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#5 | Posted by BillJohnson at 2026-09-19 09:35 PM
I'm not saying those things explain everything. But 40 to 1 became 325 to 1 somehow.
#11 | Posted by LampLighter at 2026-09-21 02:14 AM
So, I asked why that change in ratio, from 40 to 325.
The answers why some hinky "ratios" of 1970s are different from the same "ratios" in 2020s are very simple and have been clearly explained here many times before - it's all about damn lies and statistics, global competitiveness, productivity and efficiency... and "technology."
1. 'Hourly wage' ("share of Labor") usually doesn't mean total compensation, which includes company-paid medical insurance, SS contribution, part of 401(k) or (more rare now) defined-benefit plan and other benefits, which were smaller or nonexistent in 1970s.
2. Comparing entirely different jobs just to come up with x multiplies of "average" worker's hourly wage to "average" CEO's total compensations is silly - salary is usually a relatively small part of typical CEOs' compensation package, who are incentivized with stock and options. So these ratios vary widely with the stock market valuations, and they are usually much wider when stock markets are on major bull run, like we have now; and the "average" CEO's compensation is further distorted by stock holdings of few founders-CEOs, whose stock valuations grew much faster than wages - obviously not the case in the 1970s.
So now is a great time to bring up the "nonsense ratios."
3. There was a horrible 15-year period for corporate earnings (shrinking 15%) and stock market "going nowhere" from 1965 to 1982, with rampant inflation and stagnation ("stagflation"), MMFs and UST's paying 12%-15%, Fed rates shot to 20%, US companies were burdened by high labor costs and low productivity, rapidly losing market share to foreign companies and some going bankrupt from the pyramid scheme of underfunded pensions (which mostly have been gradually replaced by more manageable 401(k) plans, starting in 1978).
Unions kept increasing costs/prices and lowering productivity "pricing their labor and products out of the market."
4. Crucially, the microchips "revolution" and affordable computer/electronic technology in the late 1970s allowed companies to replace ever-more-expensive labor with ever-cheaper "technology" (Faster, Better, More, Cheaper) - streamlined tax code incentivized transformation from stagnant, low-productivity economy to competitive high-tech / high-productivity one, which created millions of high-paying jobs :
https://fredblog.stlouisfed.org/2023/03/when-comparing-wages-and-worker-productivity-the-price-
measure-matters/ - When comparing wages and worker productivity, the price measure matters
https://www.investopedia.com/historical-us-unemployment-rate-by-year-7495494 - U.S. Unemployment Rates by Year
5. Labor had a moment from late 1940s through 1970s. You simply can't compare the composition of 1970s economy with the one in 2020s. For example, in 1970s UAW had 1.5M members producing cars. Today, they have less than 400K (with half not in auto industry) but produce vastly more cars, using robots and cobots (which, BTW, required significant initial investment, along with training - "costs to the company", but contributing to lower expense of headcount and productivity gains over time), e.g.:
https://finance.yahoo.com/technology/ai/articles/gm-swapped-1-000-detroit-232700845.html - GM Swapped 1,000 Detroit Workers for 50 Cobots - 2026-06-26
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Cuti,
So...put a summary on the end.
In summary.....