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Thread: Payroll employment increases by 321,000 in November; unemployment rate unchanged

  1. #151
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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post
    401(k) plans are given to you by your employer, so what you are saying doesn't make sense.
    Do you really need me to spell it out?

    With a pension plan, the employer contributes to the plan (and I'm assuming this is included in compensation statistics). Pension funds are obligated to pay out specific amounts over time during collections, and the employer needs to keep the fund solvent -- even if the fund's investments happen to decline. With 401(k)s all of the risks are shifted to the employee. If the bottom falls out of the market, a pension fund is supposed to continue its payouts, while the retiree withdrawing from the 401(k) can not only lose income at that time, but it can also cut future wealth growth.

    IIRC large pension funds also made companies targets for hostile takeovers.

    Now does it make sense why I said that "the switch from pensions to 401(k)s are almost certainly better for companies, but not for employees" ?


    Also, less than 20% of Health Care expenditures are out of pocket. Majority of expenditures are through insurance, and most health care coverage is provided through insurance, whether its private or public, so what you are saying doesn't make sense either.
    What I'm saying is that in the past, employers offered better health insurance plans and picked up the whole tab. Over the years, as the costs of those plans increased, employers have shifted more of the costs of those plans to the employees. Is that clearer?


    It also makes zero sense to compare CEO compensation to wages of employees. They're not measured or achieved in the same regard.
    It makes a great deal of sense to me... and I'm not the only one.

    Though I guess I'd agree that CEO compensation surely isn't "measured" by the same standards as most other employees. If a normal employee screws up for a long enough time, they'll get fired, with little or no severance. CEOs today receive enormous compensation regardless of the actual company's performance. They get much more leeway than a typical employee. And of course, they usually receive enormous exit packages when they leave.

    I'd say that despite these discrepancies -- or more importantly, because of them -- it makes a lot of sense to compare CEO pay to that of other employees.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Visbek View Post
    ...or, we can gather statistical information about groups of individuals, in order to find meaningful data about those groups.

    We should also note that there actually isn't a lot of economic mobility in the US. The top and bottom in particular are sticky. So while breakdowns by quintile aren't perfect, they certainly do give us meaningful information about what's happening in the labor force and the economy as a whole.
    No, it doesn't. All it tells us is that Group A is in one particular place in Year 1 and Group A is in the same group in Year 2. It doesn't tell us anything about the people within those groups. This can only be done by tracking individuals overtime, which several studies have done in regards to income mobility (such as the Federal Reserve Member banks and the BLS). Its all a matter of numbers and statistics.

    For example, lets say that you annual measure the height of your children (C1:5'3", C2:3'10" and C3:3'4"). Year 1, their average height is 4'2". Year 2, you have a fourth child, while your other children have grown 4 inches. The addition of the fourth child lowers the average height of your entire offspring, despite the fact that your other children have growth by 4 inches.

    This is statistically explained and studied through the lack of income gains in the bottom quintile earners. Poor people earn money. Poor people move higher in income quintiles. New people entering the labour force becomes the new poor.

    Yeah... not so much. Again, perceptions of economic mobility are out of whack with reality.

    The chart shows that economic mobility is exactly in sync with reality. Only 43% of children raised in bottom income households are likely to remain in such households, while the rest have the ability to move up up in the ranks. This doesn't refute what I say, and it is in line with most studies about income mobility.

    Yes, income and wages do change over time; in particular, retirees often lose lots of income. But in general, there isn't nearly as much mobility as people assume.

    Keep in mind that the upper limit for the 1st (lowest) quintile is around $20k/yr, and the 2nd quintile is $40k. And that's per household, not per capita. So yeah... The poor tend to stay poor, the rich tend to stay rich, and the middle occasionally gets shuffled around.
    This has already been studied extensively. The bottom 50% in 1975 were at the Top 40% 16 years later. Among 25 year olds and older who filed their income tax returns in 1996, by 2005, their incomes rose 91%.

    So instead of providing alternative measures, we should just... throw up our hands, and ignore how wages have basically flatlined for the past 40 years? Fascinating.
    Wages haven't flatlined in 40 years. You'd see that if you measure wages on their own merits.

    OK then. Let's look at wages.



    H'm... It doesn't look like compensation have outpaced productivity. Am I missing something?

  3. #153
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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Visbek View Post
    Do you really need me to spell it out?

    With a pension plan, the employer contributes to the plan (and I'm assuming this is included in compensation statistics). Pension funds are obligated to pay out specific amounts over time during collections, and the employer needs to keep the fund solvent -- even if the fund's investments happen to decline. With 401(k)s all of the risks are shifted to the employee. If the bottom falls out of the market, a pension fund is supposed to continue its payouts, while the retiree withdrawing from the 401(k) can not only lose income at that time, but it can also cut future wealth growth.

    IIRC large pension funds also made companies targets for hostile takeovers.

    Now does it make sense why I said that "the switch from pensions to 401(k)s are almost certainly better for companies, but not for employees" ?
    You're not saying much of anything. You have complete 100% freedom with a 401k plan, as opposed to a regular pension, which is not managed by you or your employer, but an investment company. Is there significantly more risk in 401k? Sure, however, the rewards are significantly greater. There is a lot of freedom involved with a 401k, which allows for greater flexibility and transparency when it comes to your financial independence. 401k plans posted higher results than both the stylised final average deferred-plans and the stylized cash balance plan.

    I personally would rather have a 401k (considering that I'm in the finance industry and all) over a pension.

    What I'm saying is that in the past, employers offered better health insurance plans and picked up the whole tab. Over the years, as the costs of those plans increased, employers have shifted more of the costs of those plans to the employees. Is that clearer?
    No, it isn't clear, because it isn't clear where this basis of this statement lies. Out of pocket cost also includes copayments and/or deductibles. This hasn't really increased as a percentage of health care expenditures either.

    It makes a great deal of sense to me... and I'm not the only one.

    Though I guess I'd agree that CEO compensation surely isn't "measured" by the same standards as most other employees. If a normal employee screws up for a long enough time, they'll get fired, with little or no severance. CEOs today receive enormous compensation regardless of the actual company's performance. They get much more leeway than a typical employee. And of course, they usually receive enormous exit packages when they leave.

    I'd say that despite these discrepancies -- or more importantly, because of them -- it makes a lot of sense to compare CEO pay to that of other employees.
    This is simply false. CEO compensation is determined strictly on performance, and usually, the benchmark is company performance. Because of this, CEO compensation is highly volatile. Compensation can increase anywhere from 31% to - 41%. If you, as an employee, experienced a 41% drop in income, I don't think you would be too happy about that. Then again, most financial savvy people don't compare employee task and duties to the CEO. It's nonsensical.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post

    That graph is outdated by a year. Sometimes its just better to get the information from the horse's mouth.

    $1,780.2 W&S Supplements / $14,801.2 GDI = 12% of GDI
    GDI = GDP, not gross personal income. But i digress, the information was a tad outdated.

    Employees have received more income overtime.
    Not as a percentage of personal income:



    It makes sense to compare the growth of wages as a percentage of personal income, relative to other forms of income.
    Do you believe government transfers make up the slack?

    Why do you think it makes sense to compare wages and salaries to GDP? What exactly would that show? They are virtually the same, in a textbook sense, anyway.
    Personal income is not the same as GDP. None the less, it is a simple (yet certainly not complete) method in identifying how much compensation goes to labor.

    They save more of their income and have higher expenditures than lower income earners do. They spend money all the same.
    They have a lower marginal propensity to consume domestic goods.
    Last edited by Kushinator; 12-09-14 at 03:00 PM.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post
    Unit Labour Cost are already indexed for inflation, so your graph is inaccurate.
    No they are not.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post
    CEO compensation is determined strictly on performance, and usually, the benchmark is company performance.
    This is the claim.

    This is reality.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Kushinator View Post
    All that shows is how Unit Labor Cost are measured. While we do deflate Real Output per Hour, we don't deflate ULC. The whole purpose of measuring ULC determining the underlying rate of inflation for the economy in the medium term. Its intended to track inflation. This can't be done if you deflate ULC with the CPI-U

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Kushinator View Post
    This is the claim.

    This is reality.
    Who ever wrote that has obviously never looked at a DEF 14A form issued by any corporation to the SEC. Board of Directors don't measure stock returns in determining performance (maybe. If there is a BOD that measures stock returns, I haven't seen it). There are actual benchmarked used in determining that.

    Aside from that, the study is nonsense, with clear selection bias. It's only looking at 200 CEO/Corporations, not even the entire S&P or market overall. If anyone really wanted to, they could to go the Edgar SEC database, sure for any business, look up their proxy statement, and look at exactly how their executives were compensated.
    Last edited by WallStreetVixen; 12-09-14 at 03:30 PM.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by Kushinator View Post
    Do you believe government transfers make up the slack?
    Yes. If incomes from the top are being transferred to the people on the bottom, their incomes will rise while the incomes at the bottom will fall.

    Personal income is not the same as GDP. None the less, it is a simple (yet certainly not complete) method in identifying how much compensation goes to labor.
    The workforce has many different forms of compensation. It cannot be captured with only wages and salaries. Your employer can either give you $10,000 in extra annual taxable income, or $10,000 in untaxed health insurance funds It works out to about the same.

    They have a lower marginal propensity to consume domestic goods.
    That's not necessarily a bad thing.

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    Re: Payroll employment increases by 321,000 in November; unemployment rate unchanged

    Quote Originally Posted by WallStreetVixen View Post
    All that shows is how Unit Labor Cost are measured. While we do deflate Real Output per Hour, we don't deflate ULC. The whole purpose of measuring ULC determining the underlying rate of inflation for the economy in the medium term. Its intended to track inflation. This can't be done if you deflate ULC with the CPI-U
    You stated that ULC's are already indexed for inflation. This is simply not true.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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