Slipping one past mutual fund investors

In 2013, PBS Frontline released the documentary titled The Retirement Gamble. While the name is off target — it’s really about how Fund industry fees hamper nest egg growth —  the video takes key retirement issues head on.

In one scene, economist Robert Hiltonsmith is sitting at a computer scanning an on-line fund report as he explains the myriad fees levied by the industry. He points out the column heading shown in the screen shot below.

Students reflect on Inside Job – The 1% vs. the 99%

As discussed in What I learned watching Inside Job 25 times, I show this movie at the end of my introductory investing course. I then ask students to reflect on it. One of the questions they’re asked:

“The movie talked about how income disparity is growing between the top 1% of income earners and the other 99%. The 1%ers continue to separate themselves from other 99%. An example: a Manhattan apartment can now sell for over $100 million. But, over half of Americans have no wealth and are having trouble affording the house or apartment they live in! How do you view this? Is it a concern to you or something that’s not important, and why? Make sure to address how this could play out in the medium and long-term future, as in:  Where will this lead?”

Sophomore M.K.  I believe that compensation should be about value added towards the company, so in the case of the disparity between a CEO and a minimum wage worker, the CEO is potentially making million dollar deals, while a wage worker is doing a non-specialized task. The debate over income disparity that is occurring should not be focused on executive pay; rather, raising minimum wage to allow hourly workers to make a real living instead of living paycheck to paycheck. If something like this is not done, there will be real societal issues to follow, with hourly workers possibly going on strike or worse, leaving the economy in the lurch. This is a major issue that can and should be solved by the government, requiring companies to pay their hourly workers fair pay and benefits. After watching the documentary on Walmart earlier in the year in class, that documentary made the point that the bottom line of the company would not be reduced by such as margin where they couldn’t make money. Rather, the movie showed that with higher pay came worker satisfaction which in turn led to more efficient working. This would led to large companies making even more money, with their workforce even more efficient.

About the supposed gender pay gap

The Narrative Our society is not nearly as progressive and fair as we imagine. Exhibit A is our continued oppression of women by paying them less. More federal legislation is required to fight this injustice and to permanently sideline the forces waging their deplorable war on women.

The Reality When analyzed properly, there is no pay gap. As the following articles show, the pay gap seized upon by the Administration is computed as the average salary of women divided by the average salary of men. For example, if the average woman’s salary is $40,000 and the average man’s $50,000, then it’s clear women earn only 80% of what men earn.

A closer look at the issue reveals that there are many factors accounting for the difference in average pay which having nothing to do with gender discrimination. Examples include:

  • the level of schooling
  • number of hours worked
  • number of years in a position, and
  • the differences in positions held.

When these are accounted for, the supposed pay gap all but disappears. And, while there are regrettable instances of companies practicing gender pay discrimination, these anecdotal stories do not systemic discrimination make. Refreshingly, media outlets of all political stripes have stepped up to report the facts. The Obama Administrative pays them no mind. The opportunity to fire up a misinformed populace in support of further Federal regulation is just too irresistible. See:

Pay Gap Myths Spread Around Equal Pay Day – CNS News – April 15, 2016

Wage Gap Myth Exposed — By Feminists – Huffington Post – January 23, 2014

The Biggest Myth About the Gender Wage Gap – The Atlantic – May 30, 2013

The Gender Pay Gap is a Complete Myth – CBS MoneyWatch – April 17, 2011