buy stock at its current price at any time in the next 5 years or so. If the stock goes up, he buys at a low price and makes money. And if the stock goes up, the stockholders make money, too!

But stockholders are limited in what they can do – to prevent eeeeevil takeover artists from buying badly-run companies and imposing good management on them.

If your children and grandchildren cannot make a living in the world you leave them, you might want to say some stern words to the Man in the Mirror.

 

[John28]

There has to be limits set, because we continue to ignore the poor in this country. Every person for instance who works at wal mart is trying to make a living for their families. They are struggling to make a decent living. If Wal Mart execs would be more sensitive to the working poor this country could surpass where we are now. Wal mart is just an example of exploitation going on in this country, there are many others. Board of directors setting CEO pay is a joke. How about workers and stock holders combined setting pay based on profit. Every company has to make a profit to stay in busness, but giving it to the elite is slowly ruining this country. I’m 65 years old so it is to late for me, but what about my children and grandchildren. Will they have to leave this country to earn a decent living. Yes, they have went to college and earned degrees.

WalMart has done more for poor people than most any other company. Aside from providing jobs, they make available inexpensive goods and services. And, because those goods and services are in one place, they are accessible to everyone, even those who can’t afford a car.

The vast majority of people making minimum wage are not the main provider for a family, they are entry level people who are building skills. As they become more valuable to the company, they are paid more.

In this country, there is no reason to point to a person or company and say ‘They are the reason I am poor’. Opportunity abounds for anyone willing to work. Not happy with your situation? Don’t wait for others to help you, do something about it.

 

[griehle1]

I am not talking about the VAST MAJORITY, I am talking about the WORKING POOR in this country. I know of people working at WAL-MART as their ony income. Maybe they are not as gifted as you are, but they work just as hard or harder to TRY to earn a living as others do. Not everyone is a rocket scientist!!!

 

[vern_humphrey]

I am not talking about the VAST MAJORITY, I am talking about the WORKING POOR in this country. I know of people working at WAL-MART as their ony income. Maybe they are not as gifted as you are, but they work just as hard or harder to TRY to earn a living as others do.

And if it weren’t for Wal-Mart, they wouldn’t have a job. Nor could they afford to buy warm clothes for their children each fall.

Not everyone is a rocket scientist!!!

I noticed that.

 

[pprimeau1976]

I don’t understand the logic in that. You honestly believe the government made things better when it took the power away from the owners and allowed the management to do as they liked, including setting their own compensation?

No, they made it worse. But all you are doing is setting a ratio! There is little government intervention involved. You are not TAXING big business, you are not setting a FINITE DOLLAR AMOUNT that will be OBSOLETE, You are setting a RATIO. With the ratio, the maximum CEO income is determined by the income of the lowest paid worker.

Let’s say we make the minimum ratio from highest paid worker to lowest paid worker 400 to 1 (this is HALF of 2005’s ratio). If a minimum ratio is set and you pay your lowest paid worker $5.00/hour - that would mean that the most the CEO could get of any company is $2000.00/hour or $4,000,000/year!

Or, taking that same ratio, if a company wants to be cheap and pay someone who is willing to work for $2.50/hour the most that they could pay the top earner is $1000/hour or $2,000,000/year! THIS INCLUDES THEIR WORKERS IN CHINA, btw.

With this scenario and with a much lower ratio, the market will truly work and actually be ethical. There would be no government setting wage restrictions that will have to be continually adjusted over and over. That is less government, actually. And the ratio does not have to be 11 to 1 like Japan’s it could decrease anually until we are at a tolerable ratio.

So what is wrong with setting this?

That’s a lick on you, then! There is a word for people who don’t read the fine print – but we’re not allowed to use it on these forums.

What is a lick on me exactly? I sold all my stock because I don’t want to micromanage a company. I have a family and Church to be involved with. If that’s a lick on me then PUT MORE LICKS ON ME PLEASE!!!

And if government starts setting compensation, that move will accelerate.

Setting a ratio is not setting compensation. If a CEO wants to be a tightwad, that will reflect in his salary. The company has total control of what they pay. The government only sets the ratio.

How can stockholders prevent it? After all, the government has emasculated them, and you, yourself said

You are the one that believes that people have time to fill out proxy forms and elections. You just made my point for me, thanks. How can stockholders realistically prevent CEO wages if they are given full control to set them?

They realistically won’t unless you get rid of Mutual Funds. Bill Gates could easily go to Mutual Fund Manager Bob and say: “If you buy my stock and give me a raise, I’ll buy your stock and give you a raise.” With the baby boomers retiring, their is no chance in haedes that mutual funds will go away.