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0 pointssokoloff10y ago0 comments

I now understand your point, and I thank you for that. It was escaping me, because I so strongly hold the opposing point of view. Thank you for explaining it.

My view is that with an ESPP policy, Netflix helps align employee incentives with investor (and executive) incentives, and that makes those employees more likely to act as shareholders and take a pro-company mindset. It serves a legitimate purpose and is a hell of a perk, IMO.

Taking that perk away hurts the poor employees more than the rich employees. Rich employees can invest in other stocks, bonds, real estate, etc. Granted, the ESPP is an excellent investment vehicle for them so it's not a surprise they take advantage of it, but if you kill the program, you hurt the very people you're trying to help.

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CognitiveLens10y ago

I'm not sure how removing a policy that "poor" employees can't take advantage of hurts them. The claim is that employees who can't afford to defer earnings are in effect denied access to the perk - it is therefore a regressive perk that widens the gap between those at the top end and those at the bottom end, regardless of how it shapes the overall incentive structure.

It definitely serves a legitimate business purpose, but the employees who can't afford to participate are relatively worse off. Taking away the perk removes one source of imbalance, at a slight cost to the people who could afford to take advantage of it. But like you say, "rich" employees have many other investment options.

kethinov10y ago

How is paying people who are already wealthy more than people who are poor helping the poor?

sokoloffOP10y ago

You're focusing on the wrong side (IMO). Paying poor people a bonus on top of money they save is helping the poor, mathematically and psychologically.

I won't deny that rich can take more advantage of this program, but the working poor at Netflix also can.

If you allow someone who is poor to save even $200 in an ESPP and give them a 15% bonus on top of that, you both introduce them to stocks as well as give them $30.

True, if someone literally doesn't take any advantage of the program at all, taking it away hasn't hurt them. What I suspect instead happens (from having worked alongside good and hard-working "blue collar" workers) is that Bob figures out that if he just saves a little bit in this program that sounds too good to be true, he gets more money, then he does it and it works, then he tells Charlie and Dave about it (bragging about his maneuver, but also wanting his friends to get in on this), then Charlie tries it, then Dave is convinced, and they tell their two best friends at work, etc.

Don't focus on how much money Chad and Biff are making from this program when considering eliminating it. Worry about the warehouse/call center worker and don't screw them over by killing it just as they're getting started saving.

The warehouse worker or call center worker who started out saving just $200/yr in the program and spending that money on Christmas for his kids is way better off after a few years when he realizes he can start tightening his belt around a few 'little leaks' in his life and the cycle of pure paycheck-to-paycheck starts to get broken. Maybe he gets up to $200/quarter (about $3/workday), then $25/week...

kethinov10y ago

I'm not suggesting that such a program should be eliminated. Instead it should be reformed to benefit the majority more fairly rather than disproportionately benefitting those who are already wealthy. If poor employees can only afford to contribute 10% of their salary to ESPP, then everyone should be bound by that same limitation. This is typical at many other companies.

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0 pointssokoloff10y ago0 comments

I now understand your point, and I thank you for that. It was escaping me, because I so strongly hold the opposing point of view. Thank you for explaining it.

0 comments

CognitiveLens10y ago

kethinov10y ago

How is paying people who are already wealthy more than people who are poor helping the poor?

sokoloffOP10y ago

You're focusing on the wrong side (IMO). Paying poor people a bonus on top of money they save is helping the poor, mathematically and psychologically.

I won't deny that rich can take more advantage of this program, but the working poor at Netflix also can.

If you allow someone who is poor to save even $200 in an ESPP and give them a 15% bonus on top of that, you both introduce them to stocks as well as give them $30.

kethinov10y ago

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