120k a year isn’t enough

[volfanhill]

Everyone tends to forget that every business is in business to make money for the stockholders, not to provide jobs. If you treat your employees like **** your business will suffer and eventually fold because you are only as good as your people.

Ding Ding Ding we have a winner

 

[AM64]

Davis-Bessey? Lake Erie is a beautiful winter destination in January.... for Eskimo's.

Yep, the lake was frozen (at least as far as you could see) between Thanksgiving and mid December. I stopped for gas on the way to the plant one day, and while I was filling the car the slush that accumulated on the shift linkage froze - couldn't even drive away from the pump. We did some testing of the reactor internals during hot functional testing and were set up in a small test shack in containment - no fuel loaded. I used to get in and bask in the 100+ degree heat before I went in our shack - which was air conditioned.

 

[SpaceCoastVol]

I might be. What are the two different things you see?

I think a 'living wage' argument should be taken care of by the market. Employees that are able to make (extra) good money in their given vocation is something else. I am probably not doing a good job of articulating what I am trying to say, but I don't think government should be involved at all in determining what is a 'living wage', because that is highly subjective and geographically dependent. Admittedly I haven't investigated this story all that much, but I have no doubt it is the same ol same ol... Management crying poor mouth in the face of record profits, cutting themselves huge checks and wanting concessions from labor.

 

[SpaceCoastVol]

Took a pay cut or job loss?

I’ve been a part of a factory closing. Just means it is time to find something better.

I lost half my pay and my pension in bankruptcy. As to finding something better, pilots are married to their companies because of the way our seniority works. I am a senior captain now. If I left here and went to American or United, I would start as the most junior copilot at the company. Managements know this and they take advantage of it.

 

[AM64]

Sorry, but that is the benefit of having a union and a contract. A contract is signed by management as well, and they know what is in it. If they choose to staff/operate the business in such a manner that some workers are able to take advantage of those provisions and make money, then good for those workers. All those C suite inhabitants have contracts that allow them to manipulate such things as stock prices to their advantage and nobody on this particular thread says much if anything about that being unfair or ridiculous. Just as an example in my own situation, there are ways to use the contract to one's advantage which allow some of my copilots to make way more in a year than I do. There have been times when in a cockpit of 4 pilots, I was the lowest paid, and two of the guys are junior to me.... and we are flying the same exact trip.

That's the part that drives me crazy. Maybe in the past stock ownership by execs was a good thing ... maybe. Right now it's toxic. Screw the future for short term profits and make a bundle on what the stock does. I've done a 180 on exec stock ownership to thinking it should be banned - to include the exec's entire family. We need to get back to sound business decisions based on actually producing good products and services and away from making a quick buck by manipulating "investment" markets. I firmly believe that retirement funds parked in markets have completely distorted the concept, and the tail is inducing vibration related traumatic brain damage in the business sector as a whole.

 

[SpaceCoastVol]

There is evidence of your point all around. I think Amazon is one such stock.

But isn't it also true that a mismanaged company is destined for problems if the mismanagement is chronic enough, long enough, and severe enough?

Well sure... obviously. I was just saying that the price of the stock is not absolutely indicative of the health/value of the company. Did you see what happened to AMZN the other day after they announced earnings? They said they missed the analyst's estimates and the stock dropped something like $120/share after hours. The next morning, there was the usual panic selling and rationality took over later in the day. Still down, but not nearly as bad as when the sheep headed for the cliff. I sold puts on is and made some good coin. LOL Anyway, that was my only point. And that illustrates what Jim Cramer calls a 'broken stock' (although there is nothing really wrong here) as opposed to a broken company... which is what you are describing. But even then, I am not sure a company cannot survive with mismanagement. Look at AAL... the have gone from $15B debt pre panicdemic to over $40B now just due to things like borrowing money to buy back stock. DAL on the other hand is back to pre panicdemic debt levels. Wall Street still loves AAL. I don't understand that at all. Sorry I ran so far afield of the original discussion.

 

[SpaceCoastVol]

Your statement couldn't be any more true. I used to call managers that decided to grow profits by cutting expenses denominator managers. They didn't worry about the income side of the equation, only cutting staff, maintenance, benefits etc. These people always left the company in much worse shape than when they found it.

It is the easiest of all solutions. See: Hatchet Jack Welch. The business world thought he was a genius.

 

[SpaceCoastVol]

I need to change jobs then.

Huge difference between small business and big business management.

 

[AM64]

But the companies have chosen to keep a larger and larger portion of the pie for the executives and shareholders. At some point the workers are going to say f#ck this sh!t. It seems that many companies have lost site of a basic tenet of business - focus on growing revenue. Many businesses these days simply look to cut costs instead of fixing the issues and they typically only cut costs from one side of the table.

It's really like one whole side of the business equation has disappeared from thought. To have a market for goods, you have to have consumers. Consumers are consumers only as long as they have income. It's really a simple equation, you pay workers a reasonable income, and they can buy products they and others like them produce. It's a two part issue. First there have to be jobs; sending those elsewhere to make a cheap buck kills your market - eventually consumers do run out of money. Second, those jobs have to enable the consumers to keep the market for goods they produce afloat - that's the pay issue. Why we have seemingly forgotten such a simple concept is beyond comprehension.

 

[hog88]

Huge difference between small business and big business management.

Yep.

 

[VolStrom]

I lost half my pay and my pension in bankruptcy. As to finding something better, pilots are married to their companies because of the way our seniority works. I am a senior captain now. If I left here and went to American or United, I would start as the most junior copilot at the company. Managements know this and they take advantage of it.

One of my friends father was a pilot for United and retired before they filed bankruptcy. She told me her dad lost almost 2/3 of his pension when they filed bankruptcy. Luckily for me my former company hasn't filed for bankruptcy yet, but I expect them to do so eventually, so they can rid themselves of the onerous pension plans that they dangled as a carrot for so many years to get people to hang around.

 

[VolStrom]

It is the easiest of all solutions. See: Hatchet Jack Welch. The business world thought he was a genius.

I used to do a lot of business with GE, and once Jeff Immelt took over they went to hell in a heartbeat.

 

[AM64]

The 'living wage' argument is ridiculous. All it is is a justification for socialistic policy.

There is no justification for paying anyone more than he/she contributes to the job. That's almost the first rule of economics. At the same time, your workers are the people who buy what you and others produce. It's symbiotic. If you can't make it work by paying reasonable wages, then the business model really fails anyway in that the cost of production doesn't produce a reasonable profit. There are actually at least two sets of supply and demand curves at work - one obviously is for the product produced and the other is for the labor the company needs to produce. We've forgotten it is a balancing act - apparently back in the barter days it was an easier lesson to learn and follow.

 

[AM64]

The issue as I see it is that management has overvalued its contribution to the process for decades at the expense of its workers because it can. The issue is coming to a head. Companies that value its workers fairly should have no difficulty moving forward. Kelloggs has enjoyed record profits and is now asking its employees to take a pay cut.

I can liken the situation to situation at my firm. In typical small firms, the associate attorney is supposed to bill enough to generate revenue sufficient that 1/3 of his revenue pays his salary and benefits, 1/3 of his salary goes towards the general overhead of the firm and 1/3 to the partners. You don't make partner until you can prove that you can grow the pie (bring in enough new revenue that making you a partner does not decrease the other partners income). It is always about growing the pie. Associates don't come to the partners and say, "Hey promote me because I will cut the salaries of all the assistants and paralegals to pay for my raise."

I don't think it's so much the issue of what the executive level earns - although you can easily describe a lot of that with words like absurd, obscene, etc. It's really a matter of what they do to "justify" the obscene rewards. The short term goals necessary to manipulate the immediate earnings and stock market outlook frequently goes against what is necessary for long term stability, growth, and simply staying in business. I don't know precisely what happened to GE overall, but that's one high flying company that took a real hit. Perhaps short term thinking for Jack whatshisname simply wasn't a sound path to the future.

 

[McDad]

I think a 'living wage' argument should be taken care of by the market. Employees that are able to make (extra) good money in their given vocation is something else. I am probably not doing a good job of articulating what I am trying to say, but I don't think government should be involved at all in determining what is a 'living wage', because that is highly subjective and geographically dependent. Admittedly I haven't investigated this story all that much, but I have no doubt it is the same ol same ol... Management crying poor mouth in the face of record profits, cutting themselves huge checks and wanting concessions from labor.

I agree with what I think you're articulating.

 

[AM64]

I don't dispute some (many?) companies are top heavy and overpaying for their team. I disagree it is done so at the expense of wage earners.
Your small firm is willing for an attorney to make 1M a year as long as they generate 3M in billings. That attorney is proving their worth. People in the corporate structure have to prove the same eventually.

That's still short term thinking. How affordable is the $1M salary if the $3M billing to accomplish it chases clients to a more reasonably priced firm with similar results. There are still two sides, and companies seem blind to the other side.

 

[VolStrom]

I don't think it's so much the issue of what the executive level earns - although you can easily describe a lot of that with words like absurd, obscene, etc. It's really a matter of what they do to "justify" the obscene rewards. The short term goals necessary to manipulate the immediate earnings and stock market outlook frequently goes against what is necessary for long term stability, growth, and simply staying in business. I don't know precisely what happened to GE overall, but that's one high flying company that took a real hit. Perhaps short term thinking for Jack whatshisname simply wasn't a sound path to the future.

It was a path down the rabbit hole that doomed GE. They quit working on their equipment that had made their reputation and started to become a different company focusing on financials and not industry. They were run by a moron and he killed the company. It's a shame because I really like working with their employees, but in the end they made crap and lost my business.

 

[AM64]

I must have missed the spot where upper management agreed to take a massive pay cut for a lean year. Typically, they just fire (lay off) a bunch of worker bees and head back to the beach house.

That's another part. Few corporate execs at major corporations actually started the firm. It's a fallacy to believe they are anything more than another employee except farther up the food chain and with more influence in the direction of the company. In a sense top level execs have no more invested in the company than any other employee; we generally aren't talking about the guy who built XYZ from the ground up and the company literally is his and represents his sacrifices. The new guy or gal at Ford or GM or GE is not an owner - no skin off his or her nose - they'll land somewhere else ... or live off obscene compensation if they haven't used it up like a Powerball winner.

 

[05_never_again]

If bonuses are tied to margin and they are cutting costs by laying people off then they really aren’t taking a hit in down years.

That said, I think executives largely get a bad rap for doing a difficult job. People act as if these guys/gals are largely unqualified and anybody can step in and do it. The hours and stress these people work under are no joke and you can bet the board will kick them to the curb quick if they dont perform.

Depending on the company, a lot of times executives and senior-level management are not given much autonomy/discretion about how they achieve goals, but are still held totally accountable/responsible for achieving them. Most of their job is navigating the politics of "We want you to achieve X, but in order to achieve X you cannot do Y or Z because of reasons A, B, and C."

Those kinds of jobs, especially at larger companies, do not really seem like they are worth it despite the large compensation. They are senior-level people, but forced to operate in a box either by C-suite execs, board of directors, or some other entity (like an outside investor).

 

[05_never_again]

That's another part. Few corporate execs at major corporations actually started the firm. It's a fallacy to believe they are anything more than another employee except farther up the food chain and with more influence in the direction of the company. In a sense top level execs have no more invested in the company than any other employee; we generally aren't talking about the guy who built XYZ from the ground up and the company literally is his and represents his sacrifices. The new guy or gal at Ford or GM or GE is not an owner - no skin off his or her nose - they'll land somewhere else ... or live off obscene compensation if they haven't used it up like a Powerball winner.

A huge difference between small and large businesses is that large businesses, for the most part, are run by mercenaries.

 

[AM64]

Maybe, maybe not. It really depends more on the expectations of the so called "analysts". The key being the word expectations. The more i invest, the more i realize how much voo doo the whole thing is. I reality, stock price has very little to do with the actual value of the company. Site it's an indicator, but it isn't directly tied to it.

That's the point. Investment markets aren't what they were, don't do what they were intended, and are irrationally driven by a constant influx of retirement funds. They are defying for the time being the law of physics. Investment markets are no different from Las Vegas with some different spin on the "analysis". The house is the mega investors who start trends in the markets and use them to pump out what everyone else puts in. It's a good deal if you are riding the wave they are on, but I think in the long term a lot of retired people are going to find out they paid for some really expensive yachts, airplanes, estates, etc that don't have their names on them.

 

[AM64]

There is evidence of your point all around. I think Amazon is one such stock.

But isn't it also true that a mismanaged company is destined for problems if the mismanagement is chronic enough, long enough, and severe enough?

You don't think Bezos just decided to retire and spend some time in the sun? I'm thinking more like getting while the getting was good.

 

[AM64]

In your hypothetical, you're outlining a company dealing with a temporary slow down by only hitting the 'worker bees'. I am thinking of 'worker bees' as the employees who manufacture, distribute, or service the goods produced. If the slow down is not unique to the company, I don't see why the company would continue to manufacture, or distribute the level of goods as it did prior to the slow down.

Also, I wonder what the layoff distribution between white collar and blue collar employees actually is during a downtown.

Wait! You missed the "Do more with less" speech, and if you aren't on board we can find someone who is?

 

[AM64]

I used to do a lot of business with GE, and once Jeff Immelt took over they went to hell in a heartbeat.

So the question is whether Immelt was a failure or if Welch set the company up for failure and left it in the hands of a fall guy. I'd tend to bet Welch wasn't the business genius he seemed (unless you consider plunderer as genius) and Immelt was the patsy.

 

[05_never_again]

That's the point. Investment markets aren't what they were, don't do what they were intended, and are irrationally driven by a constant influx of retirement funds. They are defying for the time being the law of physics. Investment markets are no different from Las Vegas with some different spin on the "analysis". The house is the mega investors who start trends in the markets and use them to pump out what everyone else puts in. It's a good deal if you are riding the wave they are on, but I think in the long term a lot of retired people are going to find out they paid for some really expensive yachts, airplanes, estates, etc that don't have their names on them.

Markets are and have always been driven by sentiment and human psychology. Human beings do not act unemotionally; they don't sit there all day and never pay more than what a current DCF analysis says a stock is worth. The stock market, especially in the short term but even out into the intermediate term, is more a reflection of market sentiment and psychology than what any company is particular is actually worth today.

Stupidity has been around forever. Google the term "bucket shop." It is at least as stupid as anything going on today.