Thread: Twinkie for your thoughts

Originally Posted by mapleleafalumnus

The chart didn't provide the average yearly changes (ranges) I sought.
Between 1950-59, that average yearly change (fluctuation?) = 2.577. Highest recorded score = 9.36, lowest = -2.08
Between 2010-12, the average yearly change (fluctuation?) = 1.78. Highest recorded score = 3.87, lowest = 1.05

Inflation was, on average, higher in the 1950s.

Sorry for the delay, my old elementary stats prof always told us to crunch our own #s. Old habits and all, I guess.

David --
Isn't inflation usually one of the sticking points in any contractual negotiation?

Thanks for figuring that out bro - now to be a real @ss - what about nominal vs. real LOL <- just joking... just joking.

IMHO - price is the biggest sticking point in any contract negotiation. That said, the reason you might be thinking inflation is because historically on average, America sees a 3% inflation rate per year. Hence, if you don't get a raise for 2 years you are in effect loosing close to 6% in wages. But it's kind of a crap-shoot.

Time value of money - what would you rather have? $60 today or $20 for the next three years. With inflation you are loosing money if you take the annuity of $20 a year.

Hockey players contracts can get very complicated if you don't understand time-value because some players sign TO PLAY for say 2 years but GET PAID over a 5 year period. If inflation isn't accounted for the player gets robbed.

May times the terms will be indexed. In other words they'll take the inflation rate of the previous year and add it to the next years payments. It's all great fun really but not to be silly - if it's not accounted for it's a great way to screw a dude out oh cash.

Anyway - I hope that makes sense lol.

Make sense?

Originally Posted by maddafinga

So you think that the current ceo pay of 231 tines the average employee's salary reflects the economic value he provides?

I think it depends on the situation, but in many cases it does.
For instance: If you have a company (or are on a corporate board) and can bring in someone who will make the company more profitable by several hundred million dollars, would it be worth paying them fifty million?
The amount the employees earn is irrelevant.
That said, if a company is not performing well, executives should certainly not be getting pay increases or bonuses.

So in the 50s, did the 60 some odd times the average worker salary then NOT reflect that value at the time?

The size of a large corporation has drastically increased since then, much more than the rate of inflation.

Do the workers salaries, which have stagnated in that time while the ceo pay skyrocketed disproportionately, reflect that the actual workers in the last 40 years are providing less and less economic value?

No. Wages have increased faster than the rate of inflation.
Also, employee salaries should be evaluated separately from executive salaries.

Executives are employees too. All the salaries should be evaluated in terms of the company as a whole, in my opinion.


Salaries have not increased for the average person though actually. They've stagnated, while the buying power of that salary has decreased.

Hostess Twinkies 10 Pack 13 5oz | eBay now if i had known i would have bought 40 boxes and then sold them for a bigggggg profit.

Originally Posted by HNSB

I think it depends on the situation, but in many cases it does.
For instance: If you have a company (or are on a corporate board) and can bring in someone who will make the company more profitable by several hundred million dollars, would it be worth paying them fifty million?
The amount the employees earn is irrelevant.
That said, if a company is not performing well, executives should certainly not be getting pay increases or bonuses.


The size of a large corporation has drastically increased since then, much more than the rate of inflation.


No. Wages have increased faster than the rate of inflation.
Also, employee salaries should be evaluated separately from executive salaries.

Until now...

The reality is, in very simplistic terms, with respect to manufacturing, there are really only three ways for an established company in America to make money:

Sell more stuff

Raise prices

Become more efficient

I know it's simple, but that's really the bottom line. We can add all kinds of things into the mix, but ultimately they'll "kind of" fall into one of those category's.

Much of the spike in the salaries of CEO's in the recent past is because of reason number 3. Becoming more efficient. We have embraced awesome new logistics systems and new manufacturing systems, all at the expense of "the worker." That's not a bad thing - it is what it is. Moreover those things that still required labor intensity, we farmed out to nations who's workforce works for pennies to our dollar. America is REALLY good at efficiency!!

Anyway, that in itself creates an enormous amount of "savings." The thing is, the glory days in manufacturing where American firms could sustain insanely high CEO salaries because of said savings is over. It's kind of like the when the industrial revolution became the new normal.

Short of an unforeseen advance in some kind of technology, Wall Street and high priced employees have made manufacturing in America as efficient as it can be, and the glory days where they could claim 20% growth per year have dwindled down to well under 5% for the great majority.

All that's left is to create unsustainable models where the product is junk, or the company grows so rapidly that it can't manage itself properly.

Anyway - that's the way I see it - thanks for reading.

You know what is cool?

Straight razors.


And everything that goes with them.

^^ that's true ^^ But I want to thank everyone because I think I have the topic for a paper!! I believe I am going to prove everything I said, and get a grade for it lol!!

It is unlikely that mfg in America is as efficient as it can be. Having been in mfg for a few years now, I recognize that there is always room for improvement. One is never as good as he can be.

This has been a great topic.

Jeff

Originally Posted by TURNMASTER

It is unlikely that mfg in America is as efficient as it can be. Having been in mfg for a few years now, I recognize that there is always room for improvement. One is never as good as he can be.

This has been a great topic.

Jeff

I agree.

Here are some thoughts that I have had for a while. My numbers have no backing but I think are reasonable, and I am using imaginary countries and wages because I realize we live in a global economy.

The raw product is produced in country X and then shipped halfway around the world to country Y. The worker in country Y makes 10,00 widgets an hour for a wage of 1 Z per hour. They then ship it back to country X. The worker in the same industry in country X makes 30 Z per hour and makes the same 10,00 widgets per hour. The labor cost per widget is 30 times more but I can't see where the shipping cost doesn't eat up that difference since the cost of labor per widget isn't that big of a difference.

Obviously I am missing something. Show me the error in my thinking.

It depends on where the inputs for the finished product are made...

For the company I work for, one of the cheapest inputs is labor, no matter what country that labor is from.

We have one shop in the US and one on Mexico - the largest determining factor for what gets made where has much less to do with labor costs than it does with where products are being shipped.

Edit to elaborate:
We make parts for tractors and industrial machinery. The company that makes the machinery has assembly plants all over the world.
Working backwards through the chain: an area of the world has a large demand for brand X tractors; brand X builds an assembly plant in that area rather than shipping finished products there; suppliers like us put shops near the assembly plants; our suppliers set up operations near us; and so on...

If all of this sounds bad for American workers, it's not - there are still plenty of plants here, and these products are selling on a global market, bringing a lot of money back here.

There's also the economic concept of comparative advantage, whereby we benefit as an entire economy from focusing on the things that are most profitable and farming out the rest.

Back to the company I work for - our USA business is stronger by also having a shop in Mexico. It's not a loss of jobs for USA workers; those jobs wouldn't exist here.