Summary
Most of us were taught that pay measures what a person is worth to the place where they work. This paper argues that it cannot, and proposes what to do instead.
The case. What a company produces is made by everyone in it, together, and there is no way to divide the result among them. We can see how well a person does their own work, how many days they give, and what the company earned. We cannot see anyone’s share of it. Yet the chief executives of large American companies are paid 290 times what a typical worker earns, on arguments that do not survive a careful look. The gap then widens, because money that can be invested grows and money that must be spent does not, and because the investments that pay best are reserved for people who already have money. Equity, the usual remedy, goes mostly to a few people, pays only when a company is sold, and has to be bought. And the market rate for a role records who is scarce. It does not record whose work matters.
The proposal. FairShare pays people individually for what can be seen individually, and shares equally what can only be seen together.
- Salary comes from one short ladder that every function shares. The lowest band is a living wage, the highest pays at most three times the lowest, and the figures are fixed and published.
- Profit is shared by the day. Each day worked earns one Future, a claim on an equal slice of that year’s profit, whatever the person’s band.
- Payouts run through the following year, whether or not the person stays.
- Ownership sits with a trust. Everyone who works in the company elects, with one vote each, the council that sets the few numbers involved.
- Investors buy Futures. They get a share of a year’s profit and no shares, votes or control.
One year. In the example used throughout, a company of 250 people makes $30 million, keeps 30 percent to reinvest and puts $21 million into the pool. Each Future pays $400. Someone who worked all 200 days of the year receives $80,000 whatever their band, so total pay runs from $130,000 at the bottom of the ladder to $230,000 at the top.
What it costs. FairShare is not a perfect system and does not claim to be. Some people will earn less than they could elsewhere. A year without profit falls hardest on the lowest-paid. Investors who need a company to be sold have nothing to buy. The claim is narrower: every pay system misjudges people, and this one keeps its mistakes small and in plain sight. No company has run it yet. The paper ends with the results that would show it has failed.