Interesting article and data. Are the employee counts full-time equivalents? It seems like they aren't because the McDonald's median worker pay would be below minimum wage for a full-time worker. The median worker for the fast food brands mentioned in the article are most likely part-time, so that's inflating the profit per worker quite a bit. McDonald's profit per worker should be closer to the measure for places like Walmart. I'd be very interested to see this table with FTEs.
I suspect that Goldman's lower profit per worker than the retail banks is partly because capital gains aren't included in profits per worker and partly because of tax avoidance.
It's not as simple as tension between labor and capital. There is actually 3-way tension among those two plus also management, which double-dips on both sides and really skews both the appearance of worker compensation and the appearance of remuneration to holders of common stock. So Wal-Mart might look like it is generous to staff w/ a 'Marx Ratio' of 0.2, but I bet that 0.2 is mostly going to just a few people in management who are probably also compensated with equity.
As noted, a better median pay for employees should exclude the astronomical sums earned in the executive suite that contribute nothing to wealth while being the company's highest cost. It may change the median employee pay a tiny amount with lots of employees (like Walmart) but would certainly affect the Marx ratio to lower it.
I wonder what Marx Ratio would be on hedge fund companies - or does it not compute because of the number of digits involved?
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That's what a median does...excludes the extremes on both ends.
I'm not an economist, but your computations don't add up. The median salary can be very deceiving, and as another reviewer said, what you are comparing is just labor-intensive business models and non-labor-intensive business models. Beyond that, your data is useless. I would like to see how much the lowest-paid workers get paid, how much the CEOs get paid, and how much do stockholders make. There are other expenses--aside from labor--for many companies.
However, with the weakening of unions, the jobs sent overseas, and all statistics showing how the poor are getting poorer, the rich are getting richer, and the middle class is disappearing, we all know who benefits more from labor. This article doesn't show anything.
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The Marx Ratio is an excellent new index. Another number that might provide insight about these companies and their use of labor and capital would be the ratio of the compensation to the highest paid employee (which will include benefits the median employee does not receive: stock options, company car, etc.) to the compensation of the median employee. Also, if you know the median employee's compensation, can you also learn the median compensation for white v. non-white employees, and male v. female? Perhaps the Marx Ratio could predict which companies have CEOs whose compensation is biggest compared to the median worker's and which have the widest discrepancy among demographic groups for median compensation.
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How did Engels’ father’s factory score?
The key weakness is this only accounts for employees. It doesn't account for outsourced labor (onshore or offshore).
It would very interesting to see what the numbers are for both with and without this population and between the populations.
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Where is Costco Wholesale? The 2nd largest retailer in the US and renowned for paying it employees well.
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"[Marx's] intellectual adversaries argued that those interests are in fact aligned, as successful companies inevitably reward both capital and labor.
"We take no stand in that debate."
There's nothing to debate - the argument that "successful companies inevitably reward both capital and labor" is absurd.
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Aren't you really just calculating how labor intensive different industries are (and how much profit each company within each industry is willing to admit to the tax man)? Real estate companies make money by renting out assets that don't need to be manufactured each month. Fast food companies need to have someone make the donuts every day. Meanwhile Apple USA loses money every year because all Apple's profits get booked in tax havens.
It would be more interesting to see average non-executive pay vs. average executive pay vs. dividends and stock buy backs.
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This is mostly worthless. First the median without a distribution is very incomplete, almost worthless. Next depending on your business you could automate many things that cheap labor does in other countries. Nothing works like a detailed analysis of any company. And of course with automation and machine learning allowing more somewhat simple jobs to be done by machines the value of capital is increasing, while the value of unskilled labor declines. This is very simple to anybody with half a brain, no Marx ratio needed.
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Paralysis by analysis Neil, you lost me.
Bottom line an owner of a company should be allowed to make as much money as they can as long as the lowest worker is paid a livable wage.
If either of the above are not true, the company will and/or should go out of business.
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Wrong substitute a legal wage for your livable one and you are correct, and it all has to be within the law. Here minimum wage is livable by my analysis, plenty of other places it might not be. Thus some might need to work more than 40 hours and perhaps two jobs as well. Not to mention various charity and government programs that assist the poor.
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vulcanalex, it shouldn't be legal to pay a full-time worker a wage that a single person can't live on without public assistance or charity. We should not be subsidizing a for-profit company's labor costs through either tax dollars or charitable donations.
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And that’s the wonderful world of mr money bags. Owner make as much as possible, what based on the laws and rules they pay to create with their lobbyists. A wage just has to be legal not livable. So essentially sounds like you would be more comfortable with a feudal system. Where owners collect rents, protected by the state. Wonder how sustainable that would be. Short run greed will destabilize your society eventually.
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Now compare Profit Per Worker and Median Worker Pay to the median pay of the top earner in the company, being careful to include all sources of compensation. Let's see if the shareholders and average workers are still in contention.
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I agree. Compensation is so different for the highest earners (including stock options, bonuses, severance packages, etc.), that these "outliers" will skew any median wage calculation. The C-level executives should be listed in a separate column for comparison with the other metrics. As someone who thinks Marx got a lot right, I appreciate this analysis-in-progress.
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