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CyanideKAide t1_j5ldzcw wrote

As it turns out, the CEO makes the company more than 400x the amount of an individual worker. Pay is really just cash in compared to cash out, mixed with supply/demand for the position


Me_Melissa t1_j5lpvx4 wrote

Do you really believe this? What is the frictionless mechanism by which a worker can get fair compensation for the value they bring to the company? Quit their job? That sounds smart...


CyanideKAide t1_j5mg87d wrote

Unionize. That’s how you get shit done. Weekends, 8-hour days, minimum wages, all of those were started by unions. I do really believe that’s how the world works, because that’s what I went to college and studied on for four years.

It’s unbelievably fucked, but that’s how capitalism works. Higher level executives make a much bigger impact, even though the frontline worker works harder and has a tougher job. But that doesn’t matter for wages. It’s not based on how hard you work, but instead your wages are based on money in compared to money out, and the supply/demand for the labor for your role.


Me_Melissa t1_j5puiiu wrote

You're right. Even when I was countering, I was thinking it. A CEO's direction impacts the behavior of tens of thousands of employees. Even if those behaviors only average earning the company an extra $10/mo per individual employee, that's already millions a year.

It's worth noting that the CEO's value is also embedded in the structure of the company. The hierarchy guarantees by definition that the CEO can have the biggest impact. If a company were more horizontal in its leadership and direction, then there would be less of a discrepancy in the amount of money different employees can earn the company with their ideas.


madattak t1_j5mkobo wrote

If you're a company that has multi-billion dollar profits, it makes sense to pay millions for a CEO who can improve profits by even just a percent compared to a cheaper one and this is the justification you'll often see used - as companies have gotten bigger, the potential value a CEO can bring increased and so their compensation does too.

Just one small problem - at the far end of the bell curve the differences in skill are lost entirely to statistical noise and what studies exist show that CEO pay depends primarily on factors outside their control - I.e. Luck.


dr_reverend t1_j5me98v wrote

But they don’t. You could simply cut a CEO out of a company for months if not years an nobody would ever know. Try doing that with the average workers and then tell me which one makes the company more money.


CyanideKAide t1_j5mfmfk wrote

I’m not saying they’re essential to the business, I’m just saying that a CEO coming up with a restructuring model, once, can save millions of dollars a year for a big company. There’s really nothing that a grocery store cashier can do that will save the store millions of dollars, and the labor of a single cashier make turn the store 10 or 20 thousand dollars a year. It’s just a matter of scale. Someone making big decisions that impact hundreds or thousands of workers has a way bigger impact than someone on the frontline of the business. That’s why you want to find a really really good one, and to do that you’ll need to pay what they ask for, because if you don’t, another company will and you’ll lose your guy.


BurnTheBoats21 t1_j5mgb8s wrote

I get the merit behind that, but if it were true, it would be an amazing financial hack that shareholders can use to cut expenses. Instead, it's an unbelievably competitive market to attract and hold executive talent, so it seems clear that the market supply and demand drives that salary growth.


dr_reverend t1_j5mn3cb wrote

Again, if they are that valuable then why not just hire a great CEO and fire everyone else. If he is worth 400 regular workers then he should be able to manage just fine.

Sorry, I don't deny that good management is important but it simply is not that valuable that one person should be a multi million / billionaire while every one under them has to buy food stamps.


BurnTheBoats21 t1_j5mplgt wrote

I get it. but shareholders care about making the max amount of money and they don't give a shit if a CEO is rich or broke. The fact that the market has driven exec. wages up shows that there's a value add there. it's depressing and unethical, but the free market has demonstrated that it is a worthy expense if you want to remain competitive.

I think the conversation should start at legislation that regulates the free market so we don't do this to ourselves, not a question of whether or not they're worth paying that much. If they weren't worth it, nobody would pay them that much. that's it.


trevor32192 t1_j5mymm5 wrote

The market doesn't determine anything. It's such a cop out. They arent worth it there is nearly zero impact.


pookiedookie232 t1_j5mzg95 wrote

Not worth it to you maybe, but if it's not your company your opinion doesn't matter


trevor32192 t1_j5mzsw4 wrote

Not worth it to anyone. There have literally been studies that show ceo impact is basically a statistical error. They basically do nothing. The only reason they are massively overpaid is because they are budies with the boards which often consists of other ceos and rich people.


pookiedookie232 t1_j5mzzol wrote

It must be worth it to someone or they wouldn't pay it. You don't get to decide what is worthwhile to others.


trevor32192 t1_j5n0bfc wrote

Can you even read my responses? Ceo impact is a rounding error this isnt debatable its empirical fact.

If you pay 20k for a piece of dog shit it doesn't suddenly make the dog shit more valuable.


pookiedookie232 t1_j5n0ib9 wrote

You apparently don't understand that other people get to value things differently than you.

Your measure of worth is not the same as everyone else on earth.


trevor32192 t1_j5n3w1z wrote

No I just can recognize a scam when I see it. It's not an opinion when there is empirical data.


pookiedookie232 t1_j5n5nkq wrote

The numbers may be empirical, but whether it is worth it or not is a matter of opinion.

Is $5,000 a lot of money? Opinions will vary, but the amount in question is the same.


pookiedookie232 t1_j5mzdho wrote

You may not think they are that valuable, but if it isn't your company your opinion doesn't matter.


CyanideKAide t1_j5nehuk wrote

That’s why I said it’s a mix of money in/money out AND supply/demand. It’s very cheap to replace a cashier