Some, in arguing against unions, maintain that increasing union wages can only increase cost in the end because the companies paying higher wages will just pass on the cost. This opinion completely disregards the fact that maybe the executives and managers are overpaid. An equivalent decrease in executive pay alongside an increase in worker pay would therefore lead to no additional costs to the consumer. This is not hard to achieve since executives are making over 300 times as much as their workers.
Or are those arguing against better pay for workers merely unwilling to see management take home less? Is it that under no circumstances must executives receive less compensation, only workers must sacrifice? Executives can have golden parachutes, secure retirements, paid country club memberships, use of the company jet, and perks as far as the eye can see in perpetuity. But the workers are at fault for budgetary issues? The workers must sacrifice and go without? The $12 an-hour they are making is too much?
H/T to capper at Cognitive Dissidence.
Have you ever tried to replace a CEO? A CFO? It aint easy. It’s very similar to trying to replace Shaq or Michael Jordan. Yes, we can put someone else in the position, but it’s just not the same. That difference is what costs so much, how much is that difference worth? Well the answer is $millions.
Now, on the contrary….try to replace a $12/hour worker. It’s just a fact that it’s easier. And yes there is a difference between one worker and the next, but how much is that difference worth? Sometimes not all that much. I mean does a TV really know if it’s made in China or in the US? Um no.
It’s just Economics 101: Supply vs Demand.
But let’s take your example and run with it. Let’s lower the Executives pay. What will happen? Um, maybe they’ll move to another company that will pay them better. How much is it worth to have them stay? $Millions? Maybe. Perhaps they will stay with the shorter paycheck, but will they be as willing to sacrifice their time and effort if say…bonuses are cut? Maybe not. How much is it worth to keep the incentives high? $Millions? Maybe.
“…are those arguing against better pay for workers merely unwilling to see management take home less?” Likely no. Instead it’s that they realize the consequences of management walking away vs workers walking away.
Rich, you are asking too much of most people when you ask them to understand Economics 101. They don’t understand economic reality, they are only thinking of fairness. Which is all well and good, but capitalism isn’t fair. If you want fairness, the government should mandate that everyone makes the same, whether CEO or worker. Let’s see how that works. I know Obama said that he wanted to spread the wealth around, maybe he would be on board with that idea.
I suggest unions start informing their members of basic economics instead of always trying to convince them that they got a raw deal. But if they can’t keep people discontent, then union bosses can’t keep the rank and file under their thumb. And that is Politics 101.