[ijl]

Flat wages really aren't, for the reason that labor productivity has historically and consistently increased slightly every year. Some shared split of productivity gains between corporations and employees accounts for great wage increases during the '40s, '50s, and '60s. Why there hasn't been an increase in wages for most workers from the '70s on is an interesting economic and sociological issue.

[georgemcbay]

"Why there hasn't been an increase in wages for most workers from the '70s on is an interesting economic and sociological issue."

One that can be summarized thusly: "Top executives are taking all that money for themselves".

Average CEO in 1970, $700,000/yr, 25 x worker average.

Average CEO in 2012, $13,000,000/yr, 380 x worker average

[guard-of-terra]

Which is interesting because I believe traditionally when calculating production costs, you added materials required to produce an item and a hourly salary of workers making an item divided by the number of items they can make in an hour. You could throw in marketing and advertising bugdet too.

The management salaries weren't the part of the calculation. They were considered constant and therefore insignificant in the mass production.

But now, when your CEO makes 380x worker average, and the rest of the apparatchiks make the same combined, and you have 250 workers - then it is no longer wise to "optimise" worker salaries at all because they are by far not the biggest expense!

That's capitalism turned upside down. And I know it because I see how people are able to account for recurring costs but put a blind eye on development and management costs.

P. S. Maybe it tells us it's CEO/traditional management who need to be disrupted now. In some areas you can imagine a worker's cooperative paying 1.5x average salary to workers, outsourcing their management cheap, and still being insanely competitive thanks to no apparat spendings.

[Evbn]

Your number of workers is off by a factor of 10 or 100 for the average CEO's company.

[guard-of-terra]

When I say "workers" I only mean people who are in the direct making of the product. Most people on the payroll share the property of not being properly accounted of when the production costs are calculated with CEO. And that's the group we want to optimize today.

[maigret]

Not if you count all the executives. I think the GP has a point.

[mahyarm]

Aren't managers & executives the new knights & lords?

[WettowelReactor]

Salaries are one of those numbers where averages are a very poor metric. The compensation for the highest earners tends to be astronomically more than those a few percentage points lower on the pay scale. I suspect the median salary of CEO's is still somewhere around the 750K range.

[prostoalex]

It's questionable that a board has to decide between paying the herd of Exchange-fixing server-rebooting IT people and their executive. Most of the time the executive salary is set beforehand in board meetings, so it doesn't come as a surprise end of the year.

[perry5000]

Average employees in a Fortune 500 company: 28,000

($13,000,000-$700,000) / 28,000 = $439

[maigret]

Even if the GP forgot that... CEO compensation < executive compensation.

[phillmv]

Okay. What are you arguing here?

Income has remained stagnant for the past 40 years. I don't understand how the massive gains achieved in the 40-60s is relevant.

The whole story behind the 1% thing is that for the past two generations the benefits of the massive productivity gains we've since achieved have gone disproportionately to owners of capital.

When we talk about income, we're really talking about a fraction: nominal dollars over the cost of living. The point isn't that there have been no wage increases, the point is that they've barely kept pace with inflation. Someone born in 1935 living in 1965 had experienced a huge shift in real wealth and had every reason to expect that as society's wealth increased so would his.

This is no longer the case.

[perry5000]

Number of people who own TVs, cars, refrigerators, air conditioning, dishwashers, microwaves, ovens, appliances, entertainment devices, mobile phones, copy machines, personal computers, laundry machines, among the plethora of several other consumable goods have gone up substantially. Try buying a personal computer in 1970, and see how much it'll cost you. Each device I've mentioned have also substantially improved.