Is Capital or Labor Winning at Your Favorite Company? Introducing the Marx Ratio

"Thanks to a minor provision in the 2010 Dodd-Frank financial reform law," writes Neil Irwin, "we have a tool for measuring, in rough terms at least, how much any given publicly traded firm rewards its shareholders relative to its rank-and-file employees. Behold, the Marx Ratio." Here's his take on Facebook:

Facebook is wildly profitable, generating almost $635,000 in earnings per employee for shareholders. It also pays those employees extremely well, with median compensation of $240,340, for a Marx Ratio of 2.64.
More of Facebook’s success accrued to capital — to the company’s owners — than to labor. Its profits are driven by the network effects that keep both users and advertisers wedded to it, which are owned by shareholders. Rank-and-file software developers and advertising sales workers have less ability to extract a big chunk of the value being created.


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