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Thread: 'Are Subsistence Wages Killing the US ?"

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    Default 'Are Subsistence Wages Killing the US ?"

    interesting commentary from Mike Shedlock -

    I posted this in the Member Boards area because the 'political' content is dominant


    (snip)"I received an interesting Email last week from Minyan "MC" who is concerned about globalization's effect on jobs and wages. Let's tune in to his thoughts:

    There is a mania in this country to slash wages to a subsistence level (or worse). This is a symptom of the greed and corporate cronyism that is killing the country.

    The powers-that-be that run the US are determined to crush wages, even when they realize that people are doing without food, health insurance, etc. We keep hearing news stories that about 10% of our population doesn't have sufficient food? The root cause is the mania to cut wages and lay off workers.

    I was born into a country that emphasized hard work, loyalty, stability, and "if you get educated and skilled, work hard, work smart, and behave yourself, you will do all right." I no longer believe that lie.


    The article MC was referring to when he emailed was GM buys out 1/4 of wage earners.

    General Motors Corp. said Thursday that a quarter of its U.S. hourly workers will take the company's latest buyout and early retirement offers, opening the door for new hires who will make less money.

    Under a new labor agreement reached last fall with the United Auto Workers union, GM may hire up to 16,000 non-assembly workers at half the old wage of $28 per hour. Detroit-based GM conducted its last round of buyouts in 2006, when 34,410 workers left the company.

    GM's largest supplier, American Axle and Manufacturing Holdings Inc., said Wednesday it will cut more than half of its U.S. hourly work force, or 2,000 jobs, through early retirement and buyout offers, plant closures and layoffs.



    MC, the problems at GM are deep and many. I am no fan of GM. However, had they not taken these measures GM would not be in business today. Frankly I am surprised they still are in business given they have been behind the curve in production costs, they have a mess on their hands with GMAC financing, Ditech Mortgages, and are still hooked on a business model that is producing trucks and SUVs that are waning in popularity.

    GM has been losing money on every car they make, more often than not, quarter after quarter. I believe the only reason GM is still in existence is that it has been able to go to the bond markets repeatedly to get financing.(snip)


    (snip)Source Of Frustration

    Looking beyond GM, the frustration MC expresses stems from four sources.

    1) Globalization
    2) A sinking US dollar
    3) Misguided policies
    4) Waning US influence in a world economy

    Globalization

    The internet has literally been a productivity miracle. Information is available in seconds that might have taken weeks or longer to find before. This has made the outsourcing of tech jobs, call center jobs, and other service jobs much easier. The trend to outsource service jobs is just beginning. It is going to spread to various accounting jobs, and even medical jobs. For example, an X-Ray can be taken here, sent over the internet to India, diagnosed in India, and only the treatment needs to happen here. Also, large corporations like banks can outsource accounting functions en masse. It's going to happen.

    On the manufacturing side, we have been losing jobs to Mexico and China for quite some time. Outsourcing of manufacturing is more mature, but it is still causing the wage pressures you speak of. But what's the alternative? As mentioned above, if GM continues to pay workers what they have been paying them, GM will go bankrupt sooner rather than later. The union had no real choice other than to go along.

    Sinking US Dollar

    The sinking US dollar is something we can and should address. After all, it's not how much one makes that is important, it's how far what one makes goes. Sadly, the US has been seriously debasing the dollar ever since Nixon closed the gold window. Credit has been running rampant, and at times (but not now) there has been runaway monetary printing.

    Bernanke supports targeted inflation. My belief is that positive inflation is positively theft. Rising prices increases property taxes, sales taxes, etc, conveniently without legislation. Inflation also benefits those with first access to money (banks, brokers, and the already wealthy). By the time credit is extended to those lower on the economic ladder, the party is about over. The subprime and liar loan mortgage fiasco is a clear example of this principle in action.

    Treasury Secretary Paulson talks about a "strong dollar" policy but that is nothing more than lip service. Instead, there has been what appears to be purposeful debasement of the US dollar on the misguided idea that it will increase exports. The unwanted side effect is that few jobs are created while everyone pays through the nose in higher import prices and gasoline.

    Misguided Policies

    Part of the rise in oil prices is due to the falling dollar, but that is not the only factor. Another part of the equation is geopolitics, and a third factor is misguided policies on ethanol. At the top of the list in poor policy decisions is our attempt to be the world's policeman. We can no longer afford that luxury.

    Congress spends money it does not have on all kinds of silly programs. Both parties go along with it.

    And instead of addressing real problems, Congress is looking into commodities speculation and threatening the oil producers. See Commodities Speculation Symptom Of Larger Problem and Congressional Insanity: Sue OPEC over Oil Prices.

    Inquiring minds may also wish to consider Bankruptcy Reform Act Finally Blows Sky High.

    Finally, the city of Vallejo, California went bankrupt and that symptomatic of the fact that cities and municipalities have been promising government workers more in salaries and pension benefits than cannot possibly be met. The few (primarily union workers in Vallejo's case) have benefited at the expense of the many (the taxpayers). During the calendar year 2007, there were 292 City of Vallejo employees who had total gross wages of $100,000 or more.

    I am sorry but that is simply insane. Please see Hardball In Vallejo, No Balls In D.C. for a discussion of this topic.

    Waning US influence in a world economy

    The US went from being the largest creditor nation to the world's largest debtor. We are spending ourselves into oblivion, and at the same time rising economies in China, India, Brazil, and other emerging markets means the US can no longer call all the shots.

    Most importantly, a rising world economy means the US has to compete for resources, especially energy, which is something we have not had to do before.

    In regards to education, having a degree is no longer a guarantee of getting a high paying job. The rest of the world is catching up or even passing up the US in education while we argue over school prayer and creationism. The latter makes us the laughingstock of the scientific world. Education, while important, ignores the fact that China, India and other places are turning out more doctors, engineers, etc than we are. On the other hand, we are turning out more lawyers than anyone else. Is this a good tradeoff?

    For the first time in history, the standard of living in the US is about to fall. It has to fall because we have lived beyond our means for too many years.

    The Big Lie?

    Let's now take another look at MC's statement "I was born into a country that emphasized hard work, loyalty, stability, and 'if you get educated and skilled, work hard, work smart, and behave yourself, you will do all right.' I no longer believe that lie."

    For the US to remain competitive wages must come down and spending must come down. Like it or not, those are simply the facts. If that doesn't happen, we are going to see more bankruptcies at the personal, corporate, city, and perhaps even state level. California itself is a prime bankruptcy candidate in my opinion. But less services means fewer jobs or lower wages. Otherwise taxes have to rise or the US dollar will continue to sink.

    We are in this mess because we tried to spend our way to prosperity. In addition, too many people have houses, SUVs, boats and other toys they cannot afford, all egged on by "the ownership society" and other misguided policies.

    Living Wage

    One repeatedly hears the phrase "we need a living wage". One problem with "living wages" is that regardless of what anyone is making, there has been willingness for nearly everyone to spend every penny and then some. Part of this is no doubt related to policies at the Fed that encourage both consumption and speculation.

    Another problem is people seem to believe they need things they clearly don't, SUVs for example. I grew up in a family of 6. We did not have an SUV (they did not even exist then). Nor did we have a large house. I think the square footage of our house was something like 700 square feet, if that. It had one bathroom. At the time, I thought it was perfectly normal.

    Now it seems that not having a SUV (or two), huge TVs, cell phones for everyone in the family, and a large McMansion to live in is an act of deprivation.

    Courage To Choose

    Let's now consider a timeless post by Minyan Peter. It's called The Courage To Choose.

    I believe that in time, historians will define the last twenty years in America as the “Age of Aspiration” where, thanks to unprecedented levels of credit, Americans could become anything they wanted. Where, thanks to 0% down debt and a seemingly robust economy, we could own bigger homes, fancier cars, and more lavish vacations – where our bounty was limited only by the boldness of our wants.

    Well, I, for one, believe that our Age of Aspiration is ending. And, with its conclusion, we must, for the first time in almost a generation, begin to reconcile our wants with our means. We must choose what to do without, rather than what more to do with.

    But I would suggest that few of us are prepared for this challenge. Why? Because abundance relieves each of us from having to prioritize what is important. When anything is possible, everything is possible. Few of us have really had to choose.

    As I look ahead to 2008, though, I believe that each of us, the communities we live in, and the organizations and companies we serve, are going to have to make choices. We are going to have to separate what is most important from least, and act accordingly. Where life was once limitless, it will now be constrained. And, like it or not, all of us will need to return to our vocabulary a simple phrase that I believe has been lost over the past 20 years: “I can’t afford that.”

    So as we approach 2008, I wish the Minyanville community the wisdom to prioritize well, the courage to make the hard, and often painful, choices, and, most of all, the strength and conviction to follow through.
    The Right Choice

    Given that it's impossible to stop the forces of globalization , impossible to roll back the hands of time, and impossible to halt the waning influence of the US in a world economy, we need leaders now more than ever to choose wisely on policy decisions, to stop spending money we do not have, and to stop the debasement of the US dollar.

    My choice was Ron Paul. My choice is not going to win. My second choice is anyone who will get us out of Iraq and stop squandering trillions on a war against a faceless enemy. I believe that is the single best choice we can make about anything. But that's my choice, it may not be yours.

    Those who are in favor of this war at least ought to have the courage to fund it. That means higher taxes. Presented in that fashion: higher taxes and stay in Iraq vs. lower taxes and leave, I think 85% of the population would vote to leave.

    Instead, there is the free lunch policy in Congress and by this administration that allows us to keep spending money we do not have being the world's policeman, that subsidizes ethanol producers, subsidizes housing, and funds all sorts of other programs that have no business being funded. The waste in our medical programs is a particular outrage.

    Someone is benefiting from this madness but it sure is not the consumer.

    The rest of the world is financing those excesses and it is showing up in a dollar that continues to slide. The few (those being subsidized) benefit at the expense of everyone else even as the economic distortions ripple through the rest of the economy. To stop the madness, it's time to have the courage to opt for a balanced budget and it's time to have the courage to abolish the Fed.

    I believe the final analysis will show that it's not subsistence wages that are killing the country, rather it's poor policy decisions at the personal, corporate, municipal, and Federal level that are killing the economy."(snip)

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    After all the running around the mullberry bush, the last paragraph says it all. As an analogy, what good does it do to have cheap gas or insurance (labor costs) if the party(ies) in the driver seat runs the car off the road into a ditch or telephone pole.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Melonie View Post
    I believe the final analysis will show that it's not subsistence wages that are killing the country, rather it's poor policy decisions at the personal, corporate, municipal, and Federal level that are killing the economy."(snip)
    Bingo, throw in a little corporate greed and there you have it.

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    TheSexKitten
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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Interesting read. Thanks for posting!

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Richard_Head View Post
    Bingo, throw in a little corporate greed and there you have it.
    "Corporate greed" ? What EXACTLY is that ? Just WHO is collecting all that "ill-gotten gain" ? The workers ? For the most part, NO. Their wages are fairly stagnant.

    Corporate Executives ? A lot of them get very well paid DESPITE managing companies that are NOT showing a profit.

    Shareholders ? For the most part, YEAH. Not so much in dividends ( as many corps no longer pay dividends ) but in increased stock prices and splits. And who are the "shareholders" ? Workers whose pension funds are invested in those corporations. Mutual Fund investors; direct investors etc.

    Suppliers and vendors ? What do you think is done with corporate profits ? They buy raw materials and supplies to make their products.

    Governments ? The U.S. has one of the highest Corporate Tax Rates IN THE WORLD so when those Corps make money; government coffers swell.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Richard_Head View Post
    Bingo, throw in a little corporate greed and there you have it.
    Agreed, except it's ALOT of corporate greed, imo.
    There never was a good war or a bad peace.

    Benjamin Franklin

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Eric Stoner View Post
    "Corporate greed" ? What EXACTLY is that ? Just WHO is collecting all that "ill-gotten gain" ? The workers ? For the most part, NO. Their wages are fairly stagnant.

    Corporate Executives ? A lot of them get very well paid DESPITE managing companies that are NOT showing a profit.

    Shareholders ? For the most part, YEAH. Not so much in dividends ( as many corps no longer pay dividends ) but in increased stock prices and splits. And who are the "shareholders" ? Workers whose pension funds are invested in those corporations. Mutual Fund investors; direct investors etc.

    Suppliers and vendors ? What do you think is done with corporate profits ? They buy raw materials and supplies to make their products.

    Governments ? The U.S. has one of the highest Corporate Tax Rates IN THE WORLD so when those Corps make money; government coffers swell.
    ^^^You seem to be arguing that I'm anti profit, that's hardly the case, I'm all for a company making a profit, I'm just opposed to CEO's raking in excessive pay and perks which can put a drag on company profits as well as the stock price (and employee morale).

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    I don't know who's doing your accounting Eric, but in my business, supplies and vendors are paid with operating income, which is tax deductible. Profits are the leftovers, ya know? And shareholders of oil stocks have not seen much of those record profits reflected in the stock price.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Dirty Ernie View Post
    I don't know who's doing your accounting Eric, but in my business, supplies and vendors are paid with operating income, which is tax deductible. Profits are the leftovers, ya know? And shareholders of oil stocks have not seen much of those record profits reflected in the stock price.
    I'm sorry but there's one set of FACTS for everybody. Many oil companies saw their stock prices soar to record levels.

    As for the accounting- Yes and No. Yeah, they usually pay suppliers out of "operating income" BUT when they expand operations or INCREASE orders for durable goods; plant; machinery etc. they use profits to pay for that. Or borrow it. Or both.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Richard_Head View Post
    ^^^You seem to be arguing that I'm anti profit, that's hardly the case, I'm all for a company making a profit, I'm just opposed to CEO's raking in excessive pay and perks which can put a drag on company profits as well as the stock price (and employee morale).
    You certainly seem to be "anti-profit". From your postings you seem to think that tax rates have no effect on profits; investment and overall economic health.

    As for Executive compensation; I agree with you that some of it is excessive and unjustified especially when it bears little or no relation to the performance of the company. But what about someone like Jack Welch ?. He almost single-handedly saved G.E. ? Or Lee Iacocca who saved Chrysler ? Afaic both were entitled to their hefty retirement packages. On the other hand the president of Exxon-Mobil did NOT deserve $400 million as at least half of the company's performance had to do with skyrocketing oil prices which he had NOTHING to do with. But the thing is, unless you're a shareholder of that corporation, executive compensation is NONE of your business or my business. It has no effect on your life or mine.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Eric Stoner View Post
    I'm sorry but there's one set of FACTS for everybody. Many oil companies saw their stock prices soar to record levels.

    As for the accounting- Yes and No. Yeah, they usually pay suppliers out of "operating income" BUT when they expand operations or INCREASE orders for durable goods; plant; machinery etc. they use profits to pay for that. Or borrow it. Or both.
    I'll have to throw a mea culpa to you on that one. I misread the dates on the table I was referencing.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Eric Stoner View Post
    You certainly seem to be "anti-profit". From your postings you seem to think that tax rates have no effect on profits; investment and overall economic health.
    That's just not true, I've never proposed or suggested excessive taxes.

    Quote Originally Posted by Eric Stoner View Post
    As for Executive compensation; I agree with you that some of it is excessive and unjustified especially when it bears little or no relation to the performance of the company. But what about someone like Jack Welch ?. He almost single-handedly saved G.E. ? Or Lee Iacocca who saved Chrysler ? Afaic both were entitled to their hefty retirement packages.
    I'll agree to a point, depending upon your definition of hefty retirement packages, there's always a point where hefty becomes excessive though.

    Quote Originally Posted by Eric Stoner View Post
    On the other hand the president of Exxon-Mobil did NOT deserve $400 million as at least half of the company's performance had to do with skyrocketing oil prices which he had NOTHING to do with.
    There is a long list of CEO's that fit this category, the list actually goes on and on. Angelo Mozilo from Countrywide comes to mind as one recent example.

    Quote Originally Posted by Eric Stoner View Post
    But the thing is, unless you're a shareholder of that corporation, executive compensation is NONE of your business or my business. It has no effect on your life or mine.
    That's really not true, excessive CEO pay can put a drag on a company's profits, that can effect it's stock price which can in turn have an effect on the entire market (which will effect you whether you're a shareholder or not).

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Richard_Head View Post
    That's just not true, I've never proposed or suggested excessive taxes.

    I'll agree to a point, depending upon your definition of hefty retirement packages, there's always a point where hefty becomes excessive though.

    There is a long list of CEO's that fit this category, the list actually goes on and on. Angelo Mozilo from Countrywide comes to mind as one recent example.

    That's really not true, excessive CEO pay can put a drag on a company's profits, that can effect it's stock price which can in turn have an effect on the entire market (which will effect you whether you're a shareholder or not).
    You've proposed returning to the Clinton Tax Rates which did NOTHING to improve either the Deficit or the overall economy. It was the Capital Gains Tax Cuts; Welfare Reform and Gramm- Rudman that gave us the late 90's economic boom.

    CEO pay is the business of that corporations shareholders. PERIOD ! There is little to no actual relation between Executive Pay & Benefits and Corporate Profits because it's DEDUCTED as an operating expense.

    Mozilo and Countrywide is the business of Countrywide's shareholders UNLESS there was fraud or other criminality.
    Last edited by Eric Stoner; 06-11-2008 at 07:57 AM.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Eric Stoner View Post
    (snip)

    CEO pay is the business of that corporations shareholders. PERIOD ! There is little to no actual realtion between Executive Pay & Benefits and Corporate Profits because it's DEDUCTED as an operating expens (snip).
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    REALLY????? You actually believe that? Any expense ,operating or not, detracts from profits. The way 1 or a few corporations do business has a "trickle over" effect on how other corporations do business. A few egregiously high compensation packages raises the "expectation/reference bar" for all. Executive compensation is insanely high in US compared with other countries. Average S&P500 CEO makes roughly 400 times what average US worker makes. Compare that with Japanese CEO making 10-20 times what average Japanese worker makes, and 1980 S&P CEO average of 40:1 CEO/avg. worker ratio.(That was the year before the Space Shuttle first flew). Granted, there has been many improvements in products since then, but I don't think it's been of tenfold magnitude by any measure, except how it's rewarded those at the top. I certainly don't think that US CEO is 10-20 times better than Japanese counterpart(to wit- noticed how Japanese have increased US market share in auto & electronics sales in past qtr. century?).
    As several US Corporations have revenues greater than many countries GDP's, speaking of them in such a way that their excesses should be treated in the same scope & manner as a mom & pop grocery store (eg- its just a business & doesn't effect that many people) is rather ludicrous.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    a few points ...

    (snip)"For example, the model doesn’t work well in Japan. Gabaix reckons this is because the Japanese CEO market is relatively static, at least when compared to the more fluid and competitive U.S. market. “In Japan, you groom your CEO in-house,” he says. This means that firms need not bid up CEO salaries by competing for outside talent."

    Nor does the Gabaix model work well for the United States before 1970. Union power—which has declined steadily over the past four decades—may help explain that. Or it could be that new managerial talent glutted the U.S. market in the immediate postwar era. Or perhaps “the U.S. in the 1950s may have been like Japan is now,” Gabaix speculates, with Organization Men refusing to dart from one company to another to advance their careers. Or it could be a combination of these factors. “We don’t completely know.”

    There’s also the question of folks like former Home Depot CEO Robert Nardelli, who received a whopping $210 million severance package even though Home Depot’s stock price declined under his tenure. Gabaix notes that there are always outliers. And as Enron showed, there will always be genuine corporate swindlers. Averaged over the largest 500 companies though, chief executives have not managed to systematically boost their pay during down markets. Indeed, CEO compensation fell from 2000 to 2003, as the market tanked.

    Of course, it’s not just the sixfold increase in CEO pay that bothers people: it’s also that executive compensation has risen relative to that of the median worker. Critics want to know why CEOs seem to be the only ones who are benefiting from asset-price gains.

    Gabaix has two answers. First, “the median worker, sadly for him or her, just manages a very small part of the economy,” he says. “The economy as a whole has not grown by that much—just 2.5 percent a year or so.” In most jobs, the stakes are very small. The head of procurement in a medium-sized business may be supremely talented—but since even an abundance of talent in that job will save the business only a small amount of money on supplies, superior talent isn’t terribly valuable.

    Second, it’s not just CEOs who are seeing outsized returns these days. In virtually every field where a small difference in talent translates into a big difference in profits, superstar performers have seen their compensation skyrocket. Tom Cruise may only be marginally better at his craft than a thousand actors you have never heard of—but putting Cruise in a movie will make it a blockbuster, so he’s paid accordingly. Likewise, New York Yankees third baseman Alex Rodriguez has used his impressive statistics to negotiate a mind-boggling salary.

    “People don’t really begrudge the compensation to sports stars,” Gabaix observes. But with CEOs, “it’s harder to measure talent.” Their individual performance cannot be quantified with pure statistics. “Perhaps there’s more room for suspicion that they’ve put their friends on the board—that sort of thing,” adds Gabaix. All of this translates into a fierce resentment of executive pay—even though, as the Gabaix-Landier model shows, America’s CEO market is working pretty well. "(snip)

    from

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    A few points here, too...............

    1) "CEO compensation decreased from 2000-2003"..../ True, but it's still at absurdly high levels. More germane is what it has done recently- $10.8M in 2006, $14.2M in 2007, $18.8M as of Feb. 2008. (from afl-cio.org, executive paywatch). That is a whopping 74% increase during a period where CPI has increased 6.76%. Are we getting 74% more zip in our gas, food, drinks, appliances, etc.??

    2) "Median worker manages a very small portion of the economy"...../ This has always been so. However, due to increased automation, it takes fewer people to make a car/ widget than in the past. Or fewer crewmembers on a cargo ship, oil tanker, or airplane cockpit. So, actually, average employee doing their job right today has an impact on a greater number of customers than several years ago.

    3). The analogy between CEO's & pro athletes, or actors is a flawed one. People will go to a movie because of a certain actor/actress, or to stadium/arena to see a certain athlete "smack one, sink one, or throw/catch one". Really now, has anyone bought a certain product BECAUSE of who happens to be CEO ?? Please tell me the last time you had a problem with a particular product that you were able to personally call company CEO, and have them fix it for you. Please tell me that your prominent thoughts when you board a jumbo jet are "I sure hope this airline has a brilliant CEO" instead of "I sure hope this crew knows what its doing & cares about my safety/comfort". To sum this up in stripclub terms..... "While I, a paying customer, thinks that its nice that owner was able to snap up a primo building in primo location at a bargain price, that is meaningless if dancer gives me a crummy show or lapdance.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Really now, has anyone bought a certain product BECAUSE of who happens to be CEO ??
    well, people have certainly bought and sold company stock shares based on who happens to be the CEO ... which in the short term can affect the financial situation of the company far more than a relatively small change in product sales !

    To accurately sum this up in strip club terms, a more meaningful analogy would have been that the existing local hack club owner is bought out by the Ricks chain ... meaning that club business levels will go up due to increased image / advertising, meaning that club profits will go up, and meaning that dancer earnings potential will go down as the club charges higher stage fees and percentages from the dancers to bolster the club's net income even further ! In point of fact, customers are only 1/4th of the equation - with the other three components being the dancers, corporate club management, and the stockholders who bankrolled the takeover. This 'four legged stool' analogy applies to all sorts of publicly owned companies ... and it is the CEO who must set policy, but who must keep the 4 legs balanced at the same time.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Eric Stoner View Post
    You've proposed returning to the Clinton Tax Rates which did NOTHING to improve either the Deficit or the overall economy.
    Nice selective memory.

    Quote Originally Posted by Eric Stoner View Post
    It was the Capital Gains Tax Cuts; Welfare Reform and Gramm- Rudman that gave us the late 90's economic boom.
    I believe that Clinton was President for all that wasn't he?

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    Quote Originally Posted by Richard_Head View Post
    Nice selective memory.

    I believe that Clinton was President for all that wasn't he?
    Yes Clinton was President BUT he had to have his arm twisted by the REPUBLICAN Congress and his own Treasury Secretary, Rubin to sign the Capital Gains Tax Cuts he had resisted. Same thing for Welfare Reform. Same thing for Gramm Rudman.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    [quote=Melonie;1580246]well, people have certainly bought and sold company stock shares based on who happens to be the CEO ... which in the short term can affect the financial situation of the company far more than a relatively small change in product sales ! <<snip>>>//

    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    Again, did investors act because of the WHO (Who was/wasn't named/"resigned to pursue other interests"), or because of the THAT( The fact THAT the board f-i-n-a-l-l-y/regretably did/did not make the sorely needed changes THAT needed to be made?? ) In some cases, Micky Mouse could have been named CEO, and people would still be happy.

    "Short term" is the operative word in recent counterpoint. I don't doubt that some people have made short term profits during CEO changes. Nor do I doubt that SOME CEO's have done a bang up turnaround job. Yet, for every "Lee I" or Jack Welch, there are many others who really don't leave the company better off after their tenure, but sure leave themselves better off. In the greater scheme of things, its the long term value that counts for a majority (population wise, if not total $$ wise) of people. For the total $$ in pension funds, IRA's, 401K's, the vast majority are looking at 5-30 year timeframes for tapping into funds. Ultimately, it matters what the stock value is when one actually withdraws funds, not some abstact number when retirement is several yrs. away. I stand by my assertion that, while CEO's are important, that their importance is overblown, and their tenfold increase in relative compensation last qtr. century is unjustified.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    [QUOTE=minnow;1580790]
    Quote Originally Posted by Melonie View Post
    well, people have certainly bought and sold company stock shares based on who happens to be the CEO ... which in the short term can affect the financial situation of the company far more than a relatively small change in product sales ! <<snip>>>//

    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    Again, did investors act because of the WHO (Who was/wasn't named/"resigned to pursue other interests"), or because of the THAT( The fact THAT the board f-i-n-a-l-l-y/regretably did/did not make the sorely needed changes THAT needed to be made?? ) In some cases, Micky Mouse could have been named CEO, and people would still be happy.

    "Short term" is the operative word in recent counterpoint. I don't doubt that some people have made short term profits during CEO changes. Nor do I doubt that SOME CEO's have done a bang up turnaround job. Yet, for every "Lee I" or Jack Welch, there are many others who really don't leave the company better off after their tenure, but sure leave themselves better off. In the greater scheme of things, its the long term value that counts for a majority (population wise, if not total $$ wise) of people. For the total $$ in pension funds, IRA's, 401K's, the vast majority are looking at 5-30 year timeframes for tapping into funds. Ultimately, it matters what the stock value is when one actually withdraws funds, not some abstact number when retirement is several yrs. away. I stand by my assertion that, while CEO's are important, that their importance is overblown, and their tenfold increase in relative compensation last qtr. century is unjustified.
    There is truth on both sides of this argument. The European/ Japanese CEO model does not work with the U.S. because they emphasize company loyalty and groom their own CEO's in house far more than we do and thus pay them less.

    There are certainly plenty of cases where U.S. upper mgt. was compensated out of any proportion with their performance. Part of it results from overemphasizing stock price as a measure of overall performance and using stock options to reward mgt. I think it is far better to pay them a salary and a bonus dependent on how the company performs LONG TERM ; like over a 5 year period. And their retirement packages ought to be similarly dependent on company performance. The SEC has been asked for years to put the kibosh on stock- options as compensation because in many cases it CAN warp management decisions but Congress has blocked all such attempts.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    The SEC has been asked for years to put the kibosh on stock- options as compensation because in many cases it CAN warp management decisions but Congress has blocked all such attempts.
    this is totally understandable if you stop and acknowledge that stock option grants are one of the more useful and legal 'tax avoidance' mechanisms available to the very rich ... and most members of the US congress are very rich ... most of their important contributors are very rich ...

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    When you have a country full of educated people, and they can't find a job, something is wrong. I know so many college graduates who can only find retail jobs.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    ^^^ What's wrong is that similarly educated people in countries like India, Mexico, China etc. are willing to perform the same highly skilled job as your American college graduates but at a significantly lower pay rate, and with significantly lower mandated benefit costs to the employer ! Initially this 'lower cost competition' came in the form of foreign workers being allowed to work in the USA via H1B and other special Visa programs. However, US employers bringing foreign college educated professionals into the USA to work, even at a comparatively lower pay rate, still meant that the employer had to pay social security / workmen's comp / health insurance / retirement benefit costs etc. on behalf of these workers the same as they do for American workers. So to save even more money, US employers then turned to outsourcing i.e. rather than bringing foreign college educated professionals into the USA to perform skilled jobs like computer programming / engineering / X-ray interpretation etc. at a pay rate that was marginally lower than that of similarly qualified Americans, they could have this work done overseas and thus avoid having to pay social security / workmen's comp / health insurance / retirement benefit costs as well. In the final analysis, globalized 'skilled labor cost' differentials are now affecting highly educated and skilled American workers in a very similar way that globalized 'unskilled labor cost' differentials have already affected unskilled American workers.

    Besides the substitution of lower cost skilled foreign talent for former American talent by private sector industries, there is also a new phenomenon which is affecting entry level jobs in the public sector. Governments are bound by regulations preventing outsourcing, as well as bound by strict (usually union based) pay scales in regard to employee pay rates and especially employee benefit costs. With tax revenues now falling significantly both due to declines in real estate property tax assessments and in regard to the loss of income tax revenue due to loss of former high paying jobs, many state and local governments are now faced with making forced cuts in budgets. Since many areas of state and local gov't spending are mandated and thus can't be cut (i.e. medicaid, social welfare programs), and since (usually union based) contracts with employees like teachers / police / counselors / medical professionals prevent pay cuts or benefit cuts to existing public sector workers, one of the few 'easy' areas open to state / local gov'ts to cut spending is to NOT fill open positions. This of course directly impacts the availablity of 'entry level' public sector jobs for new college graduates.

    All of these developments in regard to job opportunities for recent American college graduates appear to stem from exactly the same lines of discussion as addressed in Mike Shedlock's article above ... although they arrive at their destination via a slightly different road.

    ~
    Last edited by Melonie; 06-12-2008 at 12:57 AM.

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    Default Re: 'Are Subsistence Wages Killing the US ?"

    If we don't stop the flow of outsourcing, most the decent jobs will be gone. I'd like to see companies that outsource jobs be taxed heavily. Nothing makes me madder than calling a customer service place, and getting someone from another country. Meanwhile, people with degrees here are suffering because they have huge student loan debts and no job.

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