Joe Nocera, in the NYT, on Wall Street bubblehead a**hats:
This week, American companies announced somewhere around 65,000 layoffs. Caterpillar, Kodak, Home Depot, I.B.M., even mighty Microsoft: they are all cutting jobs. Everywhere in the United States, people are feeling the pain of this deepening recession. Even those with jobs worry about their futures. Their 401(k) plans have been decimated. They are frightened and angry.Which is why Wall Street should not be surprised that oversize bonuses and $50 million jets generate outrage -- and tough rejoinders from the president. "It suggests the selfishness of people on Wall Street," said Charles Elson, a corporate governance expert at the University of Delaware, who sounded pretty outraged himself. "Wall Street has yet to learn the lesson of what happened." What happened, put simply, is that the people who thought of themselves as the smartest guys in the room -- and were paid accordingly -- weren't so smart after all. They brought down the financial system. They lost so much money that only the government can save them. The scolding they got from the president this week suggests that they're going to be paying a price -- richly deserved, I might add -- for a good long time.
More:
Wall Street traders are also extremely reluctant to give up the "eat what you kill" mentality that has dominated their profession these past two decades. There is no sense of shared enterprise at most firms, and no belief among the rank and file that they should have to pay a price if the firm is drowning in losses and needs government support. That is why they are so blind to how they appear to the rest of us. They just want theirs. That is the culture they have created.Indeed, Ira Kay, a top executive consultant with Watson Wyatt, told me that this bonus season has been akin to "war" inside many Wall Street firms. "It is a small group of people who caused the problems," he said. But other bankers had very good years -- and all over New York they are now complaining about their smaller bonuses, completely tone-deaf to how this sounds outside their Wall Street silos. You can make a pretty convincing argument that that culture -- and the bonuses that flowed from it -- had a lot to do with creating the financial crisis. If Wall Street can't bring itself to admit as much, the new administration and the Democratic Congress are going to be more than happy to point it out.
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Jon
The real solution of course is to restore overtime laws to their original strength and purpose so that they apply to just about everyone in the workforce, save a handful of true professionals (doctors, lawyers etc.), actual business owners, and corporate officers. Just because there's a computer on your desk doesn't mean you be classedd as "exempt."
Why should doctors and lawyers be exempt?
I don't know what you mean by 'lawyers' or 'doctors' anyway. Most of them bill for their time, so laws about wages are not particularly relevant to them, anymore than they are relevant to someone selling stuff at a flea market. They make as much as they can get other people to pay them for goods and services. You can't legally require that random customers pay them overtime. Same with small business owners...even if you could require that they pay themselves a set wage per hour, at that point you'll just end with them lying about the hours they work.
The grunts, who work under other lawyers or doctors, shouldn't be exempt, though, nor should doctors at hospitals or businesses they don't own.
WRT to formerly exempt workers....I wouldn't be adverse to some sort of 'flex time' possible for people who are expected to 'reach goals' instead of working 9-5, but overtime should still be paid for an average over the standard time. We need to make sure that the laws allow workers staying two hours late Monday-Thursday so they can head out of town on Friday. (I'm not talking about businesses being required to allow that, I'm saying that business should have the option of letting them do that without paying two hours of overtime every day.)
So the thing to do would be to set a daily and weekly average, and a daily and weekly maximum. Any exceeding of the maximum, under any circumstances, would be overtime, as would any exceeding of the daily average over a week, or the weekly average over a month. (A running average of some sort would probably be better, although more complicated.)
And the only people who should be exempt from overtime are people who are functionally 'on-call' 24 hours a day. Like corporate executives, like politicians, etc, where you've stopped punching any sort of clock. When normally you can work whenever, and in a crisis you work 22 hours a day with a 2 hour nap.
If anyone can call you out on 'working whenever', if you have a boss requiring you to show up at work at a specific time, you're not one of the people I am describing.
The easiest way to decide this is to simply make it function of pay. Simply require that overtime-exempt people make $75,000 a year, or even more. Anyone who is a decision-making and on-call 24/7 should be worth that.
In case you didn't link to it, Beliefnet's own "Movie Mom," Nell Minow, who, in her day job is the co-founder of The Corporate Library, was on The News Hour with Jim Lehrer discussing this very issue.
http://www.thecorporatelibrary.com/
The link to The News Hour bit is towards the bottom of that page.
Nell is a very impressive lady, and a terrific movie critic.
BTW, I think Nell really cuts to the heart of the issue with her common-sense, rational approach.
I've learned one thing about incentives, namely that financial incentives are often the least productive.
When I want something out of an employee, I give him or her some reason to perform a task above and beyond the call of duty. For the true workers, this is usually some cash allowance, because it does make a difference. $100 for coming in on a Saturday, that sort of thing. For middle- and upper-management, money buys me nothing except more whining about how they are underpaid. It gets lost in the whole. As soon as they see they can get paid for doing nothing, that becomes the culture. Not that incentives won't have real costs in dollars, but an unexpected day off or family tickets to a sporting event or concert (or a new frickin office chair) are significantly more tangible (despite often being intangible) than an extra bonus of that day's salary. It's about expectation, and beating an expectation will always merit greater thanks. So why set the bar so high?
Bearing that basic principle, it seems like poor business strategy to just give someone an excess of 3 or 4 million on top of an already ludicrous salary, especially when the competition at this level is so stiff. Then the expectation becomes much greater and any real incentive is lost in the equivalent of lighting cash on fire.
The best in the room argument? Modern Competitive Theory and every form of economics dictate that the fittest will prevail. Supply and demand drive pricing and there is always another qualified competitive person standing in line to do the same job at a fraction of the salary cost. The risk argument in a comment above illustrates this. At a certain point, the risk you take in financial terms is not worth the marginal payoff you can expect from any one individual's performance. At a certain level, all Harvard MBA's can produce the same results. No one is worth these high payments who isn't out already earning it for themselves. The excess comes in the form of Moxie. I'm talkin Bill Gates, or Warren Buffet and I don't see alot of that floating around on Wall Street, begging for handouts from rich bankers to get cushy CEO positions. They're out there movin' and shakin' for themselves.
Jon, I get the difference between average and median, and I'm here to tell you that if the median is "a few thousand dollars" then the guys skewing the average all the way up should be getting NOTHING.
To put it another way: Hollywood just had it's best January ever, WarnerBros just had it's best year ever, and yet WarnerBros just laid off 800, Disney is laying off, Paramount is laying off, while Wall Street gets $18 Billion in bonuses.
Explain that in any way that makes sense.
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