Is income inequality unfair?

youngishbear

Sun, Dec 14 2014, 12:07 am

zaq wrote:

There are businesses that do this. It is called "profit-sharing" and usually has good results all around, as long as people do not start considering their share of the profits as a given to be depended upon. If profits decline, so do the profit shares.

Sounds wonderful.

Marxism didn't work out because of lack of incentive for individuals, amongst other reasons. Also profits were not actually distributed amongst the workers.

Volunteer

Sun, Dec 14 2014, 7:26 pm

About profit-sharing:

Dh once worked for a very large company that had a profit-sharing incentive. If the particular store he worked at made a profit above a certain minimum, all the employees would get a quarterly bonus, which was a small percentage of the profit. It was a nice little bonus, and he usually got something each quarter. But, he thinks it was not very effective at giving employees the incentive to do their best work. Since the bonus was based on the profits made by the store, the amount that everyone got did not directly depend on how well they worked. Seasonal changes in sales, shrinkage (damaged or stolen merchandise), employee injuries on the job, and decisions made by lower and upper management all have an effect on the profits, so each employee's contribution to the profits was small. Also, all the employees shared the bonus equally, so if one worker works hard, and another gets by with minimum effort, the harder working employee does not get more.
Dh said he thought that a better system would give smaller, more frequent bonuses that recognize specific actions or achievements of individual employees. For example, this company gives a very small bonus for finding mistakes in the inventory as it's being delivered. That is more effective because it rewards specific employees for specific work they did (in this case, being vigilant at spotting errors in shipping).

Maybe other companies have more effective profit-sharing systems than this one does, but, while it was nice, it didn't actually encourage individual achievement in this case.