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The Horror of Paying Over Minimum Wage

English: 1978–1979 Honda Civic 3-door hatchbac...

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This insightful article in CFO Magazine alerts employers avoid the (apparently common) pitfall of paying employees too much:

The Worst Thing You Can Do to an Employee

The example they use is of a person earning $12.50 an hour for work that the rest of the market only pays $8.50 for.

Here are the perilous dangers, as noted by writers Doug White and Polly White:

  1. Overpaid employees don’t know they are being overpaid!
  2. Because they don’t know they are overpaid, they live beyond their realistic means
  3. When the inevitable layoff occurs, the sad employee cannot adjust to earning what he or she actually “deserves” to earn

“Paying significantly above market rates to employees who cannot justify the premium through increased output is not only irresponsible, it’s an abrogation of the company’s fiduciary responsibility to its shareholders.

Most people who find themselves out of work will try to replace the income they have just lost. They believe they can, because they think they are worth what they were making. Refusal to accept lower-paying jobs lengthens unemployment and makes matters worse. They try to hang on to the lifestyle they built, not realizing they will never again attain their former level of income. We’ve seen cars repossessed, foreclosures on homes, broken marriages, and even suicide.”

Note the paternalistic condescension. Wrap your brain around the assumptions made in this article.

Do the authors imagine that with the “extra” $4.00 an hour difference between the “overpaid” and the “properly paid” employee will mean the difference between a used Honda Civic and a Ferrari?

Unbeknownst to the likes of people who write for CFO Magazine, people making the wages described are quite capable and practiced at making the most of their meager wages.

The authors give no word on how overpaying CEOs of companies that lose tons of money is unfair to the all-important shareholders or to the poor CEOs.

I guess that’s because in the current corporate world, CEOs are like migrant farm workers, moving from place to place collecting a crop of benefits, stock options and bonus compensation without worry of having to adjust their lifestyles one iota — even after fucking things up royally.

It sounds to me that the compensation package of the Whites should be scrutinized to make sure they aren’t earning more than the market bears for shovelling bullshit.

We wouldn’t want to be unfair to them.

-Chris

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December 7, 2011 - Posted by | Economics, Media Criticism, Wall Street | , , , , , , ,

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