| Giving management equity was done to mitigate the Principal-Agent problem[2], lesser management(agent) is aligned to shareholders(principal), less likely they will take action on their behalf effectively. However this puts management interest in direct conflict with employees . More you exploit/squeeze the last bit of productivity the law and job market permits you will do so in determinant of employee health, fair and living wages. As a shareholder, that is rational behavior, you only care to maximize returns to the extent permissible by the law[2] . Environment, employees or any other non profit concern cost money if not required by law why should you do it? the competition will not be doing it. They will become cheaper and be able to out compete. Aligning management to shareholders solved the problem for shareholders, but it has made the problems for workers worse, combined with weak labor protections in this country means only protection workers have is the market, if their skills are niche and in-demand they will be able to negotiate better wages, otherwise they are screwed. --- America's unique strong immigration over the last two centuries is why labor protections are pretty weak compared to most of Europe and other developed economies, if citizen labor protests too much, America in the past always imported foreign labor to keep the supply high and market cheap for businesses. Funnily all the right wing anti-immigration rhetoric is really anti-business as it gets- if it actually impacts policy in reduced immigration then workers will be able to push the labor demand-supply equation to their favor as they did in 30s. This is not necessarily a good thing for workers in the long term either, when America no longer is able to attract talent in same way as before, jobs will go abroad instead of being cheap and domestic. --- [1] Even when required by law, we will the follow the law only if there is any real threat of enforcement and penalties actually that are high enough to hurt. When the cost of breaking the law is negligible or non existent the law will likely be ignored. [2] https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble... |