If companies shared their cash with employees

February 27, 2014

2014-02-17_11-16-13What they haven’t been doing is giving extra cash to employees, despite s a year of solid – and often record – profits and huge cash hoards. A survey by Aon Hewitt on compensation trends for 2014 shows that companies plan to raise salaries by just 3% this year – the highest since 2008, when the average raise was 3.7%. Economist Ed Yardeni notes that employee compensation and capital spending as a percentage of GDP has been the lowest since the mid-1950s.

But suppose each company with $1 billion in cash took 5% of that stash and give it to employees as a bonus. Unlike a raise, which is an ongoing cost, a bonus is simply a one-time payout – a way of thinking workers for a good year. What would each employee get?

SOURCE: If companies shared their cash with employees.

What happened to the idea of the three legged stool concept of corporate governance? It used to be that there were three pretty equal priorities for American business: Owners, Customers, Employees.  All were considered of equal importance to the well being of an American corporation. It seems in the last thirty years that the owners have become far and away the only leg. Of course this trend is also analogous to the accumulation of wealth at the top end of the economic scale.

I can remember in the 1970s getting year end bonuses. They were never even close to approaching the ones given out on Wall Street and board rooms today but it was always a good feeling to know that we got a little extra for our contribution to our company’s economic health. It made us feel we were appreciated.

There are thousands of companies today that have mammoth stockpiles of cash sitting in company coffers.  Their employees have worked hard and made the company a success. Why aren’t they thanked the same way as those who buy their stocks? If that were to happen maybe at least a small amount of company loyalty would return to American business.  Everyone likes to know that their contributions to any effort are appreciated. A little pat on the back both physically and economically will go a long ways.

The source article goes on after the above quote to show that it would mean about $3,000 to each of the S&P 500 companies. It would mean about $270 for each McDonald’s employee. That is almost the equivalent of one week’s pay at the typical minimum wage that most earn. Wouldn’t it be nice to know that you are appreciated even for flipping hamburgers?

2 responses to If companies shared their cash with employees

  1. 

    The min wage needs to go up. Unfortunately, I do not think it will change the amount that corporations collect, it will only increase the price to us. Like the Vanderbilt’s era, we can only hope “they” eventually give us libraries or something else they see fit to give.

    I only worked in a place that offered bonuses once. How did they work? Did the cleaning people and secretaries who ran the structure for the sales or technicians get a large bonus as well in the ’70s. Did lower team members get the same amount as others? I just don’t know how it works. You already shared that corporations, that probably gave great bonuses to the higher ups, did not even cover secretaries in the pension plan.

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    • 

      Janette, you seem to be much more defeated in this area than I am. No, I am not willing to simply sit back and wait for libraries to be built or to just wait for a scrap or two to be thrown off the table.

      Social justice is a fight I believe is very much worth our efforts. Most of it occurs through legislation. I thank the Lord that Teddy Roosevelt had to courage to attack the Robber Barons of his day. We need that courage even more so today.

      As far as my experiences with bonuses in the 1970s, yes the janitors and secretaries also got them. Secretaries pensions and such were actually better than we had as engineers. They were covered by the union agreements. In fact much of what we got were actually from previous union agreement with them then given to us.

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