November 17, 2008

Job Cuts

I read today that Citigroup plans on cutting 40,000 jobs over the next six months, one of many corporations I expect to see shedding jobs thanks to current economic problems. But I find it interesting that shedding jobs instead of shedding CEO salary is the priority.

Pandit's compensation in his first year was around $216 million. If the average worker being cut is being compensated at a rate of say $54k/year, then if Citigroup just fired Pandit they would save enough to pay the salaries of 4000 workers. I wonder if you cut the salaries of the top 50 compensated executives at Citigroup by a factor of five (I imagine most would be still well into six figures if not over a million), just how many $54k units that would add up to?

Citigroup hasn't asked for a bailout (yet), but this is the kind of thing that I hope Obama takes care of. If a company comes to the taxpayer asking for particular benefits, then one requirement we can impose is a harsh limit on executive salary. Even if we don't get to do this to all companies, we can at least drive the market down to a more reasonable level. It would save a LOT of jobs and also reduce the crowds at Republican $10k/plate fundraisers. Win-win!

Posted by Observer at November 17, 2008 07:00 AM
Comments

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It's not the salaries that need to be cut, it's the bonuses. I heard the tail end of a news report on the radio that said the top execs from one of the financial institutions have agreed to take ONLY their $600K salaries for the year. (but I expect there's a secret back room deal for "deferred bonuses" once the company is back on its feet and fleecing people at the usual rate again.)

Posted by: Perkusi on November 18, 2008 06:13 AM

Yeah, I tried to be careful, but I wasn't careful enough. Do a global substitution there with compensation appearing any time you see salary.

:g/salary/compensation for those who speak vi.

Posted by: observer on November 18, 2008 09:22 AM