What's my wage again

THE TOP 10

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  1. How "Math Men" overthrew "Mad Men" in advertising (New Yorker).
  2. MIT researcher Andrew McAfee gives his prediction on the future of jobs (TED).
  3. A conversation on data-informed investing, value creation, and basketball with the mysterious ex-General Manager of the Philadelphia 76ers, Sam Hinkie (The Investor's Field Guide).
  4. Here's your plain English and not-long-at-all primer on GDPR (Recode).
  5. What the hell happened at GE? (Fortune).
  6. It's summer reading season. Here's what Bill Gates and Barry Ritholtz are reading. And if you're interested in just getting a taste, here's a brief summary of 10 recent books on leadership (Bloomberg).
  7. Chill with your "retail is dying" takes, says Adam Ozimek. Let's take a look at the facts (Moody's Analytics).
  8. Two fascinating but opposing views on economic inequality (The Atlantic and Slate).
  9. Josh Brown shows us the proper way to think about Netflix's surging stock price (The Reformed Broker).
  10. Get to know John Carreyrou, the WSJ reporter who exposed Theranos as a fraud (New York Magazine).

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THE BIG DEAL

What Corporations Actually Pay Their Employees

Have you ever wondered what the typical coding whiz makes at Google? What about a rank-and-file chocolatier at a Hershey factory? Or the standard refinery worker at Exxon Mobil?

Well wonder no longer, because we've got data.

For the first time ever, public companies were required to spill the beans on what they paid their median employee in 2017 (in addition to executive compensation).

  • That's a result of a Dodd-Frank mandate coming into effect. The idea is that more transparency around salaries (especially the pay ratio between the CEO/median worker) might dampen the corporate greed that contributed to the financial crisis.

But before you read on, keep this in mind: The law gives corporations flexibility in how they report the numbers. So do you include paid time off in the calculations? Equity? Bonuses? Just base salary? There's no perfect formula here, and companies definitely took advantage to paint themselves in the most flattering light.

Alright, enough backstory...let's cut right to the chase

Here are three major takeaways (from an excellent WSJ analysis):

  1. Pharma pays. Yeah, you probably shouldn't have skipped that CHEM223 lecture. Of the four S&P companies whose average worker made over $200,000, three develop drugs (Incyte, Celgene, and Vertex Pharmaceuticals). The fourth company on that list? Facebook.
  2. Size matters. If you're looking to maximize your salary, narrow your job search to companies that have about 17,000 employees--that's the sweet spot where you'll see the best-paying jobs. The larger corporations (average 82,000 employees) have the lowest median pay.
  3. Geography? Also matters. It shouldn't come as a surprise that workers around the world are paid relative to how developed their country's economy is. So multinationals that employ many workers in less wealthy countries than the U.S. (think manufacturers) will have a lower median wage.
  4. * Exhibit A: The typical worker at whitey tighty-maker Hanesbrands (~90% of employees work internationally) is an equipment operator in Honduras. She makes $5,237 a year.

And things get interesting when you compare the median worker to the CEO

The NYTimes found that the median Walmart employee (salary $19,177) would need to work a long time--try more than 1,000 years--to make as much as CEO Doug McMillon's 2017 pay ($22.2 million).

Then there's Time Warner, where the typical worker does just fine with a salary of $75,217. But they'll still need to put in a few overtime hours (right around 651 years) to hit the $49 million annual pay for CEO Jeff Bewkes.

Bottom line: These new disclosures are important to the broader debate on how corporate profits are distributed among workers. For now, we can all agree the more information...the better.

CONVERSATION STARTER

Last week, President Trump (with support from many Democrats) signed the biggest rollback of Dodd-Frank regulations since the financial crisis.

The red meat: Under Dodd-Frank, banks with over $50 billion in assets had to follow stricter rules. But this bill raises that threshold to $250 billion, freeing up smaller and mid-sized banks from some red tape.

So....what are we left with? Here are the remaining banks that are still over $250 billion in assets:
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Start a (friendly) debate: Did Congress do the right thing here? Were these rules from 2010 an overreach based on fresh battle scars? Or with this rollback, are we being too reckless about what got us into the crisis in the first place? Take it up with your friends and colleagues.

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Breakroom Answers

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May 28, 2018
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