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Open Salaries: the Good, the Bad and the Awkward (yahoo.com)
gollum123 writes: More employers, from Whole Foods Market, with 91,000 employees, to smaller companies such as SumAll and Squaremouth, are opening up companywide salary information to all employees. They generally don't disclose it to the public—but one company, Buffer, posts all employees' salaries on its website. The idea of open pay is to get pay and performance problems out on the table for discussion, eliminate salary inequities and spark better performance. But open pay also is sparking some awkward conversations between co-workers comparing their paychecks, and puncturing egos among those whose salaries don't sync with their self-image.
Everything is going just fine for Whole Foods and they need something to fuck things up.
I would think a Board member would tell them that this opens a can of worms and will ultimately distract from the core business.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
Personally, I am in the private sector, but I don't care what others are getting paid. Usually a company will trot out the line: "well you are making more than the average so you didn't get much of a salary bump this year". I tell them I don't care what the average is, that is someone elses problem. And we are all making peanuts compared to the executives, so who cares what the "average" for the company is. Obviously "average" doesn't apply to C level.
minimum wage and 29 hours a week max for lot's of workers makes them look bad.
I'm fairly accustomed to knowing what my fellow employees make. Even if the company doesn't publish (internally) how much each person makes, there is usually talk about such things. Co-workers tend to compare salaries and raises between themselves, so publishing the information internally doesn't change much.
But going public with the information is a twist. And a potentially awkward one. Not because of people in other companies comparing rates or people within a company comparing them, but family and friends seeing the information might make things awkward. Imagine the increase in loan requests from friends or the disapproving looks from relatives who think you should be "doing more with your life".
Money issues can make family/friend/relationship situations weird and having this information available to the public could result in some unpleasant conversations.
everything made by man fails is a given...
Here is a link to the buffer salaries. https://open.buffer.com/transp... It pays to be a hipster!
In Norway, EVERYONES salary is available and guess what, nothing bad happened.
The last time I found out what one of my coworkers was making I just about fell over. This was not a supervisor position, he was just another technician on the bench. What he did have was a seemingly endless knowledge of all things computer science, despite never setting foot in a traditional educational facility past grade 6, no certs, . How I found out what he was making: He left the company on bad terms, pissed a lot of people off in the process, and one of those pissed off folks just so happened to mention that I should ask for a raise now that they weren't paying this guy ($8/hr more) than I was getting.
Huge breach in privacy.
Troll is not a replacement for I disagree.
Everyone who works for a big enough organization has probably run into people who you have no idea how their salary is justified. I'm not just talking about "oh, I'm better than him because I know more," I'm talking about the secrets that confidential salaries can hide:
- Board members' less-than-qualified family members/business associates/friends getting paid a relatively huge salary compared to their role/contribution
- Senior level people who have been "parked" after a division closure or similar event -- often because they have lots of knowledge that would otherwise disappear, more often because they are politically connected
- Revealing how much politics really affects salaries would be a huge morale-buster.
The bigger the organization, the more these become apparent. For example, look at HP laying off 30,000 employees or IBM laying off 20,000. Most of it is probably offshore talent replacement in these cases, but I'm sure there are plenty of highly-compensated people left over from acquisitions, etc. that they're just taking the opportunity to purge because they were making a lot of money and not contributing a lot.
As a person with 30 years of experience, it seems likely that I make more than my boss, who only has 6 years of experience. In fact, by boss's boss once hinted something to the effect to me. So, is that unfair to the boss? We could debate whether he or I contribute more to the organization, or whether I'm worth X times what he makes. But that's irrelevant. Presumably, when my boss has 30 years of experience he likely also will make more than someone who has only six years of experience.
This is a bit like the union "seniority" system. Fairness comes not in terms of value-added per pay-received but in terms of the fact that ostensibly underpaid younger people will eventually become ostensibly overpaid older people.
You may disagree with the above, but what if everybody in this story knew each others' salary? I think that would just lead to a lot of bad feelings by those who feel they are underpaid (which was me in a past life), and wouldn't accomplish much of anything. It seems like a very bad idea to me, and not just because I'm now a highly paid senior person, but primarily because I saw the problems it caused among me an my coworkers when I worked at a Boy Scout camp at age 15: being young, we didn't know not to discuss these things, and when we discovered apparent discrepancies in our pay, it led to a lot of bad feelings.
Joel CEO 2010-08-01 New York, NY, USA $218,000
now, its tempting to assume this is a very reasonable regular salary for such a high position. you may even feel compelled to complement Joel on his humility, but dont. What isnt disclosed is Joels quarterly and yearly CEO bonus as well as his earnings from any assets he may hold in the buffer corporation such as interest from stock or dividends paid.
what the buffer corporation, and i suspect a large number of other more libertarian 'uber economy' minded corporations, are trying to do is get employees to compete amongst eachother for salary equity while ignoring the bigger picture: the control of the corporation and its assets are fundamentally outside their scope of influence. They participate in the companies performance and production, but gain very little from its successes outside their formal salary. The companies operational objective, for example, is stockholder value and not the greater good of providing gainful employment and retirement security for its employees. I also conject that 'open salaries' are a clever means of equalization for tech industries that are sick and tired of having to pay market price for talented IT staff and coders.
Good people go to bed earlier.
DHI.
Man I agree this is news for nerds, but once again DHI missing the boat again..
When U.S. publicly traded companies had to disclose top managers' compensations their collective compensations increased. Employers couldn't really screw them over. (Arguably, it was these employees screwing them.)
Capitalism/shareholders really can afford being squeezed of profits in order to pay fair market value for labor.
This is actually quite smart. When you have low skilled employees, a poor economy, and weak organised labour, making salary data available basically turns your employees on themselves. It would make it harder for a single employee to negotiate a higher salary, and general labour market conditions (outsourcing, unemployment etc) will keep aggregate salaries suppressed. Pretty much the opposite to why tech companies are so secretive about the astronomical amounts they have to pay technical staff.
As for those at the higher end of the scales - well, there are plenty of ways (many much more tax efficient) to 'pay' your executive team in something other than a salary. Most employees are not going to be able to understand why their company is running massive continuous share buy back programs while perpetually issuing the executive team with share options.
> as his earnings from any assets he may hold in the buffer corporation such as interest from stock or dividends paid.
Fyi stocks pay dividends, bonds (loans) pay interest.
If someone loaned the company $100,000 and they are being paid 4% interest on that loan, that's an entirely separate transaction from whether the person is also an employee of the company. If the company issued bonds, anyone, any employee or non-employee can buy that bond (make the loan) and be paid interest on the money they loaned.
Similarly, anyone who wants to put up some money and buy stock can do so. Any dividends earned are earnings from the money they put up, which is seperate from if they are employed by the company. You can buy General Electric stock today and get paid dividends as an owner of GE. Btw this is how the vast majority of millionaires BECOME millionaires - buying a bit of stock each month, typically through a mutual fund.
Ideally, one would treat investment in their future the same as taxes as withheld - allocate 10% of your paycheck to investment off the top, BEFORE you make your budget. Invest first, then decide if you can afford the Ultra Deluxe 400 channel HD cable package or you need to stick with Deluxe 160 channel.
The problem is not that salaries are now open. The problem is that they were secret for so long allowing various forms of corruption to grow and fester. It is always awkward when previously hidden rubbish is exposed to the light. The solution, though, is not to go back to hiding salaries but to keep them open. That way existing inequities get cleaned up and new ones are not allowed to sprout.
Url is still broken...
I had a boss who made a big deal about giving me a routine 2% raise after I was with the company for six years. When I pointed out that I got a 50% raise after my first year and every raise since then was always 2% because of the salary cap, he got mad because I made more money than him for four years. Although we were coworkers for nearly five years before he became a manager, he thought he was better than everyone else and his paycheck proved it. That I made more money than him for many years didn't sit well with him. Needless to say, I got a job and a 40% pay raise at a different company.
You are working for the tax payers, not a private entity with private interests. Your salary should be public knowledge, primarily for accountability to the people who you work for. Politicians, Military, etc... should all want to be open to the public about everything. It's not like people are hit over the head and stuffed into the Government Jobs camp any longer.
That said, the private sector is a different story all together. The Government needs to know what you make for tax purposes, but I don't believe there is any benefit to publishing everyone's salary for everyone to see. Executives maybe, but not the general labor staff.
I may be biased because I can negotiate my worth very well, and have a long successful career. If I was not competent/confident in either of those things I may be more worried about what Joe makes versus my salary and demand "equality". Maybe. I also happen to be a realist and despise the push for equality by people who really are not equal to other people. I'm an egalitarian and perhaps a bit of an anarchist capitalist believing that the market will handle itself the majority of the time.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
This isn't that new. People in unions can typically calculate what anyone else makes based on their position and seniority. People in the military know just by rank plus a couple other factors like danger pay. In Ontario, Canada if you work for the public sector and make over $100,000 your name and salary are published in a list every year (colloquially called the "sunshine list"). This is usually done for the same reasons stated above, and usually benefits the employees overall (which is why unions request it). Just because some companies do it, it's news?
"I have never let my schooling interfere with my education." - Mark Twain
When discussing salaries, negotiate the net, not gross. The only thing that matters is what you take home. The rest is company business, irrelevant to our needs.
“He’s not deformed, he’s just drunk!”
My last job was at a state agency. Salaries were online for everyone to see. I didn't notice any problems related to that.
In my department, at least, each person's job was a bit unique ; nobody else did exactly what I did, so there wasn't a direct comparison. Raises (without a promotion) were quite limited because the legislature only approved 1%-2% per year merit raises for the agency, meaning almost everyone got a similar raise. To give one person a 10% raise would mean 9 other people got no raise, so that didn't happen. Only occasionally would one person not get 1%-2% because they didn't deserve a merit raise. (Cost of living adjustments were a seperate 1%-2%).
this is how the vast majority of millionaires BECOME millionaires - buying a bit of stock each month, typically through a mutual fund.
This is a widely held belief, but its false. The average millionaire is a millionaire because of the concept of dynastic wealth. They are rich through the lottery of birth. conversely, the average american stands no chance to enter a circle of millionaires simply through investment. GE has for example 9.4 billion shares, each costing around $23 a piece, and each returning approximately 25 cents of interest. you would need to purchase, at minimum, around half a million shares before you realized even upper-middle class living standards from your investment. Wealth sees new entry through sports stars and pop stars, and occasional lottery winners however statistically, this makes up a fraction of a percentage of all millionaires.
Good people go to bed earlier.
Open salaries sound good and all, and we'd probably do better with them, but we have to consider some negatives:
If we go by what Buffer pays, It means pretty poor salaries at the top end. Their scale is absolutely not competitive. That's great for a startup's founders, who have a lot to say about the total equity, but as an employee, your equity can, and will, be diluted, and your interests will not be taken into account when you want to sell the equity before IPO. So, in practice, this talk about openness in Buffer doesn't look like a bargain for employees.
Also, consider companies that don't keep salaries private: They will be able to pay unpopularity well to some people. I look at my current employer, for instance, who handed me signing bonus that is larger than many of my coworkers' salaries. They did that to be competitive with big industry names. But would they be able to do that without repercussions in an open compensation environment? I don't think so. So the end result would have been that I'd have gone work somewhere else. So the incentives to open salaries first go to companies that aren't paying that competitively in the first place.
But in the short to medium term, it's going to cause a lot of problems. In most companies of any size there are wage disparities between people in the same job for a variety of reasons, exacerbated by the simple fact that companies rarely pay you more than they think they can get away with. So when a company institutes transparency like this you will have a lot of people who were reasonably content suddenly very unhappy to discover that some of their teammates who are doing the exact same job are making more than them, perhaps considerably more. This actually happened to me. I was working at a place for years as a sysadmin, doing 10-12 hour days constantly and after quite a while of that management decided (finally!) I needed someone to help with the workload. So they hired another sysadmin and we split the workload, and things were going great. The two of us got along very well and then one day a few months in we were at lunch talking about buying property and in the course of that conversation he mentioned in broad terms his salary. Which was about 1.6x what I was making at the time. Needless to say I was not very happy with that. I had an annual review coming up in a few weeks so I brought it up to my boss then. The boss was very taken aback that I had that information and was actually angry that the new guy had mentioned it. Reasons for it were stated as "well that's what the going rate is and we had to offer that to get candidates". And when I got a raise after that review it was only about 1/3 of the differential, with the stated reason being that the company had a maximum cap on annual increases and "this was already pushing past that as much as we could". So 3 months later I left that company after being there for 7 years, for a job elsewhere that paid the market rate.
Now a problem like the one I mentioned above will probably get taken care of under a transparent company by them deciding to align everyone at a certain position's salary with a few minor adjustments, but that will take time and will be done gradually to not have the payroll shoot up dramatically. While that's being done there will probably be higher than normal turnover as well.
A company can never pay you what you are worth because they'd never make a profit doing that.
I think, he was telling me to that I should work for myself if I really wanted to get paid. I think he was right. You don't get rich working for somebody else. It's a good living sometimes, but after 25 years I'm not getting rich doing what I do...
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
this is how the vast majority of millionaires BECOME millionaires - buying a bit of stock each month, typically through a mutual fund.
This is a widely held belief, but its false. The average millionaire is a millionaire because of the concept of dynastic wealth. They are rich through the lottery of birth
{{citation-needed}}, for both of you.
Secession is the right of all sentient beings.
I'm generally aware of the rising importance of inheritance on wealth inequality, but do you have any source or data where we can see that the majority of millionaires are such because they inherited their wealth?
I know a lot of boomer millionaires, and most weren't born into it. Most saved a lot during the 60s, 70s and 80s to get there.
I think your point holds true for people with net worth > 10 million. But a million dollars isn't much these days.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Some employees chatting about salary openness decided to take it upon themselves to do it. Someone created a Google Form and shared it on a very widely-used internal mailing list (~40K subscribers). People could choose to provide their username or not; many did. About 3000 employees added their data in 2014, which included career ladder, level, location, gender and base pay rate. For 2015 the form was revised to add "total compensation", because a significant part of Google employee compensation is in the form of stock grants and bonuses. Analysis of the numbers shows that compensation is pretty fair. There's no gender gap (not surprising because Google HR watches those stats closely). There are some significant differences between people at different locations, but those correlate pretty well with cost of living differences.
Punctured Egos... Won't somebody think of the Egos?!
and puncturing egos among those whose salaries don't sync with their self-image.
Awwwww. We need some of this on wall street and every corporate boardroom.
Actually the average american has a very good chance of entering the "millionaires" club. All they have to do is work at an average job and save at above average rates while spending at lower than average rates.
But... a million dollars ain't what it used to be. It's only 10 years income for many college degreed jobs (and many non-degreed jobs too).
It's only 20 years pay for a completely average job and most people work 40 years.
And that completely ignores investment growth.
What you probably mean these days is 10million dollars. Very few people have any chance of going from poor to 10 million dollars except one group of the top 1% who occasionally takes all their losses and defer their income in the same year (so they flip flop from 'poor' back to top 1% in the space of one year.)
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
I pay for the goods for a company and the pay of their workers comes from that money I give them, therefore I have, as a customer of theirs, JUST AS MUCH RIGHT to their salaries as any employee of government, whose work gives me things I need or require and I therefore pay for.
Why not?
I pay government for the services they offer, and some of that goes to salaries, and you claim I must therefore be able to see their salaries. I pay the supermarket for the services they offer, and some of that goes to salaries, so I must ALSO be able to see THEIR salaries, right?
If not, why not?
I happen to already know that I'm being underpaid, based on discussions with a former co-worker who was making significantly more than me for exactly the same work, even before he left for more money... so I'd welcome "open salaries" with open arms -- and promptly start negotiating my pay raise.
... Before leaving, to get another pay raise. I will spare not a bit of remorse for a company which knows full well that they're underpaying me.
Are you sure that it even takes a public information request? There are sites on the internet that aggregate public employee salary data and make it available through a simple google search. My salary and my co-workers' salaries are available for anyone to see through such a search because we work for a public state university. It even includes previous years' salary data. In fact, a google search for just my name brings a link to my salary on findthedata.com within the first page of results!
Haven't these been around for a while? Is this news?
putting the 'B' in LGBTQ+
you introduce your unspecified "millionaires club" and then point out that, over someone's work life, they can easily make a million dollars. So what? WTF does that have to do with the question at hand?
I'm not going to claim to know what GP meant by millionaire in "the average millionaire is a millionaire", but he clearly referenced income ("and each returning approximately 25 cents of interest"), not savings.
If you are trying to imply that an average worker can become one of the wealthy elite by simply saving better than average you are:
1) a fucking moron ...
2) trolling
3)
nah, I think its just one or the other
Defense contractors would be able to make money in a free market, but we don't have a free market. Whether right or wrong (different discussion and interesting) the Government restricts what people make, how much they make, and who they can sell things to. They limit software as well as hardware, and in some cases even concepts and ideas. A company like Lockheed Martin can not sell a military plane to Bill Gates even though he could easily afford one or two. Let alone selling a plane to Sudan or Russia, which would be how a defense company would operate in a free market.
Your conclusion of a private company existing due to tax payer money is extremely biased. Meritorious in some cases, but certainly not the majority or even half.
That one aside, we have to ask if its cheaper for tax payers to use a company like General Dynamics as a private company or would it make more sense to have it public? Another really good discussion to be had, and easier to summarize my opinion.
Looking at retirement benefits and how it's nearly impossible to remove bad employees from the tax payer funds today I don't think it would be better or cheaper for tax payers to have Government agencies do all the work. There are certainly incentives to having freedom in certain markets, and part of that should be that private companies can pay some people a lot more money than others even in the same role and job title. Consider also that you don't want the salaries of certain people public because it puts them at risk. You don't think the job "John Doe, NW.Scientist 300K/yr" versus "Jerry Doe, Janitor, 40K/yr" would make it obvious to an enemy who they should target?
Last point on that one is that when I last worked DOD (5 years ago or so) executives were required to report their salaries and earnings publicly. They also needed to report how much of a contract went into what types of labor. Executive abuse was/is? easy for Congressional oversight to catch. But, stronger incentives could be given to stronger workers to get better products in a shorter time frame.
While I certainly agree that the Government should be accountable I don't consider every Government worker a leech and don't agree with the premise. I see the value in providing some freedom for certain services so that we get better than what a bureaucracy would provide (which we can use the old USSR as a great example of how that fails).
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
Less than 10% of millionaires inherited significant wealth.
I'm currently DOING this, getting rich, and it IS working, just like it's always worked for other people who do it. It's not quick, but it works. At this point you decide which is most important to you - holding on to a mistaken belief or retiring as a millionaire. Because this is how it does work.
Here's a calculator for you to run different scenarios, but the bottom line the calculator will tell you is that you need to EITHER save $480/month (PRETAX) for 35 years OR participate in your employer's matching program (401k etc.) As I'll explain, the monthly investment required is less than it first appears from the calculator.
https://www.investor.gov/tools...
Long-term returns in the overall market are 8%-9%. Short-term returns vary considerably but we don't care about that; we have a 25-40 year plan, not a 1 year plan.
So the calculator says we need to invest $480 / month for 35 years. HOWEVER, that doesn't mean taking $480 out of your paycheck, for two reasons. First, most employers offer a matching program. You have $350 automatically invested and they'll kick in another $125. Secondly, you'll invest PRETAX. Taking $350 out of your pretax pay will only reduce your take-home pay by about $275. In summary:
$275 reduction in take-home pay = $350 invested by you.
Employer matches $125 = $475 invested per month.
$475 invested at 8% for 35 years = a million dollars
The above doesn't include inflation. You actually want to end up with MORE than a million dollars due to inflation, so take $350 paycheck reduction and after the match you'll be set.
Adam Ruins Everything - Why You Should Tell Your Coworkers Your Salary
Sure, let's just pretend that CEO's and management class don't get huge stock grants and stock options, watering down the value of the stockholders.
Cheap storage VM.
The number of independent variables exceeds the number of data rows. Therefore, it is possible for a set of rules to be created to arbitrarily map each employee to any desired salary. In other words, these "rules" are less effective AND LESS TRANSPARENT than arbitrarily setting each person's salary.
-- I was raised on the command line, bitch
In California all salary records are available at http://transparentcalifornia.c.... They lag by a year or two, but it's all there.
Beware of the Redittor who loans you a Sharpie.
I believe it's called the same here.
My main concern with such lists as they could be used by unscrupulous persons (scammers, phishers) to find targets within a company.
Back in 1970, I was the new guy at a company. One of the older workers asked me what i got paid and i saw no harm in telling him. It almost caused a strike if not a riot. I assumed i was the lowest paid worker as i was new and young and the workers were skilled and specialized. It turned out that i was paid more than the others and it freaked them out. I simply was able to do some things that their workers could not do and i rapidly proved that to be a fact. So out of the blue the company VP brought me a coffee machine and a stack of Playboy magazines. He said I was doing a great job and was aware that I had it all down to about one hour a day. He said i took on 100% of what I was expected to produce and not to do others work for them and sit back and have a nice day when my duties were complete. The funny part is that the workers could see my office and it really bit them in the rump to watch me drink coffee and read Playboys many hours every day.
" Mr. Atkinson says female and minority-group candidates sometimes ask for too little when theyâ(TM)re hired."
Wooops. You mean it is not the Patriarchy?
Isn't Open Solaries dead after Oracle turned it back into Solaris "Express" (whatever that's supposed to mean)? With illumos you still get the cool stuff like containers and dtrace, but without the Oracle crapification.
It seems you may have read the definition of "stock option" but aren't clear on how they're actually used. Key people typically get stock options as part of their compensation because that means their total compensation is affected by how well the company does, specifically by the CHANGE (delta) in how it does under their leadership. They don't, however, exercise those options by buying stock at the option price. Even if they did, that wouldn't make new stock magically appear and "water down" the other stockholders. But anyway they don't use the options to by stock. Here's what they do. Suppose John is the CEO and Mary is some random investor. Three years ago John got an option at $85 and the stock is now selling at $100. John wants to cash out the option. Mary wants to buy the stock, for $100. Mary buys John's option for $15 so she can buy the stock for $85. She pays a total of $100, exactly the same as she would have paid if there was no option, for exactly the same stock. John puts the $15 in his pocket. John never owns the stock itself and he certainly doesn't cause new stock to magically appear.
You all negotiate individually for your salaries? Are you insane? FFS, get yourselves proper unions or something already, the rest of the world figured this out decades ago.
This is the reason most West European and Scandinavian countries are nice relaxing places to live because income equality is pushed hard by socialist elements in government - along with universal health care and social safety nets.
Some guy who's already negotiated 14 agreements today and who's paid to minimize company costs is going to completely screw anyone he can! And the more he does the better he's going to get at it.
Seriously, you Americans must be idiots.
Wow. You know... and I mean this in the nicest way, there are some decaffeinated alternatives that are equally tasty on the market.
The parent poster says that the average millionaire is based on dynastic wealth and it's not true of about 3/4 of millionaires. What he said is true of about 1/4 of millionaires.
About 95 percent of millionaires in America have a net worth of between $1 million and $10 million.
https://www.nytimes.com/books/...
A million 1950 dollars is worth $9,847,966.80 today. (CPI calculator)
However, the average wealth (net worth) of the top 1% is 19.1 million dollars. (IRS)
That's the wealthy elite.
4% of americans have a net worth of a million dollars or higher. But 3% of them have small amounts of money compared to the wealthy elite.
People can *easily* have a million dollars for retirement. I did. My mom was a high school drop out. My best income never exceeded low six figures and that only for about 5 years. My net worth is well over a million dollars. I retired at 51.
I think this article is more to the point the pp was trying to make:
http://inequality.org/selfmade...
I think he set the bar too low on wealth. That was my entire point.
It was not my intent to piss in his or your cheerios so take a chill pill.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Unfortunately performance-based pay is a red herring and political. In this service oriented economy, service quality is very subjective: managers that don't produce any product judge their employees more personally vs actual widgets developed or sales figures. It's about "likes"...
From a meritocracy standpoint, that is another mess since mentors and superiors can easily set up success for the people of their choosing and thus failure for the rest of us.
Value based pay has gone out the window, we're all contractors.
the average american stands no chance to enter a circle of millionaires simply through investment.
I don't think I trust this statement. I've been saving for a decade and have about $300k in retirement accounts. At this pace I project to hit a $1 million in another 10 years, and hope to retire with $3 million a decade after that. This is with my entire 20's wasted with no savings, and a plan of retiring around age 60.
My household income is higher than average, yes, but lots of people ought to be able to hit a million given 30-40 years of saving/investing.
Of course a million isn't what it used to be. Even at $3 mil, my retirement plan calls for the continuation of a modest lifestyle in a slightly-higher-than-average cost of living community, and isn't putting me into the lap of luxury or anything like that.
If you're posting my salary, I'm not working for you. The simple fact is I have had success negotiating salaries above my peers, sometimes by a lot. I shouldn't be punished for showing extra skill, extra initiative and being aggressive. If it was found out they wouldn't bring their salaries up, they would bring mine down. I just don't care that much about people outside of my family to be willing to do that. I go for mine, you go for yours.
When a company issues (sells) new stock, that dilutes the value of the existing stock. So company sells stock -> reduces values. When the company issues an option, they are required to later BUY stock with which to fulfill that option. If the company SELLING stock reduces the value, what do you think happens when the company BUYS stock?
Suppose you are trading MTG cards, and there are only 10 copies of a certain card.
You have three of ten.
Suppose I am -required- to offer to purchase 5 of those cards. How does that effect the price at which you'll sell the card?
Obviously, when someone is required to purchase them, that means there is more demand, and therefore the price increases.
If I'm required to buy 5 cards, that -reduces- the number of available cards to only 5. It REMOVES those five cards from being available to others, precisely the -opposite- effect from printing 5 new cards.
When a company gives someone a stock option, that means the company is required to later purchase shares with which to honor the option. That's an increase in demand, which INCREASES the value the stock. Precisely the opposite from the company issuing (selling) new stock, the company is -buying- stock.
All of that said, suppose Yahoo's CEO gets an option for a thousand shares at $30, and the stock later increases to $50 per share. So the CEO made $20,000. We have these numbers:
$50,000 Yahoo paid for the stock
$30,000 Someone paid to exercise the option
$20,000 profit to CEO (the "extra" money you're worried about)
$30,000,000,000 Total value of Yahoo shares.
Really, you're worried about $20,000 diluting $30,000,000,000? You realize the company spends more than $20,000 on floor care, right?
In 1990, a fellow from Denmark told me that in Denmark everybody's salary was publicly available information. So much for information privacy. Maybe it has changed since then.
No the "average" worker can't become one of the wealthy because the "average" worker has completely bought into the myth that they must:
1) Spend their money as fast as they make it.
2) Must have instant gratification.
3) Must own all the new shiny devices that mainstream media and the advertising companies tell them they need to have.
4) Have never been taught, nor have they on their own developed a pinch of self discipline to live within their means.
This is one of the stupider things I've read lately. I will explain how and why you're wrong:
Anyway, that's the math that applies if you're an idiot consumer sucker. If you instead choose to invest a reasonable fraction of your salary -- say, 50% -- you can start from $0 and be living off your investments in about 16 years (and if you can get your savings rate to 65%, you can shave that down to a decade).
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
Or you are 3) this guy. Or this guy. Or this guy. Or any number of other people who executed similar plans, but didn't blog about it.
(These are all people who became millionaires simply by saving more than 50% of their middle-class salary, and retired in their 30s. If they wanted to be in the deca-millionaire range instead they could have just kept working and investing 100% of their salary for another couple of years. Considering that they live off withdrawals that are designed to be safe in the worst-case scenario, under most non-worst-case scenarios they'll end up with tens of millions eventually anyway.)
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
It can be quick; you just have to save more. I'm aiming for a 65% savings rate, so I can be done in a decade (shortly after I turn 40 -- what can I say; I spent a long time in college and then graduated into the recession).
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
Well, since the Yahoo's CEO stock options are currently worth about .5% of Yahoo's market cap, I think you are understating the effect.
You are also either mistaken, or disembling;
http://knowledge.wharton.upenn...
Cheap storage VM.