raising the minimum wage is good economics

CEO compensation these days is roughly $7,000 an hour (that is, assuming a 40-hour workweek). In fact, CEO-to-average worker pay has increased by a factor of 15 from the 1960s ratio of 20 to 1 to the present whopping 300 to 1. But in some companies it is astronomical. At Chipotle the ratio is 1,522 to 1. Yes, you read it right. That is not a typo. In some firms, the CEO makes nearly 2,000 times as much as the average worker. At Walmart the ratio is 1,133. Do these CEOs deserve their millions? Not by a long shot. Take the CEO of Coca Cola company. He still pockets $25 million. His rival, the CEO of Pepsico writes a check to himself for $22 million. Yet, I have not heard any of the Republican presidential hopefuls suggest that these millions are hurting our exports. A pittance to the coolies hurts the economy, but the millions to their bosses are quite all right.

https://www.pbs.org/newshour/economy/why-raising-the-minimum-wage-is-good-economics

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DownTheStreet · 56-60, M

How does minimum wage relate to what shareholders via the board of directors are willing to pay the CEO?

LordShadowfire · 46-50, M

@DownTheStreet Because those CEOs don't need the massive salaries they have.

DownTheStreet · 56-60, M

@LordShadowfire I get it, but here’s the math. Take Walmart. CEO made $28 mill last year. They had 1.8 million retail associates. So, if you took 100% of all of the CEOs earnings and divided it amongst its retail staff they’d get a year end bonus of … $15.55.

If you want to raise the pay for front line workers you’ve got to convince customers to pay more, and/or make them more productive.

Here’s the inconvenient math. Wages represent about 30% of sales in fast food - McDonald’s, for example. So, if you give them all a 33% raise, you would have to raise prices by 10% to offset that cost. So, if we are all fine with the $9.00 meal deal costing just under $10, then, okay.

Don’t get me wrong, I get it, but the solution is so much bigger.

LordShadowfire · 46-50, M

@DownTheStreet Seriously? You're able to maintain a straight face while typing that, knowing that a huge part of the reason for what you just said is that they want to maintain the same profit margin regardless? They wouldn't die if they lost a little bit of that.