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In SIlicon Valley: Profits up. Employment Down.
popo writes "The New York Times (free yada yada) has an interesting report on the changing landscape of Silicon Valley tech companies: Profits are soaring but employment figures are not. This dynamic points to significant future shifts down the road for Silicon Valley companies like Electronic Arts and Cisco. Interestingly, the culprit isn't just outsourcing. Huge leaps in worker productivity and automated processes are also responsible for the decreased need for new labor."
Right Here
Have you Meta Moderated t
Where are those profits going?
While CEO salaries are going up faster than lower level workers, the CEO salary is a cost to the corporation subtracted from the calculation of the amount of profits.
Corporate profits are used in a number of ways - funding acquisitions, paying dividends, buying back stock, etc. Generally profits end up in the hands of the stockholders in the form of increased dividends or stock value.
I don't mean to be inflamatory about this, but the way that companies are being run in Silicon Valley just WREAKS of the Harvard MBA way of doing things. Seriously guys and gals, if you ever have the priveledge of running your own company, don't ever ever hire one of these snakes. You'll find yourself drowning in the bad karma that they'll pump into your company/life. 'Nuff said.
I think you need to do more research on the distribution of wealth, because you contradict yourself. You say that it's "insane" for 10% of people to own 90% of listed companies shares. This implies that you believe that, in a larger sense, it would be wrong for a small minority of citizens to control the vast majority of wealth. On that much, we agree. But while more ordinary people own shares than before, this is not the same as having wealth. In the old days, owning shares literally meant a share of the profits, in the form of dividends. Nowadays, most companies do not pay dividends, or if they do, they pay out only a tiny fraction of the profits. That means that stock ownership isn't really ownership, in the truest sense of the word. If I owned Acme Widget company in it's entirety, you can bet that I would get 100% of the profit. If own one millionth of Microsoft, do I get one millionth of the profit? I certainly do not. What I get instead is a piece of the speculative market for MS shares. And as the lancing of the dotcom bubble proved, the stock market is not a perpetual wealth generating machine - not for anyone who is not at the top rung of the corporate ladder.
By focusing on ownership of corporate shares, you have failed to consider the larger question of distribution of wealth in general. I recommend this site:
http://www.lcurve.org/
It graphs the distribution of income in this country by representing the population of the US as living on a football field, with their annual income represented by a stack of 100 dollar bills. The median family dwells exactly on the 50 yard line, and makes about 40 thousand dollars a year. That stack of Benjamins is just 1.5 inches high. The family on the 95 yard line earns about $100,000 per year, a stack of $100 bills about 4 inches high. At the 99 yard line the income is about $300,000, a stack of $100 bills about a foot high.
And then a really odd thing happens. The stacks of bills don't keep getting a little bit higher. They start to shoot straight up into the sky(the L shaped "curve" that the site's title refers to). So how high does that stack get at the 100th yard, in Bill Gates territory? It's a stack of 100 dollar bills 30 miles high.
Does that seem sane or insane to you, Robert?