Three charts have kept my interest for the past few months.

1.  Corporate profits are at an all-time high

2.  Wages as a percent of the economy are at a low

3.  CEO pay continues to grow

 4.  Workers are more productive, yet wages haven't matched that productivity


Given the combination of the above, I make the following modest proposal to address the above issues:

1.  Overall compensation increases for Key Employees and Highly Compensated Employees, as defined by the IRS, will be capped...UNTIL
2.  Compensation increases for the rest of the employees averages 5%.
3.  Thereafter, the cap is removed.

A simple enough example:
a) It would take $500,000 to raise the compensation of the bottom 92% of employees by 5%
b) The top 8% could not see their overall compensation raised by more than a total of $500,000 until part a is reached.

RATIONALE
1.  If you want to pay exorbitant amounts of money to your top level people, go wild....as long as most employees see some gain from the success of the organization
2.  By averaging compensation at 5% for lower-level employees, it provides flexibility to recognize high performing employees.

In this weekend's New York Times, Floyd Norris highlighted the latest statistics for workers and corporations.  He writes:

In the eight decades before the recent recession, there was never a period when as much as 9 percent of American gross domestic product went to companies in the form of after-tax profits. Now the figure is over 10 percent.

During the same period, there never was a quarter when wage and salary income amounted to less than 45 percent of the economy. Now the figure is below 44 percent.

Accompanying his article, were a number of charts, including the below to highlight his point:


For decades, the success of workers and corporations were intertwined.  As corporations did well and had high profitability, benefits expanded and wages increased.  A rising tide lifts all boats, right?

In the 1910s, Henry Ford knew if workers worked long hours at low pay, they could neither afford nor consume the product they were making.  So, he lowered the work day to 8 hours and the work week to 5 days, while offering $5 a day in wages (doubling wages).  Check out his thoughts here.

When did organizations decide that workers no longer deserved to share in the success of the organization?