Financial News

[Jenksismyhero]

e.g.

 

Meet the CEO Who Cut Worker Pay in Half While Pulling in $21 Million Last Year

 

What would be your fix here? Federal law capping CEO pay? I'm not sure I'd be ok with that, but I think a federal law mandating public disclosure (and by public, I mean really public, not just SEC filings) of these sorts of figures. Let the people decide if they want to buy products from companies like that. Let people decide if they want to work for a company like that.

[StrangeSox]

I don't know that I have a good fix here. Maximum wage laws would be one potential solution.

 

You can't really rely on consumer choice to prevent this sort of thing, though. There's a limited number of producers that all engage essentially in the same behavior. Even when a company adopts a philosophy of treating its employees well, it's couched in economic/profits language. One example of this is Costco vs. Sams Club. Costco's founder and CEO believes in treating his employees well and offers much better pay and benefits than Sams Club. However, he has to justify this to the board on terms of "employee retention" and "better moral=more efficient workers," ie how it ultimately helps profits. Otherwise, he'd be out on his ass and replaced with someone focused solely on generating the maximum possible return for investors. Our current structures reinforce this ideology, that the only thing that a company should care about is pursuing profits at all expense. Management is rewarded for cutting wages and sending jobs overseas because investors get bigger profits. The notion of any sort of social responsibility for a company is nonexistent.

 

The management team that doesn't follow these profit-maximizing goals is going to find itself out on its ass in a short manner, and you can never ignore the larger Walmart-type effects. Sure, niche markets can exist where higher-quality products and made and sold at higher profits (I have hiking socks that are $8 a pair, lol), but on the larger scale, it'll never work. Even if the Walmart cycle ultimately is terrible for communities in the longterm by driving out local retail and manufacturing, they're going to win in the short-term based solely on price.

 

Here's a book that covers what I'm saying much better than I can:

 

TOM SLEE: NO ONE MAKES YOU SHOP AT WAL-MART, CHAPTER 1

 

As far as "deciding if they want to work for a company[...]," that presumes a lot more choice than most people in the labor market actually have, especially these days.

[Jake]

Yes -- when I see headlines like the one SS posted, it simply points out the flaw in the system. It benefits people to do worse for their employees. I don't have a perfect solution, this is just going to be a growing problem in a post-industrial society.

[Jenksismyhero]

I don't know that I have a good fix here. Maximum wage laws would be one potential solution.

 

You can't really rely on consumer choice to prevent this sort of thing, though. There's a limited number of producers that all engage essentially in the same behavior. Even when a company adopts a philosophy of treating its employees well, it's couched in economic/profits language. One example of this is Costco vs. Sams Club. Costco's founder and CEO believes in treating his employees well and offers much better pay and benefits than Sams Club. However, he has to justify this to the board on terms of "employee retention" and "better moral=more efficient workers," ie how it ultimately helps profits. Otherwise, he'd be out on his ass and replaced with someone focused solely on generating the maximum possible return for investors. Our current structures reinforce this ideology, that the only thing that a company should care about is pursuing profits at all expense. Management is rewarded for cutting wages and sending jobs overseas because investors get bigger profits. The notion of any sort of social responsibility for a company is nonexistent.

 

The management team that doesn't follow these profit-maximizing goals is going to find itself out on its ass in a short manner, and you can never ignore the larger Walmart-type effects. Sure, niche markets can exist where higher-quality products and made and sold at higher profits (I have hiking socks that are $8 a pair, lol), but on the larger scale, it'll never work. Even if the Walmart cycle ultimately is terrible for communities in the longterm by driving out local retail and manufacturing, they're going to win in the short-term based solely on price.

 

Here's a book that covers what I'm saying much better than I can:

 

TOM SLEE: NO ONE MAKES YOU SHOP AT WAL-MART, CHAPTER 1

 

As far as "deciding if they want to work for a company[...]," that presumes a lot more choice than most people in the labor market actually have, especially these days.

 

I'd argue that a lot of "perks" for employment by companies came about because the labor force demanded them. I work for a small law firm and get nothing. My wife works for a hospital and gets a ton of benefits - pension, retirement contribution, health club memberships, one time payments for getting an annual checkup, etc. The CEO and board are still worried about spending money (they're a non-profit, so slightly different situation, but i'm other private hospitals and businesses are the same) but they still offer those perks. They don't need to, but they think it's a way to attract better applicants. Google/Apple/most of silicon valley does the same thing. So while I agree that capitalism is just about chasing the almighty dollar, capitalism can still result in the every man receiving good social benefits.

 

And we can't look at Wal-mart as if they'll be around for all time. They're going to have competitors (Target, Costco, etc) that will do things differently and the money will follow. Starbucks, Whole Foods, Chipotle are all relatively new brands that are financially successful in their respective industries largely due to the fact that people like the way they do business for their employees and in their communities.

[StrangeSox]

Starbucks maybe less so now (who did they displace though? and they still don't treat their employees well), but Chipotle and especially Whole Foods are niche markets (no idea about their labor relations but they have other social positives). Chipotle is never, ever going to displace significantly cheaper options like McDonalds or BK and Whole Foods (Whole Paycheck!) is never going to replace a majority of grocery stores. Either because people can't afford them ($8.99/lb organic chicken vs. a box of frozen Tyson for $9) for the most part or because the short-term (trying to be value-neutral there) benefits of much cheaper food/things are instantly realized and understood while the long-term harm of the destruction of domestic manufacturing, wage stagnation, etc. aren't right in your face as you pay for your groceries.

 

Sort of an aside, but this is the same type of problem with advocating upper-class solutions to many environmental, ethical or economic problems. I buy organic, free-range chicken and eggs because I like the free-range part (and the chicken is substantially better quality), but it's never going to compete on a large scale with Tyson or Purdue. The forces that exist in the market will pretty much assure that. It's all very cyclical, with people not being able to pay higher prices at a store to support higher wages because their owns wages are low.

 

Absolutely wages and benefits exist because the labor market demands them, but it's an asymmetric market and labor's been losing power for decades now. I know that Walmart might not be around forever, but I see no reason to assume that they'll be pushed aside by social justice forces that completely remake global capitalism into something that doesn't function solely on the seeking of more profits.

 

edit: note, too, that in your argument, you state that it's about attracting "better candidates." It's still a desire to maximize profits at its core. If we don't believe that companies have any social responsibility and instead only have a fiduciary responsibility to maximize returns for shareholders, this is how they will operate. This is where capitalism fails from an egalitarian perspective and where it needs to be amended by social policy.

Edited March 27, 2013 by StrangeSox

[illinilaw08]

Starbucks maybe less so now (who did they displace though? and they still don't treat their employees well), but Chipotle and especially Whole Foods are niche markets (no idea about their labor relations but they have other social positives). Chipotle is never, ever going to displace significantly cheaper options like McDonalds or BK and Whole Foods (Whole Paycheck!) is never going to replace a majority of grocery stores. Either because people can't afford them ($8.99/lb organic chicken vs. a box of frozen Tyson for $9) for the most part or because the short-term (trying to be value-neutral there) benefits of much cheaper food/things are instantly realized and understood while the long-term harm of the destruction of domestic manufacturing, wage stagnation, etc. aren't right in your face as you pay for your groceries.

 

Sort of an aside, but this is the same type of problem with advocating upper-class solutions to many environmental, ethical or economic problems. I buy organic, free-range chicken and eggs because I like the free-range part (and the chicken is substantially better quality), but it's never going to compete on a large scale with Tyson or Purdue. The forces that exist in the market will pretty much assure that. It's all very cyclical, with people not being able to pay higher prices at a store to support higher wages because their owns wages are low.

 

Absolutely wages and benefits exist because the labor market demands them, but it's an asymmetric market and labor's been losing power for decades now. I know that Walmart might not be around forever, but I see no reason to assume that they'll be pushed aside by social justice forces that completely remake global capitalism into something that doesn't function solely on the seeking of more profits.

 

I thought Starbucks generally did treat their employees well with health insurance and other benefits for part time employees. http://money.cnn.com/magazines/fortune/bes...apshots/73.html

 

But you are spot on that one's respective economic status allows one to make different economic decisions. I can afford not to shop at Walmart so I don't (I shop at the local Kroger which has a good track record of employing adults with special needs).

 

Something that baffles me is that we have 24 hour news cycles that talk about inane, ridiculous crap. Have an hour show that highlights both corporate responsibility and provides negative press to the ones that treat employees like crap. I'd watch that. And make economic decisions based on it.

[StrangeSox]

I thought Starbucks generally did treat their employees well with health insurance and other benefits for part time employees. http://money.cnn.com/magazines/fortune/bes...apshots/73.html

 

I dunno, my friend fought to unionize the store he worked at in Chicago several years back. Their wages are still low, but their CEO did support the proposed minimum wage hike. Their average wage is below the proposed wage right now, so he needs legal cover to pay his employees more. If he suddenly decided to pay them all say $15, keeping Starbucks profitable still but reducing overall stockholder value, he'd be out on his ass quickly as the company gets undercut by numerous competitors paying crap wages and eating up their market share. It's the nature of the beast.

 

But you are spot on that one's respective economic status allows one to make different economic decisions. I can afford not to shop at Walmart so I don't (I shop at the local Kroger which has a good track record of employing adults with special needs).

 

yeah, the guy now working a crappy minimum wage job because Walmart forced their suppliers to move manufacturing overseas to cut costs or be dropped from stores can't afford to shop at Whole Foods. He's stuck going to the Walmart.

 

Something that baffles me is that we have 24 hour news cycles that talk about inane, ridiculous crap. Have an hour show that highlights both corporate responsibility and provides negative press to the ones that treat employees like crap. I'd watch that. And make economic decisions based on it.

Our media is generally terrible. Teh Deficit!!! is the most important thing to them in the world, despite most people who aren't in DC and not wealthy not really giving a s***. They got bigger things to worry about, like not having a job.

[StrangeSox]

I saw this interview on The Daily Show from Tuesday and thought it applied a little bit to that concept of Wall Street corporate pressure and limited individual choice.

 

He's talking specifically about the food industry, and there's a lot that goes back to what I was saying in that health eating thread we had a few months back, but he also gets into the fact that even when companies try to change their unhealthy foods, Wall Street freaks out and the company is quickly pushed back to salty, fatty, sugary foods because that's where the biggest profits are.

 

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Indecision Political Humor,The Daily Show on Facebook

[Jenksismyhero]

Food is an industry where you have a bazillion choices. Not sure how you can claim that Wall Street has limited consumer options. Think about the incredible amount of selection we have.

[StrangeSox]

Most choices aren't particularly healthy, though, and as the author noted, the unhealthy choices are the ones we subsidize e.g. corn syrup in damn near every processed food. There's strong profit motive to keep a large portion of our choices focused on not-really-that-healthy foods, and some of that comes back to basic biology and what our brains want us to consume because we haven't had tens of thousands of years to adapt to the industrialization of food.

[Balta1701]

Most choices aren't particularly healthy, though, and as the author noted, the unhealthy choices are the ones we subsidize e.g. corn syrup in damn near every processed food. There's strong profit motive to keep a large portion of our choices focused on not-really-that-healthy foods, and some of that comes back to basic biology and what our brains want us to consume because we haven't had tens of thousands of years to adapt to the industrialization of food.

The thing that drives me nuts in terms of lack of competition is that there shouldn't be a price driver towards the more processed stuff. If I went to the UK, I could buy a box of instant oatmeal that isn't loaded with preservatives. Some sugar yes, but you know, 4-5 ingredients, for a comparable price as a preservative loaded box here in the US. But to buy that same quality of oatmeal in the US, I have to find a high priced organic box; the only option I'm given at an affordable price point is the preservative loaded option.

 

They actually make better versions of the same product to sell overseas at normal prices, but those versions are unavailable to the american consumer.

[Jenksismyhero]

The thing that drives me nuts in terms of lack of competition is that there shouldn't be a price driver towards the more processed stuff. If I went to the UK, I could buy a box of instant oatmeal that isn't loaded with preservatives. Some sugar yes, but you know, 4-5 ingredients, for a comparable price as a preservative loaded box here in the US. But to buy that same quality of oatmeal in the US, I have to find a high priced organic box; the only option I'm given at an affordable price point is the preservative loaded option.

 

They actually make better versions of the same product to sell overseas at normal prices, but those versions are unavailable to the american consumer.

 

What's your definition of a preservative loaded box?

 

http://www.peapod.com/itemDetailView.jhtml...M=1364487520155

 

This has some additional elements to increase the volume of the oatmeal. Is that really bad though?

 

Keep in mind too that a lot of random crap added to food is because of the way we ship/process it. But that again goes to availability in areas where the food is from half way around the world.

 

I don't discount that we're all hopped up on corn syrup. But you don't have to be, and as we discussed a few months back, doing so is a personal choice not generally motivated by finances. People choose to eat processed foods when it's cheaper and healthier to eat fresh produce.

[StrangeSox]

something ironic about a link that brings me to an "expired" page

[Jenksismyhero]

something ironic about a link that brings me to an "expired" page

 

You have to put in your zipcode at peapod before you can see the products, so my link didn't work for you. It's the quaker instant oatmeal for 3 bucks.

[StrangeSox]

it was just a lame joke about food preservatives and "expired"

[Jake]

I buy the big ass tubs of oatmeal, no sweat.

[StrangeSox]

I used to work at a place that packaged a lot of quaker instant oatmeal, you could really see the seasonal swings. by this time of year, they've probably shut down most of their production.

 

/cool story

[Jenksismyhero]

it was just a lame joke about food preservatives and "expired"

 

lol, i see. went over my head.

[Balta1701]

What's your definition of a preservative loaded box?

 

http://www.peapod.com/itemDetailView.jhtml...M=1364487520155

 

This has some additional elements to increase the volume of the oatmeal. Is that really bad though?

 

Keep in mind too that a lot of random crap added to food is because of the way we ship/process it. But that again goes to availability in areas where the food is from half way around the world.

 

I don't discount that we're all hopped up on corn syrup. But you don't have to be, and as we discussed a few months back, doing so is a personal choice not generally motivated by finances. People choose to eat processed foods when it's cheaper and healthier to eat fresh produce.

I can't see anything at peapod, but if it's the same version I get at my grocery store, here's an example ingredient list.

Quaker Instant Oatmeal - Peaches & Cream

WHOLE GRAIN ROLLED OATS, SUGAR, CREAMING AGENT (MALTODEXTRIN, PARTIALLY HYDROGENATED SOYBEAN OIL**, CORN SYRUP SOLIDS, WHEY, SODIUM CASEINATE, SUGAR, DIPOTASSIUM PHOSPHATE, MONO AND DIGLYCERIDES, ARTIFICIAL COLOR, SALT, SOY LECITHIN, ARTIFICIAL FLAVOR), FLAVORED AND COLORED FRUIT PIECES (DEHYDRATED APPLES [TREATED WITH SODIUM SULFITE TO PROMOTE COLOR RETENTION], ARTIFICIAL PEACH FLAVOR, CITRIC ACID, ANNATTO COLOR), SALT, CALCIUM CARBONATE, GUAR GUM, OAT FLOUR, ARTIFICIAL FLAVOR, NIACINAMIDE*, REDUCED IRON, VITAMIN A PALMITATE, PYRIDOXINE HYDROCHLORIDE*, RIBOFLAVIN*, THIAMIN MONONITRATE*, FOLIC ACID*.

If you cut that ingredient list in half, I'd happily pay more for it and all that it would be is the same product sold in the UK.

[Jenksismyhero]

I can't see anything at peapod, but if it's the same version I get at my grocery store, here's an example ingredient list.

If you cut that ingredient list in half, I'd happily pay more for it and all that it would be is the same product sold in the UK.

 

OK, well "peaches and cream" isn't bare bones oatmeal so...

 

 

[Jake]

Why buy those little packets when you could a tube of it and add exactly which ingredients you want?

 

Ingredients

100% NATURAL WHOLE GRAIN QUAKER QUALITY ROLLED OATS.

Edited March 28, 2013 by Jake

[Balta1701]

OK, well "peaches and cream" isn't bare bones oatmeal so...

But that's the point. They can and do make this exact product with 1/3 as many ingredients and sell it overseas for effectively the same price.

 

We get the preservative laden version by choice of their investors (and because the government doesn't say no).

[bmags]

Liberals...and their oatmeal.

[Jenksismyhero]

But that's the point. They can and do make this exact product with 1/3 as many ingredients and sell it overseas for effectively the same price.

 

We get the preservative laden version by choice of their investors (and because the government doesn't say no).

 

Logically this makes no sense. It's going to cost the company more money to put more additives into their products. I'm sure this is based on geographical considerations and regulations.

[Jenksismyhero]

Why buy those little packets when you could a tube of it and add exactly which ingredients you want?

 

Ingredients

100% NATURAL WHOLE GRAIN QUAKER QUALITY ROLLED OATS.

 

But I want it to be INSTANT with PEACHES & CREAM and I want it to contain NOTHING BUT ORIGINAL, GOD-INTENDED OATMEAL. It's just Big Oatmeal forcing me to eat their delicious, addictive product.