Never been laid off during a recession or had your pay frozen and bonuses cancelled during a hard time? Employees risk a lot more than most stock holders by working for a company. On average, stock holders are way more diversified.
Uhm no?
You apparently never been a business owner. Employees get their wages, and even can legally enforce them. If a business go down, owners eat the losses and envy their employees.
I've been on both sides. Being a business owner is much riskier.
Is the risk high enough to justify the ever-growing disparity between owners/C levels/investors/etc and the employees that get the work done?
What with all of the bail-outs through history, running an especially large company seems pretty much riskless. And hell, if you look at the history of technology, say games and game consoles (because I like retro games) the number of times a hugely successful product/project that netted 100s of millions of dollars was "not allowed" by the CEO etc but was hidden until it was too late (see Xbox etc) is super high. In addition to the number of decisions made by higher ups where the business swallowed a loss (particularly easy in larger businesses) is also high.
Imagine if Bill Gates and Steve Balmer hadn't been convinced/swayed to make the Xbox. How much profit has MS made from that? A fucking shitload, and have the guys that pushed it, or for that matter anybody in a similar situation (of which there are many) ever seen any of that success? No.
And we can't say "well the CEXs have the final say because they take on all the risk" they do, technically, but in reality when C levels screw up oftentimes it's just taken as a loss and things move on.
Pay frozen == no pay raises
hmm, they can perhaps reduce the risk by not working for a company. They can just be stock holders or launch their own company, that way whatever may happen they will never get fired.
How can anyone seriously type this? If you fuck up bigly enough, you will 100%—without fault—get sacked. Again, not even talking about long tails (bad economic conditions, layoffs, etc.).
This is under totally normal situations: if you lose the company money, you will be fired. As a bonus, you also lose unvested options or equity. These kinds of posts are exactly why engineers have garbage bonuses compared to finance even though they probably generate an order of magnitude more value.
which is to be expected - making a big mistake might not be something that can be forgiven and overlooked (depending on the magnitude of the mistake).
But you will not lose capital as an employee, since you did not put in capital to lose. Your time would still have been paid, up to the day you are fired.
Therefore, you obviously have no incentive to take on a risk that can result in a mistake (but which the reward you take no part in). You just do your assigned job, and whether it saves the company money or not, as long as you can cover your ass, you're golden.
Unless the company incentivize you to save money - for example, via a bonus through hitting a target or achieving some goal that was set.
The conversation is a lot more complicated because there's an opportunity cost, you lose time (your time is finite, company time is infinite), you lose reputation, and so on. Besides, your argument is a bit weak as it's not like hedge fund managers put up the cash themselves, either.
My point is only that value-generators should be rewarded as such, and it's a bit weird that engineers are totally cool with not getting a piece of the pie.
It depends on how much you mess up. Mess up large enough as an employee and you can end up sued by your former employer. Losing a lawsuit is losing capital. A probably not comprehensive list of reasons an employer can sue an employee, not all of which are because of negligence or malfeasance: https://www.mylawteam.com/employment/can-an-employer-sue-an-...
Depending on the state you can also have your pay docked (if that's not a capital loss, at least for transportation costs, then I don't know what is): https://www.avvo.com/legal-library/employment-law/paycheck-d...
