Unsurprisingly, Top Performers Leaving Companies Under Pay Czar’s Rule
It floors me when people who have an inkling of how markets work warn what will happen if pay restrictions are imposed on some of the companies in an industry, but not all, and those warnings are disregarded. And no, I’m not campaigning for all companies to come under the “pay czar’s” control. Instead, what is clear is the “pay czar’s” unilateral pay cuts are now hurting the very companies you and I (and our grandchildren’s grandchildren) unwillingly bailed out. And while I mostly agree with MichaelW’s thoughts on the subject, I also understand that the way it is being done does not help make their profitability (that’s how they’re going to pay back the bailout money) better. In fact, it stands a much better chance of hurting profitability:
Many executives were driven away by the uncertainty of working for companies closely overseen by Washington, opting instead for firms not under the microscope, including competitors that have already returned the bailout funds to the government, according to executives and supervisors at the companies.
“There’s no question people have left because of uncertainty of our ability to pay,” said an executive at one of the affected firms. “It’s a highly competitive market out there.”
It would be a bit like the government getting its hands on an NFL franchise for whatever reason that was failing. After “saving” it with your tax dollars, the powers to be decide that one of the things they need to do is severely limit the salary of players, because, you know, in relation to Joe Six-Pack, what the players make is obscene. So they unilaterally put salary caps on what players can make that are well below industry standards.
Any guess what happens when free agency rolls around? Any idea of how many drafted players are going to say “no” and remain unsigned when their salary demands aren’t met? Why?
To quote the executive, “It’s a highly competitive market out there”, and there are teams more than willing to pay the price for that talent. Why? Because the talent has proven themselves or have tremendous potential (as in the case of high draft choices).
So if it is blindingly obvious what would happen with an NFL franchise if the same thing was done there, how do these people who are doing a very populist political thing endemic to identity politics, think what they’re doing will be the exception?
They’re unilaterally limiting the talent pool in financial institutions we’ve paid to bail out which puts in jeopardy the ability of those companies to pay back the bailout money.
That doesn’t hit me as very bright. But then, a lot of things that have been done recently fall into that category, don’t they?