So this investment group managed to find value in a company which previous managers had not, that's fine. But they also captured all the rewards, which none of the actual workers could do. 2.3 billion divided by 1200 is about 2 million per worker, yet they make $10 per hour. While this is legal, it seems wrong. There are plenty of frameworks (stock options, employee ownership, unions etc) that would have accomplished this but it seems like only in the tech industry is it assumed that the people doing the work deserve some of the rewards. As events like this are more common it should be just as common for non-knowledge workers to be able to benefit from turn around a like this.
A theory: The ability to capture the rewards depends to a large extent on political power within the organization (i.e. rather than merit and market value). Management has great political power, naturally; that's why in some organizations even failing managers get massive bonuses, golden parachutes, etc.. For workers to have power they need to organize themselves, and that is what unions are: Political power for workers.
People complain that unions are corrupt, which of course some are and to different degrees. That's also true of managers and anyone else with political power.
Yep. That's exactly why the idea of unions being necessary goes all the way back to the beginning of capitalist economic thinking. The first person to make a version of that observation was Adam Smith himself.
Tech companies don't give options to employees because they "deserve some of the rewards". They do it because it's difficult to attract and retain top talent, especially for speculative start-ups. That's not the case for blue-collar jobs.
> That's only because the supply/demand situation of tech laborers gives us bargaining power at the moment. It won't last forever.
Tech is unique in the job market in that it's much easier to move up the value chain relative to other types of jobs. There is very much a tech underclass of easily-replaced workers. As time goes on, more and more of these sectors become commodified. IT workers used to be really highly paid, now they're replaceable. PHP was once in high demand, now it's only a little better than being a IT worker.
The question here is whether there will always be a sector for tech workers to move to where they can easily leverage themselves a seat at the table. I find it hard to believe that it'll suddenly go away anytime soon.
Even non techies get large stock option grants, while an outlier the chef at Google made millions when they IPO'ed. At other places I've worked writers, designers, HR, tech support etc have all gotten options. Is this not typical?
That's not a realistic choice, so it's not a compelling argument. The workers in this case don't "prefer" cash, it is the only option.
However, if there was a basic income in this country, I think workers in a situation could indeed make that choice. If it was $10 basic wage + $10 equity OR + $10 wage now there's something to discuss because that's a more interesting trade off.
(((edit to clarify based on comments: yes I meant a $10 basic income + either ( $10 equity or $10 wage )
I didn't even comment on the parts of the story that actually made me unhappy, which was the ridiculous debt financing deal, the blatant union crushing, skipping out on pension commitments, and ultimately laying off 90% of the original work force in order to "extract value" from a mediocre junk food company which is just going to end up in bankruptcy again when they're done with it.
If we're talking about a basic income for just working aged Americans (because kids don't need it and the elderly are already covered by other programs) we're talking about roughly 200M people.
200M * 2000/hours per year * $10 hour = 4 trillion dollars a year.
For comparisons sake the current federal budget is about 3.8T.
I picked the $10 value for UBI at random (well, because that was the wage in the article). I should have probably thought about it a bit more. As you point out, it's a bit expensive. Maybe we could pay for it by mining diamond asteroids, who knows?
A more reasonable assumption might be $5 UBI + $10 wages = the proposed $15/hr affordable living wage.
And yeah, you'd pretty much have to tax the rich and the corporations more and stop spending so much on the military to get there. But money was invented by people, I feel like generally more of it should be in the hands of the average citizen. Sure, I want a Scrooge McDuck money vault as much as anyone, but I will argue that wealth inequalities around the globe cause real harm, and a bit more wage/equity/reward flexibility in the way corporations pay non-tech workers might be an improvement.
I'm confused why you are bringing up a basic income. I might also bring up a basic job guarantee, open borders or other random political proposals, but that's just derailing the conversation.
I agree that Hostess probably didn't offer equity. However, if it did, do you think more than a tiny number of workers would have chosen equity over cash?
Workers don't get upside if the stock does well for the same reason they don't get downside when the stock tanks. They are more risk averse and have a stronger desire for liquidity; as a result they are paid cash which satisfies their preferences.
Out of all the things that make you unhappy, which things do you think wouldn't have happened if private equity allowed Hostess to die? From what I can tell, 100% of the workers would have been laid off, the pension still would have gone bankrupt and the union would no longer exist.
I used to have a boss who grew up and lived most of his life in Russia. Many times he would say to me: "that's capitalism, baby." I think it's a quote from a movie, he often spoke in movie quotes.
