Inequality: Should the government be concerned about it?

[Veritas]

Good to see you finally arguing against businesses taking advantage of their laborers.

"Wages have fallen to a record low as a share of America’s gross domestic product. Until 1975, wages nearly always accounted for more than 50 percent of the nation’s G.D.P., but last year wages fell to a record low of 43.5 percent. Since 2001, when the wage share was 49 percent, there has been a steep slide.
...
From 1973 to 2011, worker productivity grew 80 percent, while median hourly compensation, after inflation, grew by just one-eighth that amount, according to the Economic Policy Institute, a liberal research group. And since 2000, productivity has risen 23 percent while real hourly pay has essentially stagnated."

http://www.nytimes.com/2013/01/13/s...ductivity-climbs-but-wages-stagnate.html?_r=0

What is an employers "fair share" of the work done by their employees? The employers share has been increasing and the employees share of their own labor has been decreasing.

I agree that there are parasites in our economic system, but it's not the working poor (who are often the recipients of wellfare), but some of the business owners (generally large business owners, rather than small business owners) who are confiscating increasing amounts of the productivity of their labor force.

The CEO of Walmart didn't earn that $20 million all by himself.

Don't worry, at least bonuses are fair and balanced...

"The New York Times reports that Walmart US CEO William Simon’s contract gave him the opportunity to earn a $1.5 million bonus last year on top of $10 million in salary and stock awards if the company’s American net sales grew by 2 percent. But net sales grew only 1.8 percent last year and Simon still received his bonus. That’s because Walmart calculated an “adjusted” sales growth over 2 percent that “corrected” for a series of factors that it said were beyond Simon’s control. Similarly, the company’s proxy statement reveals that executives would still receive a cash incentive even if the company’s total operating income declined by 1.5 percent.
Simon’s “performance pay” can be compared to the pay structure for Walmart associates revealed in an internal document last year. It lays out the hourly wage bonus that associates receive based on five different levels of performance. After calculating the annualized bonus associates receive if they work 52 40-hour weeks per year, it’s clear that Walmart doesn’t use the same pay structure for its executives that it uses for its associates. An associate who is graded “below expectations” or “needs improvement” won’t get any extra pay. A “solid performer” will receive $832, “exceeds expectations” nets $1,040, and a “role model,” the highest grade, is awarded $1,248. This means an associate can get an 8 percent bonus over the minimum wage when she is a role model, and a CEO can still get an 11 percent bonus when he misses his objectives."


Walmart US CEO Gets A $1.5 Million Bonus For Missing Expectations While A Worker Gets $0 | ThinkProgress

Most employers are not large corporations.

https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

Small businesses make up:

99.7 percent of U.S. employer firms,
64 percent of net new private-sector jobs,
49.2 percent of private-sector employment,
42.9 percent of private-sector payroll,
46 percent of private-sector output,
43 percent of high-tech employment,
98 percent of firms exporting goods, and
33 percent of exporting value

These small businesses were started by an individual just like you. Jobs and pay are based on market forces (and gov intervention). Most of these businesses struggle often to make payroll and provide benefits. Of those that are very successful, the owners are still risking their capital and livelihoods daily. Stop focusing on a few large corporations and CEO's. They just don't matter.

 

[whatbogsends]

Most employers are not large corporations.

https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

Small businesses make up:

99.7 percent of U.S. employer firms,
64 percent of net new private-sector jobs,
49.2 percent of private-sector employment,
42.9 percent of private-sector payroll,
46 percent of private-sector output,
43 percent of high-tech employment,
98 percent of firms exporting goods, and
33 percent of exporting value

These small businesses were started by an individual just like you. Jobs and pay are based on market forces (and gov intervention). Most of these businesses struggle often to make payroll and provide benefits. Of those that are very successful, the owners are still risking their capital and livelihoods daily. Stop focusing on a few large corporations and CEO's. They just don't matter.

But, per your statistics, most (by a small margin) employees are employed by large businesses.

Small businesses comprise 49.2 percent of private-sector employment., leaving 50.8 percent of private-sector employment provided by large businesses.

Additionally, of small businesses, 78.5% of them have 0 employers other than the business owner.

My criticisms of business practices have been specifically directed at large businesses, and wage structures in them.

 

[super animator]

Envy rules the day in the social justice/income inequality debate

If you ad hominem attack that is.

 

[MachZer0]

If you ad hominem attack that is.

And that's a big "if" since it hasn't happened

 

[super animator]

And that's a big "if" since it hasn't happened

If you ignore it,

 

[whatbogsends]

Envy is central to the debate. If one feels victimized by income inequality, the solution is to increase one's income by taking appropriate steps. If one determines the steps to take are to take the income of others rather than earn one's own income, that's envy

I'm not victimized by extreme income inequality, but others are. Me advocating for those less fortunate is not envy. I don't find the term "income inequality" to be representative of the issue, as no one is arguing that all wages should be equal, rather that low end wages aren't providing a living wage, such that full-time minimum wage workers qualify for government assistance. By this measure, government is effectively subsidizing businesses who engage in this practice.

If an objective analysis shows that corporations are being more productive (they are), but paying their workers less (they are), criticism of those wage structures and their effects is not representative of envy, but of desiring a just outcome in the marketplace for labor. I want to live in a society in which a fair days work yields a fair day's pay.

I don't argue that CEOs shouldn't make more than the employees in their company. I don't even argue that their wages should be within a factor of 10 or even 20 of their employees. I do, however argue that when CEO wages are a factor of 300 of their employees, those wages aren't a reflection of the value provided by the CEO, especially as many CEOs make such exorbitance wages while their company performs poorly.

"Consider the case of Richard Fuld, who ran Lehman Brothers from 1994 until 2008. Fuld made the list of America’s twenty-five highest-paid executives for eight years in a row, until the bank collapsed under a slew of bad investments. The Lehman bust was the largest bankruptcy in the nation’s history and a defining event in the financial crisis. For his leadership in the eight years prior to the collapse, while the firm was making bad bets and covering them up with accounting tricks, Fuld raked in more than $466 million.

Then there’s Vikram Pandit, former CEO of Citigroup. Pandit made the top-twenty-five list in 2008, earning $38 million. That same year, his firm laid off 75,000 employees, and took government bailouts ultimately exceeding $472 billion. Pandit accepted only $1 for his services while his firm was in the red, but by 2011 he was back on the list of top earners.

These cases of gross overcompensation for poor performance seem exceptional, but in fact they’re representatives of a trend. A twenty-year review released today by the Institute for Policy Studies found that the records of nearly 40 percent of America’s top-earning executives include leading their firms to bankruptcy, government bailouts, fraud-related fines and settlements, and their own firing."

Paying CEOs Top Dollar for Poor Performance | The Nation

Somehow you think fair that CEOs lead their companies into bankruptcy, while pocketing more money each year in their job than most workers will earn in their lifetimes.

 

[ThatRobGuy]

In this society it is the rich who are the parasites.

I don't even know why I'm asking you...

But please elaborate on why you feel this way...and explain why you see the rich as a monolith instead of as individuals.

The reality is, there are parasites at every point of the wealth spectrum...of course, that reality doesn't fit in with your agenda.

 

[ThatRobGuy]

Let's say your dad owns a family farm valued at $5million dollars and leaves it to you when he dies. That leaves you with a tax liability that you likely can't pay unless you sell the farm and put yourself out of business

If the farm is a business (which it sounds like it is) if the plan was for you to take it over, you would already have shares and/or partial ownership in that business would you not?

 

[Veritas]

But, per your statistics, most (by a small margin) employees are employed by large businesses.

Small businesses comprise 49.2 percent of private-sector employment., leaving 50.8 percent of private-sector employment provided by large businesses.

Additionally, of small businesses, 78.5% of them have 0 employers other than the business owner.

My criticisms of business practices have been specifically directed at large businesses, and wage structures in them.

Unfortunately, you've made the mistake of assuming that if it's not a small business of 5-25 employees it must be a big business. There is a HUGE chasm that separates the two. That's the space that mid-sized companies fill. There is a big difference is scalability between 100 employees and 100,000+. Understanding these differences will hopefully help you appreciate just how hard it is for the AVERAGE employers. Hate Walmart all you want. It just doesn't matter. You're wasting your energy.

http://247wallst.com/special-report/2013/08/21/the-10-largest-employers-in-america/2/

 

[whatbogsends]

Unfortunately, you've made the mistake of assuming that if it's not a small business of 5-25 employees it must be a big business. There is a HUGE chasm that separates the two. That's the space that mid-sized companies fill. There is a big difference is scalability between 100 employees and 100,000+. Understanding these differences will hopefully help you appreciate just how hard it is for the AVERAGE employers. Hate Walmart all you want. It just doesn't matter. You're wasting your energy.

The 10 Largest Employers in America - Wal-Mart Stores (NYSE:WMT) - 24/7 Wall St.

Who said anything about "5-25" employees?

"Small business" as defined by your first link was < 500 employees.

"The Office of Advocacy defines a small
business as an independent business
having fewer than 500 employees."

Businesses of less than 500 employees comprise 49.2% of the private sector employees per your link. Unless there is another type of private sector business besides <500 employees and > 500 employees, then by your data, 50.8% of private sector employees are employed by businesses with >500 employees.

Understand your own data before making false claims as to my understanding of the data.

 

[doubtingmerle]

Do you agree (per my previous scenario) that if the bottom 10% receives a positive increase of 10% in their income that would be good for the economy even if it nets in a 100% increase for those at the top? Or do you disagree. (yes or no answer please)

Ken

It depends on your definition of "income".

If by income you mean these people will all receive a net increase in pay, but there is no increase in total goods and services available to be consumed, then by definition that is not good for the economy. Since the total supply of goods and services is the same in either scenario, then there was no net improvement in the prosperity of the people. Further, the rules you propose would let the rich have a higher percentage of a fixed supply of goods, and leave the poor with less. Further, if incomes are increased by that extent without an increase in the supply of goods, it will probably lead to runaway inflation that would ruin the stability of the economy, and that could lead to a crash. So no, that would not be good.

But if by "income" you mean that not only will their pay increase, but also the net supply of goods and services will increase, then by definition that is good for the economy. However as I have stated previously, this is based on total fiction. The total supply of goods and services can increase only incrementally when things are good (several percent per year). But today's world is so limited by natural resources, that it is becoming doubtful if any country can experience significant increases in total supply of goods and services. So this is like asking if everybody got a personal genie that gave them everything they asked for, would that increase their wealth? Well yes, but this is strictly fiction.

And the other question that comes up is whether the majority of people will say that such a government best effects their happiness and safety. The framers of the Declaration of independence remind us that it is self evident that when most people think a different government is better for their happiness and safety, they will then often revolt and seek to establish a new government. If the rules of government doubles the wealth of the rich, and only marginally increases the wealth of the populace, than the populace might well decide that a different government with different rules is better. And if the populace decides that, then obviously that is a major upset to the economy.

So no, one cannot answer such questions with a simple yes or no. Does that answer your question?

 

[doubtingmerle]

It's an agreement based on supply and demand. Where workers are scarce, the wage is higher. Where workers are plentiful, the wage is lower.

And when wages drop below what can sustain the workers, then what?

If oil prices drop so low that we shut down some oil wells, that is the market.

But if wages drop so low that we kill off the extra workers, that is a moral issue.

And no, it is not just a matter of the workers choosing jobs that pay better.

 

[Veritas]

Who said anything about "5-25" employees?

"Small business" as defined by your first link was < 500 employees.

"The Office of Advocacy defines a small
business as an independent business
having fewer than 500 employees."

Businesses of less than 500 employees comprise 49.2% of the private sector employees per your link. Unless there is another type of private sector business besides <500 employees and > 500 employees, then by your data, 50.8% of private sector employees are employed by businesses with >500 employees.

Understand your own data before making false claims as to my understanding of the data.

Ok. Just so I don't misunderstand, you think there's no difference between a company that has less than 500 employees and one that has 300,000. Correct?

 

[1000Flames]

Ok. Just so I don't misunderstand, you think there's no difference between a company that has less than 500 employees and one that has 300,000. Correct?

You did.

 

[MachZer0]

And when wages drop below what can sustain the workers, then what?
If oil prices drop so low that we shut down some oil wells, that is the market.

But if wages drop so low that we kill off the extra workers, that is a moral issue.

And no, it is not just a matter of the workers choosing jobs that pay better.

Then workers go somewhere, making them scarce causing wages to go back up

 

[doubtingmerle]

Then workers go somewhere, making them scarce causing wages to go back up

And where exactly will the low wage workers go? Many of them are skilled workers that cannot get the jobs they want. Do you really think they are working minimum wage at their choice?

 

[doubtingmerle]

There's no such thing as the employer's fair share of the work done by the worker. There is an agreement between the two as to how much the worker gets and how much he is expected to produce

But the terms are often set up so the employers get to set the wages on their terms. Years ago powerful unions allowed labor also to have a seat at the table. But that is not the way it is today. Today those with control of the means of production decide the rules. But why would not the powerful union days have just as much legitimacy as the modern system?

Jefferson said the guiding factor should be whether the system best effects the happiness and the safety of the people. Do you think your system best effects the happiness and the safety of the people? Because I strongly think not.

Just curious, but do you like Feudalism? In feudalism there was no strong central government so powerful forces grabbed all the means of production. Everybody else was marginalized, and had no say in the matter. They had no choice but to sell themselves to the powerful feudal lords in exchange for food and protection. Does that sound like a good system to you? Because everything you are saying seems to indicate you want things to be more like Feudalism. If not, how does the philosophy of your system differ with the philosophy of feudalism?

 

[doubtingmerle]

Incorrect. Envy isn't part of the debate

Have fun trying to convince Machzer0 of that one.

Actually I think he knows you are telling the truth. Because when I asked him if his ad hominem attack accusing others of acting out of envy applied to anybody, he would not answer. And whenever he was asked about anybody in particular, he says it does not apply to them. Well guess what? If it doesn't apply to anybody, then it is false. But that doesn't seem to stop Machzer0. He goes on pretending that it applies to somebody while denying that it applies to anybody in particular. Go figure.

 

[doubtingmerle]

The rich do not pay the most taxes, they pay ALL the taxes.

Top 40% of taxpayers pay ALL the tax. The lowest40% pay NOTHING! The very bottom 10% actually get tax credits that make them negative taxpayers!

But keep hating on the rich even though they are providing most of the wealth redistribution the lower 40 enjoy!

What about the middle 20%?

And yes, the lowest 40% do pay taxes: social security taxes, sales taxes, property taxes, etc. It is true that many college students, elderly, and those in extreme poverty don't make enough to pay income tax, but they still pay taxes.

 

[doubtingmerle]

Taxing a purchase vs. taxing your earnings

Except the earnings come because government allows us to make earnings. Without the government much of our earnings would not be there.

Businesses depend on roads, education of workers, infrastructure, police forces, defense, etc. Without government much of their earnings would disappear. So by no means is it wrong to charge them for the privilege of making money here.

And most of all they are depending on government to establish their legitimacy to the land and their suppliers land. Without that legitimacy, they would be left with defending whatever they could, and would have no legal claim to say that they own the land and its bounty.

So I can't see that it is stealing to charge them for all the bountiful opportunities they get because we the people, through the government, give it to them.