Regarding David G’s point about the divorce of corporate ownership from management, this is a major consideration which I have discussed, I believe, on a variety of occasions on this blog, referring all the way back to the classic book by Gardner and Means. There is no question that this divorce of ownership from corporate control has permitted senior management at large corporations essentially to steal a portion of the corporation’s profits and redirected it into their pockets in the form of excessive salary and benefits. That is an important story but not the one I was concerned with in my post.
Let us put some numbers to this discussion to make it a little bit more concrete. The median wage for full-time employed American workers is currently in the range of $40,000 a year plus or minus. But there are some millions of workers not in senior management positions making eighty thousand or hundred thousand or hundred twenty thousand a year. If my hypothesis is correct, why do not the senior managers drive those salaries down by tens of thousands of dollars and open the jobs up to workers who do not have college credentials, thus creating the sort of competition for the somewhat but not dramatically better jobs that would make it possible for them to be filled at those reduced salaries?
We have become so accustomed to the present state of affairs
that we very rarely ask what its origin or rationale is. I am genuinely puzzled
by this and I do not have a ready answer to my own questions.
22 comments:
And maybe University Presidents can drive down the salaries by having professors without the requisite degrees. That would bolster competition too. More and more I want to be like that philosopher that stays pushes the barrow while the world is ending.
Why don't the senior managers drive down the salaries mentioned?
Because they're not the rational economic agents that you and Marx suppose.
Their sense of self-esteem, of who they are, is tied up in the system, is tied up in the idea that a university education, especially from an elite university or one that is almost an elite university, matters and tracks competence and above all, tracks merit.
Now it's important to the senior managers to think of themselves as meriting their tremendous salaries, their power and their social prestige. If they open those one- hundred-thousand-dollar a year jobs to people who do not have a university education, they are tacitly admitting that going to a university does not track merit or at least that it is not an important indicator of merit and thus, casting a doubt over whether they merit their own positions. That is unbearable for them, they need to believe their own bullshit lies to feel good about themselves.
I'm not claiming that there are not here and there a few completely Machiavellian cold-blooded capitalists, but most of them need to convince themselves that the world is just.
"why do not the senior managers drive those salaries down by tens of thousands of dollars and open the jobs up to workers who do not have college credentials, thus creating the sort of competition for the somewhat but not dramatically better jobs that would make it possible for them to be filled at those reduced salaries?"
This is already happening for many jobs, especially in IT, software development, other tech positions. But to the extent that it is not happening, what SW said above.
First, I think you mean Berle and Means, not Gardner and Means.
Second, what s.w. said, plus also maybe the existence of HR Departments, which I wd think tend to be rather invested in credentialism.
Professor Wolff asked: "If my hypothesis is correct, why do not the senior managers drive those [80k-120k mid-managerial or specialist] salaries down by tens of thousands of dollars and open the jobs up to workers who do not have college credentials, thus creating the sort of competition for the somewhat but not dramatically better jobs that would make it possible for them to be filled at those reduced salaries?"
The argument from the HR perspective, particularly in the public sector but also in many heavily regulated areas in the private sector (energy, healthcare) is market-based: employers conduct salary surveys with comparator companies or agencies or jurisdictions to ascertain the "market" for particular classifications of jobs, make a determination as to what percentage of the "market" they wish to pay employees in particular job classifications, and then establish percentage differentials between line staff, lead, supervisory, and management positions within a particular class structure to match the organization's view of itself relative to the "market" for their employees.
If upper-management at any one employer moved forward with suppressing the credentialing and experience requirements within their own classification structure, they would miss out on recruiting and retaining the "best" talent for those jobs. So the suppression would have to be coordinated across entire industries - where factors like organized labor and worker mobility would eventually provide a backstop to the suppression of mid-managerial salaries.
Off-Topic
'Tis the season
Veni veni Emmanuel
The other reality is that most "decent" jobs (i.e., salary with benefits) get so many applications, a degree is just another way to weed people out during the selection process. You will still be left with a good applicant pool that will still most likely take something close to the salary you're offering.
I wonder about this story: suppose I'm a senior manager. Maybe the current arrangement is one where 10 people below me make $40,000 per year and 1 college grad makes $100,000 per year; and maybe (as you point out) there's another possible arrangement where I throw the doors open on the last position and all 11 people below me make $45,000 per year. That leaves my labor costs about the same either way. As long as my profit is the same, I don't care between those.
Now, would you have to bump the salary on the 10 positions up from $40 to $45k if all applicants also had a shot at a (…perhaps less demanding…) middle management job? That seems plausible to me…
A major reason is the incestuous relationship between corporate boards and management. Management largely controls who is on the board. The board sets its own and management's compensation. Boards are largely rubber stamps, who meet once a month to ratify what management has done or wants to do. Members fly in from here and there, stay in posh hotels on the expense account, and pick thousands per month in director's fees. Many, if not most, directors are there as ornaments--Hunter Biden, Caroline Kennedy.
Prof. Wolff,
I went online to purchase a paperback copy of “Understanding Marx.” Are you aware of the price your book is selling for in paperback? On Amazon, the price for a used copy ranged from $239 to $246. A new paperback copy costs $809.67 (with free shipping). Prices at Ebay were the same. I am going to obtain an interlibrary loan from the University of Michigan.
P.S.:
Used copies of “Understanding Rawls” were much, much less expensive. (I once annoyed a professor of Biochemistry at the University of Michigan by commenting that the course pack he required students to purchase was very cheap. “Inexpensive” he scornfully responded.)
Happy Holidays everyone! And Hail to our New Chief!
MS
I just quickly looked up RPW's _Understanding Marx_ on the site ABE Books. Prices there are considerably more reasonable, though on a quick look the sellers appeared to be book dealers in the UK, so shipping might take a while. Interlibrary loan might be your best bet, but you shd know that ABE Books is a good site for out-of-print, older, used etc. There are others too, I'm sure, but it just happens to be one that I know about.
Obviously I consider the book worth every penny you have to pay for it :-) On the other hand, you can click on the link to box.net at the top of the front page of the blog and there you will find the book archived for free. Just saying…
I've also had good luck with ABE books. Last month, looking for a used copy of a book published in 1960, I got a copy for $20; all of the Amazon offers were over $100.
Oddly enough, ABE books is owned by Amazon!
Prof. Wolff and David,
Thank you both for your advice. That is very generous of you Prof. Wolff. I just checked. I can print the 170 pp. of “Understanding Marx” for about $6.00 total. (I order printing paper from Office Max at 10 reams per box for about $33.00 – covers a lot of motions and briefs.) I have an aversion to reading books, cases, documents on a computer screen – can’t write notes in the margins.
I am actually looking forward to 2021. Aside from our new President, I have a number of exciting and precedent making cases in suit – 3 cases in New Jersey relating to important 1st Amendment free speech issues; a case in the 6th Circuit involving the intersection between two rights protected under the 1st Amendment, free speech and free exercise of religion; and a case in Michigan state court involving an Hispanic individual who has been harassed by a major public Michigan university (not U of M) which, we claim, blackballed him from the Ph.D. program at the School of Agriculture because he was advocating a program to unionize the migrant workers in Michigan. All these cases will be coming to a head in 2021.
Sorry LFC, I missed your comment when I submitted my comment thanking Prof. Wolff and David. I checked ABE Books. I can obtain a copy of “Understanding Marx” for $60.00, including shipping. I am going to opt for the free copy offered by Prof. Wolff. Money’s a bit tight – and the way things are going, I may not get that financial supplement that our fine hero of the People is holding up.
@ D. Palmeter
I didn't know ABE was owned by Amazon. I guess I shdn't be too surprised.
@ MS
Actually you cd get it for less than $60. There were prices in the $30 range. But obvs. printing the free copy is the way to go.
'the way back to the classic book by Gardner and Means. There is no question that this divorce of ownership from corporate control has permitted senior management at large corporations essentially to steal a portion of the corporation’s profits and redirected it into their pockets in the form of excessive salary and benefits.'
There is 'no question' that what, now? I question even what 'essentially to steal' is supposed to mean, here, given that 'the corporation's profits' wouldn't answer the question about whose profits they are. You're thinking of how the sole responsibility of a corporation is to maximize profits for its shareholders? Your issue here, is 'Senior executives get paid too much', which becomes, 'why do we allow public companies to steal from their shareholders' In that you are concerned that profits are reduced and cash that should be paid out in dividends to shareholders goes to those executives? And, in your opinion that’s a much better place for it to be? Like, maybe much of that money would end up in individual middle class people’s 401(k) accounts? I am giving it my best guess, but still, it's not like somebody is stealing from you, here. And permitting senior management at large corporations essentially to steal, implies that stealing is, like, a bad thing. Which seems like a piece of bourgeois morality, which I can't figure, isn't this something that Marx rejected? Wouldn't this seem relevant? Like, morality is nothing more than ruling-class ideology? I guess that point is emphasized only when it gets emphasized..? I also don't know how to avoid inferring, here, that almost all public CEO’s are overpaid. In your opinion. You mention 'senior management at large corporations'. The senior management group at any big company, then?
While we are at it, the classic book by Garnder and Means is, I suppose, The Modern Corporation and Private Property? Well, this was written by Gardiner Coit Means, is his name. That is, if we're thinking of the fellow who during the New Deal, served as an economic adviser to Franklin D. Roosevelt and Henry A. Wallace. I could seek to identify Means's ideological place in the discipline, and my understanding is that his analysis etc., made a decided case for an active role for government in supervision and regulation of the private sector.
Merry Christmas to all!
'If my hypothesis is correct, why do not the senior managers drive those salaries down by tens of thousands of dollars and open the jobs up to workers who do not have college credentials, thus creating the sort of competition for the somewhat but not dramatically better jobs that would make it possible for them to be filled at those reduced salaries? We have become so accustomed to the present state of affairs that we very rarely ask what its origin or rationale is. I am genuinely puzzled by this and I do not have a ready answer to my own questions.'
You are geneuinely puzzled by .. this?
A lot of people are underpaid, but a lot more people are not underpaid. Do we want people to be realistic about their value on the talent market? In a way, every employer challenges every employee to go find a better pay rate somewhere else if they think they can. who doesn't work in Silicon Valley or another high-salary zone is underpaid because they could move to Silicon Valley and make bank -- but that doesn't mean they are underpaid in their own zip code.
By the same token, every employee quietly challenges their employer to go find a better employee for a lower salary if they think they can.
I elided the 'college credentials' question entirely, or, the question of how the value of educational credentials is and isn’t changing. I have a college degree, and I find the idea that a college degree is 'valuable' to be rather ingenuously believed by tuition-paying students. It's often repeated that by earning your bachelor's degree, you could earn as much as $1 million more than someone with a high school diploma over the course of a career, and this is supposedly according to recent data from the U.S. Bureau of Labor Statistics and such.
How valuable is a college degree?
Bill Gates does not have a college degree. Of course, Gates left Harvard after two years, opting instead to start his own computer software company. I also contemplate Mark Zuckerberg, Harvard dropout and CEO of a company worth nearly $400 billion or whatever it is. This is the story, then, of billionaires who were college dropouts before becoming rich. It's approximately 1 in 8 billionaires, as I recall. Well, fine, you don't need an Ivy League degree to become a billionaire. Ralph Lauren. Ted Turner. Michael Dell. Larry Ellison. You don't Need a traditional college education to be successful, as it were. The genuine desire to learn aside.. if you pinpoint career goals as your main motivation for pursuing a college education, then I am being perfectly serious when I offer, as a 50-year-old educated man, that it doesn’t mean that this is the only – or best – way to live a good, happy, successful life. Maybe I would feel different about it if I was advising my own children, I don't want anybody to feel misled here, maybe that's how you feel too, when you here that Oprah Winfrey is an anomaly that is unattainable for the average person. Of course, yeah, comparable levels of success are highly improbable for most people.
College graduates or not.
The shared characteristics of these individuals, I think you can acquire these traits both with and without a college education. Most of us aren't Steve Jobs. But, 'how can I get rich without going to college?' has many answers, and reasons you don't need a college degree to earn big are several. In any case, this is how I managed to just ignore the whole 'college credentials' issue on my first pass here -- I think that it can be ignored.
@ Danny
As has already been pointed out by a couple of commenters, _The Modern Corporation and Private Property _ had two authors (Berle and Means). Prof Wolff just made a little (and understandable) mistake in the OP that he didn't bother to correct -- it's not that big a deal. (Esp I guess, from a practical standpoint, since Berle is no longer alive and thus can't complain about it.)
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