Minimum Wage

Starbucks caffeinates its employees

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Starbucks loves to serve its politics up with its bitter brew but once tax cuts are causing even the biggest virtue signaling corporation to serve its employees with an “extra shot” with whipped cream.

From the Seattle Times,

All employees will soon be able to earn paid sick time off, and the company’s parental leave benefits will include all non-birth parents. Starbucks Corp. said Wednesday that the changes affect about 150,000 full-time, part-time, hourly and salaried employees, most of whom work as baristas or shop managers. The new benefits apply to workers at more than 8,200 company-owned stores but not at the 5,700 licensed shops like those found inside supermarkets…The company will give at least $500 worth of Starbucks stock in April to employees at stores, support centers or bean roasting plants. Store managers will get $2,000 in stock grants.

#makecoffeegreatagain

Iceland legislates equal pay for women

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Google statistics on the gender pay gap and you can find an endless supply of stats supporting women earning a fraction of that of men. Iceland has now made it law. Companies with 25 members of staff and over are obliged to obtain government certification of their equal-pay policies or face being slapped with financial penalties. It makes absolute sense to pay equally for identical work but we all know from our own experiences that all workers don’t perform equally in the same role. That goes for both genders.

Take two salespeople (ignore gender for now). They both work the same hours, are both the same age and have exactly the same qualities. Over whatever time period set the first outsells the second person on a 2:1 basis. Competition in their industry is rife and the employer is worried that it might lose one of is better performers if it can’t reward them appropriately.

In a previous role as head of a sales department, the top saleswoman was paid considerably more than male counterparts for “performance”. Same role, same rank, similar age and tenure. Better pay. It was rational. Gender was irrelevant. Performance was what mattered. Would the Iceland law makers censure the gender discrimination against the men in the team? Not likely. Surely it would turn a blind eye and inwardly celebrate an overturn of decades of perceived injustice!

Companies will get tied up in irrelevant, costly and onerous red tape to defend common sense. That is time consuming. Companies will need to hire a whole department to protect them from behaving too commercially or rationally. All of a sudden instead of dealing with customers staff and management spend a growing amount of time ticking internal boxes so the company doesn’t get into any trouble. Customers lose and ultimately the company becomes less profitable as a result. Lose lose.

Take it a step further. If companies could hire one group for 20% less than another for exactly the same output why would they bother paying a premium for it? Makes no sense. So the argument that women are paid less for the same role is nonsense. Why would companies bother to hire men?

Take the world of super models. The top 20 females get paid north of $1mn per annum. There are two males that achieve it. Where are the masculinists screaming for equal pay? Is it not the corporation that sees more value in having Giselle Blundchen’s sultry looks than some 6-packed dude from the Polo Ralph Lauren catalogue? Same work? Not same pay! Still Giselle’s agents know her value to the ultimate revenues of a cosmetics company that Joey Sixpack simply can’t generate. Is that unfair? Surely if Giselle has her pay capped at 1/10th current pay she might refuse to work.

Regardless of the debate over gender balance, it is not strange to see men dominate the numbers in the military, emergency services and construction. These are workplace choices. If 80% of the people who want to apply for a particular industry are men or women then why force gender balance? Doesn’t the sheer number of men or women applying for a particular type of job speak volumes about real interest? Should army recruiters in Australia face demotion if they don’t hit gender targets? Should we want our military to be a social experiment or the most capable force of defending a nation? If more men are willing and capable to serve in artillery battalions why should we deny them? Isn’t motivation a desirable trait?

Another flaw in the gender pay argument is that of classification. Stanford Professor Thomas Sowell suggested personal and workplace choices account for much of the gap…perhaps the biggest reason is biology. Women make up 50% of the workforce but give birth to 100% of the babies. And if women choose to have children, their incentives change and this affects their choices of jobs, careers, continual service and hours spent on the job…and data compiled from the Census Bureau, unmarried women who’ve never had a child actually earn more than unmarried men…according to the Labor Department, “of men and women who work 30 to 34 hours a week, women make more, 109 percent of men’s earnings.

Of Sowell’s points, continual service is important. If a woman takes 10 years out of the workforce to raise kids while her husband is able to continue in his job one would imagine prospects for promotion would be on balance higher than hers if she returned to the workforce after a long absence. It doesn’t preclude women couldn’t climb a ladder or overtake her hubby but on balance this is but one factor.

The gender pay gap is a statisticians dream. One could slice and dice it to get the result one wants. However isn’t it an insult to women to think they need a regulated leg up in life? Some of the most successful women Known to CM are determined and the last thing that crosses their mind is that being a women is an impediment. Their drive and determination was an inspiration.

The left leaning Fairfax Media is already pointing fingers at Australia to adopt Iceland’s lead. Just what Australian industry needs. More red tape.

EU pushes for 40% female representation on company boards

The EU in its infinite wisdom said that it wishes to mandate that company boards achieve a quota of 40% women. Even Germany considers this an overreach (even though its own goal by 2018 is 30%). This EU’s socialist charter to push for affirmative action was challenged in 1981 by Dr Thomas Sowell who completely debunked the myths put forward about the gender pay gap, discrimination and other stereotypes of minimum wage and income inequality. It is truly worth watching the 50 minutes or so of Sowell dispose of lawyer Mrs Pilpell whose weak liberal agenda gets ripped to shreds because is based on a lack of understanding and being loose with facts.

Don’t mistake the position of CM. If based on merit then have 100% female boards should they outqualify men. So assume that boards hit 40% women then what next? Should we hire a minimum percentage of LGBT, minorities, religious groups or disabled people to run companies? Since when should gender, sexual orientation, race, religion or disability be a bigger factor than capability  in running company boards? Shareholders expect one thing – returns. The Sydney Morning Herald wrote a puff piece on those boards without women on them underperforming. CM proved the hypothesis false.

CM wrote with respect to the SMH’s false assertion, “Note that the twenty companies listed in the article have the following 1yr and 3yr relative performance (i.e. vs. ASX 200). Note on an unweighted average over these 1 & 3 year periods, these chauvinistic men’s clubs outperformed the broader index by 22.7% and 89.9% respectively.”

Once again, gender ought to have nothing to do with it. Every ambitious, hard working female that has become truly successful in a man’s world never complained at any disadvantages they may or may not have had. They never played the woman card and I absolutely admire them to this day. One is a mentor some 18 years after we first met. So shouldn’t it be an insult to industrious women like her to see less hungry females given unfair advantages that weren’t earned through individual merit and effort like she had to endure to get there?

Yet such diversity programs designed to remove inherent biases in the system actually create the very discrimination it is designed to stop. All that matters is diversity of thought and if that happens to be women that provide that wisdom sign me up as a shareholder of every corporation that does so on merit. Listen to Dr Sowell – it is truly intelligent stuff. Poor Mrs Pilpell.

Ultra High Net Worth Individuals (by country)

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In an ever growing world of haves vs have nots, Elliman has released an interesting update on the statues of global wealth and where it is likely to head over the next decade. It suggests North America has 73,100 UNHWIs at an average of $100mn each or $7.31 trillion. To put that in perspective 73,100 North Americans have as much wealth as Japan & France’s annual output combined. Over the next decade they expect 22,700 to join the ranks.

Europe has 49,650 UHNWI also at the magical $100mn mark (presumably the cut off for UHNWI or the equivalent of Japan.

Asia is growing like mad with $4.84 trillion split up by 46,000 or $105mn average. In a decade there are forecast to be 88,000 UHNWIs in Asia.

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I am not sure what the World Bank was smoking when coming up with the coming forecasts I’ve rthe next decade but the figures smel fishy.  Then it all comes down to this chart.

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1) Political uncertainty? Everywhere you look – Trump, Brexit, Catalonia, Australia, France, Germany, Austria, Czech Republic, The Netherlands, Hungary, Poland etc etc

2) Potential fall in asset values – looks a very high chance of that. Current asset bubbles are almost everywhere – bonds, equities, real estate etc

3) Rising taxes – maybe not the US or Canada (if you follow the scrutiny over Finance Minister Morneau), but elsewhere taxes and or costs of living for the masses are rising

4) Capital controls – China, India etc

5) Rising interest rates – well the US tax cuts should by rights send interest rates creeping higher. A recent report showed 57% of Aussies couldn’t afford an extra $100/month in mortgage – a given if banks are forced to raise lending rates due to higher funding costs (40% is wholesale finance – the mere fact the US is raising rates will only knock on to Aus and other markets).

Surely asset prices at record levels and all of the other risk factors seemingly bumping into one another…

So while UHNWIs probably weather almost any storm, perhaps it is worth reminding ourselves that the $100mn threshold might get lowered to $50m. It reminds me of a global mega cap PM who just before GFC had resplendent on his header “nothing under $50bn market cap”. Post GFC that became $25bn then eventually $14bn…at which point I suggested he change the header entirely.

I had an amusing discourse on LinkedIn about crypto currencies. The opposing view was that this is a new paradigm (just like before GFC) and it would continue to rise ( I assume he owns bit coins). He suggested it was like a promissory note in an electronic form so has a long history dating back millennia. I suggested that gold needs to be dug out of the ground – there is no other way. Crypto has huge risk factors because it is ultimately mined in cyber space. State actors or hackers can ruin a crypto overnight. There have already been hacking incidents that undermine the safety factor. It does’t take a conspiracy theory to conjure that up. To which he then argued if it all goes pear shaped, bitcoin was a more flexible currency. Even food would be better than gold. To which I suggested that a border guard who is offering passage is probably already being fed and given food is a perishable item that gold would probably buy a ticket to freedom more readily as human nature can adapt hunger far more easily in the fight for survival. I haven’t heard his response yet.

In closing isn’t it ironic that Bitcoin is now split into two. The oxymornically named Bitcoin Gold is set to be mined by more people with less powerful machines, therefore decentralizing the network further and opening it up to a wider user base. Presumably less powerful machines means fewer safeguards too although it will be sold as impervious to outsiders. Of course the idea is to widen the adoption rate to broaden appeal. Everyone I know who owns Bitcoin can never admit to its short comings. Whenever anything feels to be good to be true, it generally is. Crypto has all the hallmarks of a fiat currency if I am not mistaken? While central banks can print furiously, they will never compete with a hacker who can digitally create units out of thin air. Fool’s Gold perhaps? I’ll stick to the real stuff. I’ll take 5,000 years of history over 10 years any day of the week.

Equal pay for equal work

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Australian Channel 9 TV Today Show host Lisa Wilkinson has quit the station after pay negotiations broke down. Her request to have her salary matched to that of her male side kick Karl Stefanovic was knocked back. Stefanovic is reportedly on a $6mn three year deal, contracted when he was about to quit and join another station. Call it unfair or whatever you will but Wilkinson was still paid ($1.1mn) but appeared on fewer shows than Stefanovic .The network upped it to $1.8mn (with the potential it would cause retrenchments) but it was not accepted by her. She walked to defend the gender pay gap to join a new show where she is paid 3x the salary of the male host. So the gender pay crusader is ok with earning more for equal work. How soon we forget that the station being pilloried for not paying fairly made Jana Wendt the top paid announcer 30 years ago. Commercial decision.

MotoGP is a great example of why equal pay for equal work isn’t always so simple. The Ducati Factory Team has two riders – a newly signed €25m 2-yr contract former 5x world champ Jorge Lorenzo and a €1.5mn pa 1x world champ Andrea Dovisioso. Now Dovi is in shooting distance of his first ever MotoGP crown while his overpaid team mate is ranked 8th with patchy performance. While no doubt the pay gap for the same work (riding a motorcycle as fast as possible and not crashing) will be addressed somewhat, satellite team rider Scott Redding has to “pay” for his seat. Not get paid, but pay. So much for equal pay! Yet Redding has made a conscious choice on the basis he performs and his fortunes change. He hasn’t demanded a €25mn deal because he’d be laughed at even if technically fair. Yes, the reality is that “performance” matters. If you’re a better rider, TV cameras are zoomed in on your sponsors for more of the race. That’s why the pay gap exists. Sponsors get their lick. Same job, unequal pay.

We heard similar arguments around the pay differences between the male and female national US soccer teams. The point was made that the women were more successful than the men (true) so it was absurd they were paid less.  The realities were simple. The women were paid healthy salaries whether they played or sat on the sidelines – win, lose or draw. The men were geared to pay on performance and those who were dropped on playing badly didn’t get a dime. Once again, as professional sports goes, male sports tend to be much better paid because of the revenues they attract (which is a reflection of commerciality). Lionel Messi earns 40mn euro a year. Is he worth 100x that of the highest paid female player, Alex Morgan. Well if you paid Messi $400k he probably wouldn’t play. It’s just the world of professional sports. Perhaps all players should be on $40m per year after all equal work, equal pay right? How would losing teams be able to attract superstars to help them win championships (they’re not in it to lose) if they paid them the same wage? They’d remain at the bottom of second division and go out of business because they couldn’t afford equal pay.

To turn the argument on its head, perhaps male models should have the right to protest that female supermodels absolutely trounce them for pay. Only three male models earn over $1mn while 5 times as many supermodels earn it. In the lower echelons female models get paid much more than the men. Probably because the companies that wish to advertise think their brands get more impact by using women! No problem – a commercial choice.

While there is no doubt that pay equality for the same work is fair in theory, the idea that women are deliberately discriminated against from a pure economic standpoint is irrational. If companies could hire women to do the same work as men for 25% less, why would any business hire men? If you work at Starbucks or as a bank clerk, on the same seniority, hours, effectiveness and efficiency then absolutely the pay should be equal .

For jobs that have equal output from equal time then absolutely equal pay is warranted. However workplace discrimination is an evil in almost every firm. Do we have half yearly evaluations where everyone gets the same grade and same bonus? Or do firms try to keep the best performers by incentivizing them to keep bringing in more dollars. For the record my top salesperson (female) in my former career was the best paid of all – gender irrelevant – output relevant. No complaints.

So we can howl at the gender pay gap but let’s get real with what is unfair and what isn’t. There is an idea that all have a right to equal pay but I will defend every woman who earns more than me if she legitimately beats my results – wait a minute I already did.

59yo COO sues Fujifilm Australia for ageism

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The Australian Financial Review (AFR) reports that one of Fuji Film Australia’s executives, COO David Marshall is suing for ageism. There is a sense of irony in that the Chairman of Fujifilm Japan is 78. The AFR reports,

At a dinner at Melbourne’s Rococo restaurant in 2015, former Fujifilm CEO Kevin Masuda allegedly stood up and pointed at Mr Marshall, laughingly saying “Dave is too old” in front of senior clients…During 2017, Mr Koshimizu repeatedly referred to himself in front of Mr Marshall as “old, like past 60, retirement age” and allegedly told him Fujifilm “wants you to find the next Mr Marshall” and it was looking for a “young, strong” team.’We need a younger person’

On May 18, during a dinner at Palace Hotel in Tokyo, the chairman Mr Koshimizu told Mr Marshall “Dave, you and I are old too. We need a younger person to make strong as a general manager.”

Retirement is a hot issue in Japan. Corporates are retiring expensive workers (who are often paid based on seniority) and reemploying them as ‘advisors’ (pp.15-24) on relatively paltry sums of $1,000/mth. While it is not unusual here, it would be rather strange if Fujifilm in Australia were to make such a rookie mistake in trying to flip a worker approaching 60. In 1984 85% of male employees were full time vs 62% odd today. It isn’t surprising to see the most active demographic seeking work aren’t young uni grads but the elderly struggling to make ends meet.

 

The 5 election issues seen by the Komeito include mobile phone charge spots

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The Komeito was out in force today trying to see what things were bothering potential voters. The Komeito asked the following 5 questions to passers by and requested them to place stickers against only one. Such is the level of data collection even kids were asked to put stickers. Feeling out future voters? Hardly. Smacked of garbage in, garbage out data collection.

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1: Cut politicians salaries 20%

2: Minimum wage hike to 1000 yen/hour

3. Free high school and a cut in waiting lists for nurseries

4. Easier access to cancer screens and health tests

5. Establishment of more mobile phone charging stations

On point 1. Cutting salaries has a nice ring to it. Most senior politicians in Japan earn around $250,000. Cutting salaries would likely drive up  other means of squeezing the corporate teat. One wonders if salaries were higher that more savvy people run for office as the opportunity cost is lowered

Point 2. The Japanese minimum wage is paltry  823yen/hr in 2017 up from 796 yen in 2016. The bigger concern for the Labour market is the long term trend to part time/contract and casual workers as a percentage of the workforce. Raising the minimum wage won’t solve for much. People can’t feel confident in their future if they’re aren’t secure in the job market. Even in Europe the problem is the same.

Point 3. The Abe government already has plans to build 800,000 extra daycare places by 2019. The problem isn’t in the number of schools but getting enough qualified Day-carers. Abe has raised the subsidies to secure more carers.

point 4: much of the health checks for cancer are run at the local level.

Point 5: if their 5th question is talking of mobile phone charging points the platform is running  out of steam. Why not discuss deficit reduction, taxation or ways to revitalize small business. Is it any wonder the LDP won’t fear Komeito’s powerful platform. #makekomeitogreatagain ?