Why won't companies just offer more money if they need employees?

Companies are making high profits and they prefer to keep making them and if they sacrifice market share because they don't have enough employees, so be it.

 

Shit our company sold off a high profit but slow turning division because we wanted to improve cash flow. Profits are not the only thing.

 

One of my clients in lovely Silicon Valley wasn't growing fast enough. There have been the Fortune 100 Top Companies to Work For for several years.

Two years, they have a layoff in the 1000 people range. Not your low performing 10%, but they release middle management and senior staff - many of them who had been at the company for 5-10 years (which is a long time in the valley). Made no sense. Good, high performing people. Sadly, one of the senior staff killed himself. Lovely wife and two beautiful daughters.

 

Well.. In the case of the company I work for.. They have shareholders to appease and execs to compensate.. Despite record sales and profits the stock price has been fairly stagnant due to external factors, so in order to appease the stockholders, they spent a healthy chunk of that profit on increasing the dividend, a significant stock buyback regime, and, of course, massive bonuses for the execs.

 

Ditto. Then we get the company-wide email that we have to work to "increase shareholder value." Which IIRC was not a tremendous driver of corporate decisions until the go-go 80s.

Edit: Article about maximizing shareholder value as a company's primary purpose as illustrated by IBM. Basically economic theorists & Wall Street f*ck America once again.

The belief that shareholders come first is not codified by statute. Rather, it was introduced by a handful of free-market academics in the 1970s and then picked up by business leaders and the media until it became an oft-repeated mantra in the corporate world.

Together with new competition overseas, the pressure to respond to the short-term demands of Wall Street has paved the way for an economy in which companies are increasingly disconnected from the state of the nation, laying off workers in huge waves, keeping average wages low and threatening to move operations abroad in the face of regulations and taxes.

This all presents a quandary for policymakers trying to combat joblessness and raise the fortunes of lower- and middle-class Americans. Proposals by President Obama and lawmakers on Capitol Hill to change corporate tax policy, for instance, are aimed at the margins of company behavior when compared with the overwhelming drive to maximize shareholder wealth.

“The shift in what employers think of as their role not just in the community but [relative] to their workforce is quite radical, and I think it has led to the last two jobless recoveries,” said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology.

The change can be seen in statements from IBM’s leaders over the years. When he was IBM’s president and chief executive, Thomas J. Watson Jr., son of the company’s founder, spoke explicitly about balancing a company’s interests with the country’s. Current chief executive Virginia Rometty has pledged to follow a plan called the “2015 Road Map” in which the primary goal is to dramatically raise the company’s earnings-per-share figure, a metric favored by Wall Street.

...In 1970, Nobel Prize-winning economist Milton Friedman wrote an article in the New York Times Magazine in which he famously argued that the only “social responsibility of business is to increase its profits.”

Then in 1976, economists Michael Jensen and William Meckling published a paper saying that shareholders were “principals” who hired executives and board members as “agents.” In other words, when you are an executive or corporate director, you work for the shareholders.

Stout said these legal theories appealed to the media — the idea that shareholders were king simplified the confusing debate over the purpose of a corporation.

More powerfully, it helped spawn the rise of executive pay tied to share prices — and thus the huge rise in stock-option pay. As a result, average annual executive pay has quadrupled since the early 1970s.

http://www.washingtonpost.com/busin...e9ca8e-ed74-11e2-9008-61e94a7ea20d_story.html

 

Indeed.. There's also been a dramatic shift in how employers view employees. Employees are viewed as little more than commodities now and given the current shareholder first mindset, the cost of commodities has to be driven down. My employer has been pulling out of "high cost" areas and shifting work to "low cost" areas. In other words, laying off employees in areas where the wages are high and hiring new employees in low wage areas of the country.. Unfortunately it has resulted in drops in productivity and quality, but hey, the employee cost is lower!

 

Yes, it takes a while for the lower cost employees to get the experience to get to the level of the former employees, but then they start demanding higher wages, so it becomes time to move again. This may be happening in China now, wage inflation may mean moving some of those low wage jobs somewhere else, as China moves more people to middle class and higher skill work. Hopefully Africa can get some of those jobs and they can help them cut down poverty rates.

 

I guess here is a good spot for this.

https://espresso.economist.com/ded5e3abc5b47bd4fab6e07f6cc5cce6

 

This is exactly how my fortune 500 company operates.

I will say though that our yearly anonymous feedback survey does not show wages as a major complaint of workers. The primary critiques are workload management, unrealistic performance metrics, schedule flexibility and dissatisfaction with the health coverage. Not sure how scientific these surveys are, but I suspect that it's not far off from the truth ...

 

There's little worse in business than being taken over by a large company.

I've been through it three times, and it's amazing how big corporations always think they know how to run businesses far better than smaller ones.

My last one was a classic example. It was a small company, employing about 75 people. It made a profit every year and was a growing business. It got bought out by a US company who removed the entire management structure (except the yes men) and brought in their own people. The result was the company lost 70% of its business in 18 months.

Now, there was a definite suspicion that the company was only really interested in the portion that makes up most of what's left, and wasn't too fussed about losing the rest, but why would anyone run down part of a company that made a profit?

 

From my news feed:

http://www.usatoday.com/story/money/markets/2016/04/29/yahoos-marissa-mayer-gets-55m-leave/83722362/

The CEO of the embattled online news site, currently trying to sell itself, is entitled to severance benefits valued at $54.9 million in case she is terminated without cause, according to a regulatory filing after the market closed Friday. The potential payout would also be triggered by a "change of control," which includes the sale of the company, according to the filing.
Mayer's potential payout includes cash severance of $3 million, $26,324 to continue her health benefits, $15,000 for outplacement, and -- if that's enough -- nearly $52 million worth of accelerated restricted stock and options.

/quote

And also...

http://m.dailykos.com/story/2016/04...s-guess-who-s-getting-a-raise?detail=facebook

The London-based energy giant, which operates the BP Whiting Refinery on Lake Michigan, announced another 7,000 layoffs worldwide so far this year in response to a huge drop in the price of crude oil. Dudley is in line to be paid 280 times as much as workers at the Whiting refinery, who earn around $70,000 a year on average, according to the United Steelworkers union.

/quote


Raise the minimum wage?

The economy will collapse!!!

 

In a similar tale, an 88 year old department store chain is set to fold with the loss of 11,000 jobs in the UK. The owner, who bought it in 2000, failed to turn the company around, yet paid himself £400 million in dividends, a figure not a million miles away from the pension fund deficit now at the company.

The £400 million was also paid to an offshore account, so no tax was paid on it either.

 

The nature of who and how people invest have changed dramatically over the last twenty years. The stock market has more amateurs and panic buyers and is far more volatile. Doubt people view Gekko as a hero anymore.

Trump has given the media something other candidates couldn't and that's profit. It's a business like any other and if the clown brings more eyeballs the clown gets the attention. Sucks but true.

 

Raiding companies to cash out pension funds is a classic, very wall street movie. Maybe they will be nationalized like the English steel company Tata steel is selling. Well only if Labor gets in power.

 

But anyone with just a little Trump knowledge knows he was born on 3rd base & thinks he hit a HR. And he'd be twice as rich if he just invested daddy's inheritance in an index funds 35 yrs ago and did coke/banged hoahs the rest of his days. Instead this rat face f#ck has taken an entire political party hostage. Joke's not funny any more.

If I was in charge of oppo research for his opponents I'd be skewering him non-stop.

 

Never was funny but we have a few more months of it.

 

Britain's only mainstream Labour-supporting newspaper, The Daily Mirror, was owned by Robert Maxwell. He died after falling off his yacht in 1991. The paper was full of tributes to their kind, caring, brilliant leader. The tone after the articles changed somewhat shortly after, when it was found that he'd stolen the money from the company pension scheme.

The was no sorrow in Reading over his death. Towards the end of the 82/83 season he announced that Oxford United (who he owned) and Reading were going to merge to form a new club called Thames Valley Royals, to play in the small town of Didcot, halfway between the two. It was a daft plan, and would almost certainly have just ended with Reading's Elm Park being sold and the team staying in Oxford, as Oxford, in a classic case of asset stripping.

 

This is a great name for a band.

 

I was looking at The Asset Strippers.

 

On a related point, I saw Bernie a few weeks ago being interviewed on Morning Joe. Scarborough scoffed at the idea of free college. And Bernie replies, "well who thought even 5 years ago that cities & states would pass laws raising the minimum wage to $15/hour?"

IIRC my first job in 8th grade I was paid the then princely sum of $3.35/hour.

 

My first job was also at $3.35 and the minimum wage had just gone up from $3.10.