I did some ‘back of the napkin’ math a few days ago to see what it would take for the employees in my company to purchase enough shares for a controlling stake in the company. I figured that we’d never get 100% of the employees to buy in, but we also don’t need 100% of the shares, so to keep it easy I calculated if 60% bought 60% of the shares… and it would cost each employee around $2.3 million.
That tells me that each employee provides $2.3 million worth of value to the company… and we’re not getting paid anywhere near that. Not even close.
Why is this highly upvoted? This is just a poor understanding of economics.
The market cap just shows the aggregate value of shares that are being publicly traded. It has nothing to do with labor value. You can’t derive labor value from the market cap because there’s no correlation. If you want to find out how much each employee contributes, you would have to use something like company revenue.
Here’s a site that calculates basically how much you’re being exploited in a company. It’s mostly for American stock exchanges, but if you can find the financial reports of your company you can apply the same method (it’s nicely described).
The top comment doesn’t really work, because even if workers pooled the money together, shareholders or execs might refuse to sell their shares if they are expecting it to grow and pay them out more in the future. Buying up companies to turn into coops doesn’t work (except for failing/bankrupt companies), because it takes capital to do that, which workers don’t have by definition.
gotcha. What about assets? Im not an accounting person, but we routinely buy tooling for hundreds of thousands of dollars. Raw materials have costs/value associated with them. How would that figure in?
If you want to compare it to salaries, I think you would need to do the year-over-year change. But even that wouldn’t factor in all the bloated C-suite bonuses and such, so I feel like the calculations would end up being much more complex.
For instance, if you work somewhere for 23 years making on average $100,000 per year, you’ll have received about $2.3 million from that company over time. If that company’s market cap increases by $2.3 million per employee in that course of time, then you would be about even by your metric.
each employee provides $2.3 million worth of value
Market cap is just the value at which shares are sold on the market, not necessarily the actual value of the company. It implies a lot speculation for investors on how much they expect to gain from the ownership. The company equity/net worth is a more accurate indicator. What you’re calculating is the accumulated value in time, not yearly.
If you want the ratio of generated value to wages paid, it’s hard to accurately calculate with just public data, but you can approximate it so: in a given year, take the operating income and divide it by the number of employees. Operating income accounts for overhead expenses like SG&A (Sales General & Admin), which includes things that you can argue are useless (like wages for execs, middle management, and sales), but they also include admin costs like office rents, etc. Then you also have to find the average/median wage of a worker at the company, so the total is:
yearly value created by a worker = (operating income / n. of workers) + median wage
It’s interesting to note how in all of these top companies, for every 1$ paid to workers, another ~1$ is transferred to capitalists through dividends and buybacks.
I did some ‘back of the napkin’ math a few days ago to see what it would take for the employees in my company to purchase enough shares for a controlling stake in the company. I figured that we’d never get 100% of the employees to buy in, but we also don’t need 100% of the shares, so to keep it easy I calculated if 60% bought 60% of the shares… and it would cost each employee around $2.3 million.
That tells me that each employee provides $2.3 million worth of value to the company… and we’re not getting paid anywhere near that. Not even close.
Company value is just the result of shareholders expectations for the future company value. It doesn’t directly reflect the employees worth
Why is this highly upvoted? This is just a poor understanding of economics.
The market cap just shows the aggregate value of shares that are being publicly traded. It has nothing to do with labor value. You can’t derive labor value from the market cap because there’s no correlation. If you want to find out how much each employee contributes, you would have to use something like company revenue.
this is interesting to me. can you show your work? Id be interested in going through the thought experiment as well.
Here’s a site that calculates basically how much you’re being exploited in a company. It’s mostly for American stock exchanges, but if you can find the financial reports of your company you can apply the same method (it’s nicely described).
https://yourfairshare.info/
The top comment doesn’t really work, because even if workers pooled the money together, shareholders or execs might refuse to sell their shares if they are expecting it to grow and pay them out more in the future. Buying up companies to turn into coops doesn’t work (except for failing/bankrupt companies), because it takes capital to do that, which workers don’t have by definition.
Market cap is around $141 billion.
Number of employees is around 60,000.
60% of employees: 36,000.
60% of market cap: $84 billion.
$84B / 36,000 = $2.33 million.
gotcha. What about assets? Im not an accounting person, but we routinely buy tooling for hundreds of thousands of dollars. Raw materials have costs/value associated with them. How would that figure in?
Those are operating costs, I’m referring to control of the board of directors.
If you want to compare it to salaries, I think you would need to do the year-over-year change. But even that wouldn’t factor in all the bloated C-suite bonuses and such, so I feel like the calculations would end up being much more complex.
For instance, if you work somewhere for 23 years making on average $100,000 per year, you’ll have received about $2.3 million from that company over time. If that company’s market cap increases by $2.3 million per employee in that course of time, then you would be about even by your metric.
Market cap doesnt reflect the value of labor, its purely speculative these days.
These days?
So get to shitposting!
You should subtract initial investments in the company, value of real estate owned, value of machines etc.
Market cap is just the value at which shares are sold on the market, not necessarily the actual value of the company. It implies a lot speculation for investors on how much they expect to gain from the ownership. The company equity/net worth is a more accurate indicator. What you’re calculating is the accumulated value in time, not yearly.
If you want the ratio of generated value to wages paid, it’s hard to accurately calculate with just public data, but you can approximate it so: in a given year, take the operating income and divide it by the number of employees. Operating income accounts for overhead expenses like SG&A (Sales General & Admin), which includes things that you can argue are useless (like wages for execs, middle management, and sales), but they also include admin costs like office rents, etc. Then you also have to find the average/median wage of a worker at the company, so the total is:
yearly value created by a worker = (operating income / n. of workers) + median wage
You can also do a quick calculation using this tool: https://yourfairshare.info/
It’s interesting to note how in all of these top companies, for every 1$ paid to workers, another ~1$ is transferred to capitalists through dividends and buybacks.