Size Matters: How Companies Pay Their Workers

Summary

WSJ Your Money Briefing – “Size Matters: How Companies Pay Their Workers”

Date: August 2, 2018
Host: J.R. Whalen (Wall Street Journal)
Guest: Teo Francis (WSJ Reporter)

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Episode Overview

This episode explores how public companies pay their employees, focusing on the factors that influence median pay beyond just company size. Drawing from WSJ’s own analysis of pay disclosures from over 1,100 publicly traded firms, reporter Teo Francis and host J.R. Whalen discuss the impact of company structure, workforce composition, and global operations on the numbers reported—and what these mean for job seekers, employees, and investors.

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Key Discussion Points & Insights

1. Scope and Methodology of WSJ's Analysis

• Only Public Companies Examined

  • WSJ focused on public companies, as only these are required to disclose median employee pay. (03:12)

  • Analysis included about 1,100 firms, both large and small—not just household names.

    “This analysis really only looked at public companies ... but not just the biggest public companies. We looked at about 1,100, as you said, and that includes some that are pretty small and that most people probably wouldn’t have heard of.”
    — Teo Francis (03:12)

2. Company Size vs. Pay

• Size Isn’t Directly Correlated with Higher Pay

  • Company size (big or small) doesn’t predict higher salaries.

  • Companies compete for the same talent pool, regardless of brand recognition or headcount.

    “Companies compete with one another for talent and for skilled labor. And a well-known home builder or a well-known biotech company is competing with lesser companies as well. You see really a range of pay across well-known and lesser-known names.”
    — Teo Francis (03:45)

3. Median Pay: Impact of Workforce Composition

• Importance of Workforce Structure

  • Median pay can be driven down if a company employs a large number of low-wage or part-time/seasonal workers.

  • The SEC’s methodology doesn’t adjust for part-time or international workers, which can skew numbers.

    “If you have a whole lot of low-paid employees, as many restaurant and hospitality companies do, then you’re more likely to have a much lower median pay number...you see those median pay numbers go way down, sometimes down below $10,000 a year.”
    — Teo Francis (04:16)

4. Global Operations and Their Influence

• Foreign Labor Lowers Median Pay

  • Companies with many overseas, lower-wage employees report lower median pay.

  • Example: Hasbro vs. Mattel—two similar companies with very different median pay costs due to outsourcing/manufacturing choices.

    “Hasbro reported median pay of about $74,000 last year, compared with about $6,200 or $6,300 at Mattel. And that’s because Mattel mostly employs its own factory workers...Hasbro outsources them. So those employees are on some other company’s books.”
    — Teo Francis (04:56)

5. Industry Structure: Entertainment Example

• Industry Definitions Mask Pay Differences

  • Entertainment covers a wide variety of business models, from major broadcasters (CBS) to event and amusement park operators (Live Nation, Six Flags).

  • Some firms have high median pay (CBS, WWE); others, due to large part-time/seasonal workforces, report much lower figures (Six Flags: ~$8,000; Live Nation: ~$24,000).

    “Really, when you’re in different parts of an industry, you’re going to see very different pay practices. And a lot of that has to do with business structure as much as with company size.”
    — Teo Francis (06:38)

6. What Job Seekers and Investors Should Understand

• Look Beyond the Numbers

  • Median pay can offer useful info, but often masks nuances about company structure and workforce makeup.

  • Job seekers/investors should “look under the hood” to understand what’s behind the reported numbers for a given company and role.

    “If you’re looking at Hasbro and Mattel, you might be scared off by the lower pay number that one of them has. That may just be a reflection ... of their structural operations rather than what you’re going to be paid as an employee.”
    — Teo Francis (07:25)

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Notable Quotes & Memorable Moments

• On the broad pay range within industries:

  "...you see really a range of pay across well known and lesser known names."
  — Teo Francis (03:45)

• On the effect of overseas workers:

  “Mattel mostly employs its own factory workers ... Hasbro outsources them ... So those employees are on some other company’s books. As a result, Hasbro only has the higher paid, probably more American or European based employees, and therefore its median pay number is considerably higher.”
  — Teo Francis (04:56)

• Advice to job seekers:

  “... it may have a lot to do with the kind of job you’re pursuing.”
  — Teo Francis (07:38)

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Timestamps for Important Segments

• Public Companies & Disclosures: 03:12
• Company Size & Pay: 03:38–03:45
• Workforce Composition’s Effect on Median Pay: 04:06–04:51
• Foreign Workers & Example of Hasbro/Mattel: 04:51–05:55
• Entertainment Industry Pay Gaps: 05:55–07:09
• Takeaway for Job Seekers/Investors: 07:09–08:00

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Summary Takeaways

• Median pay at public companies is heavily influenced by how companies structure their workforce (full-time vs. part-time, domestic vs. international, outsourced vs. in-house).
• Size or name recognition isn't a reliable predictor of pay; business models and operational choices matter more.
• Median pay figures are useful, but must be interpreted in context—especially by job seekers and investors.

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For anyone considering job opportunities or investment decisions, this episode underscores the importance of digging into the details behind the numbers—median pay tells a story, but it doesn't always reveal the full context.

Transcript

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[Teo Francis]

money briefing Money in Market Stories from

[J.R. Whalen]

the Wall street journal. I'm J.R. whalen in New York. The Wall Street Journal analyzed how public companies pay their employees and it has little to do with how big or small the company is. We'll run the numbers in a moment. First, these Money headlines the Payroll processing company ADP says 219,000 private sector jobs were added to the US economy in July. That was the largest number since February. And of the 219,000 medium sized business businesses, which have anywhere from 50 to 499 employees added 119,000 jobs, more than small and large businesses combined. Analysts point to tax cuts and increases in government spending as spurring on the hiring, and they say that tariffs have yet to impact the labor market. The Wall Street Journal Daily Shot column takes a look at several current economic indicators and points out that consumer spending continues to be robust, as does consumer confidence, mainly due to the red hot labor market. And the Federal Reserve concurs, announcing Wednesday it's holding interest rates steady and it acknowledged that economic activity has been rising at a strong pace. However, Americans feel much better about their current situation than they do about the future. A measurement of consumer expectations by the University of Michigan versus the current conditions puts American forward looking sentiment at a level not seen since late 2001. And cheaper, less comprehensive health plans could be more common after the Trump administration announced it is loosening restrictions on a type of coverage known as short term medical insurance. Those are low cost plans that cover a limited period with less expansive benefit offerings and which are subject to fewer consumer protection regulations. Such plans can now only be carried for up to 90 days. The new rule would allow the plans to last for a year and be renewed for a total coverage period of 36 months. The plans also don't have to cover people with pre existing conditions and insurers can charge higher premiums based on a consumer's health status. They also don't have to include include the Specific benefits mandated by the Affordable Care act, such as prescription drug coverage. This is your money briefing from the Wall Street Journal. Welcome back, everybody. The Wall Street Journal analyzed more than 1100 companies, both large and small, to find out how they pay employees. Wall Street Journal reporter Teo Francis headed up the analysis and he joins us to explain how more than just company size plays a role. So Theo, one of the things to come out of the analysis in your piece is that if you're looking for high salaries, a good place to start looking is public companies.

[Teo Francis]

Certainly this analysis really only looked at public companies because those are the companies that are required now to disclose the pay of the median employee. That is the employee smack in the middle of the distribution from the highest paid to lowest paid. So this is explicitly looking at public companies, but not just the biggest public companies. We looked at about 1100, as you said, and that includes some that are pretty small and that most people probably wouldn't have heard of.

[J.R. Whalen]

Among those public companies, it really doesn't matter if the company is a household name or not, to find higher salaries.

[Teo Francis]

That's right. That's maybe not too surprising. Companies compete with one another for talent and for skilled labor. And a well known home builder or a well known biotech company is competing with lesser companies as well. You see really a range of pay across well known and lesser known names.

[J.R. Whalen]

And if you're looking for median pay, sometimes it can be driven down if the company employs a large number of people at a wide range of salaries.

[Teo Francis]

Yeah, that's right. I mean, it's not so much the range of salaries, but where most people are. If you have a really even distribution between a very low minimum wage kind of number and a very high number, then you know your midpoint will be somewhere in the middle. But if you have a whole lot of low paid employees, as many restaurant and hospitality companies do, then you're more likely to have a much lower median pay numbers. So you see companies that have a large seasonal workforce or a large part time workforce. Neither of those are adjusted for in the SEC's methodology. And so you see those median pay numbers go way down, sometimes down below $10,000 a year.

[J.R. Whalen]

And sometimes if employees are overseas, then that could have an impact on the numbers also.

[Teo Francis]

That's right. You'll see a company, in fact a great example are two companies that compete head to head. Hasbro and Mattel. These are both toy companies. They both compete directly in many areas, games, dolls, toys, action figures, that kind of thing. But they have very different business models. Hasbro reported median pay of about $74,000 last year, compared with about 6,200 or 6,300 at Mattel. And that's because Mattel mostly employs its own factory workers. So its median pay number reflects a lot of low paid or lower wage employees in China and other low wage countries. Hasbro doesn't actually employ its manufacturing employees, many of whom work in the same countries as the Mattel workers do. Hasbro outsources them. So those employees are on some other company's books. As a result, Hasbro only has the higher paid, probably more American or European based employees, and therefore its median pay number is considerably higher.

[J.R. Whalen]

And you also spotted broad pay differences across the entertainment industry as well.

[Teo Francis]

Right? And to some degree that's, you know, part of the way we define industries. The entertainment industry is pretty big, right? It includes everybody from, you know, somebody like CBS, the big broadcaster with about you know, almost 13,000 workers, to companies like World Wrestling Entertainment, which produces, you know, wrestling shows and has about 850 employees, not including its wrestlers who are independent contractors. Now both of those companies have have median Pay numbers over $100,000 a year. But at the other end of the pay spectrum still in entertainment, you have companies like Live Nation, which owns Ticketmaster and does other concert and event promotion kinds of businesses, and Six Flags, the amusement park company. They have, you know, 8,000, 800 and 2,000 that full time employees, but then, you know, tens of thousands of part time and seasonal employees over the course of the year. They have much lower median pay numbers, $8,000 or so at Six Flags, a little over 24,000 at Live Nation. So really, when you're in different parts of an industry, you're going to see very different pay practices. And a lot of that has to do with business structure as much as with company size.

[J.R. Whalen]

So I guess a good rule of thumb to come out of your analysis here is for someone who's looking at a company for pay trends or even for investors, is you really do have to look beyond the numbers and look under the hood and see how employment scenarios might the median or the average salary.

[Teo Francis]

That's right. If you're an American worker looking for places to work, if you're looking at Hasbro and Mattel, you might be scared off by, you know, the lower pay number that one of them has. That may just be a reflection though of their structural operations rather than what you're going to be paid as an employee in a particular kind of job at that company. So these are useful numbers in analyzing companies depending on the company and the industry, they may be useful in figuring out which firms are a good bet for an individual. But then again, it may have a lot to do with the kind of job you're pursuing.

[J.R. Whalen]

All right, that's Wall Street Journal reporter Teo Francis joining us via Skype from Washington. Teo, thanks for being with us.

[Teo Francis]

Thank you.

[J.R. Whalen]

And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.

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This podcast is brought to you by reliaQuest. Cybercriminals are constantly attacking. They want your data. They want your identity. They want your innovation. RelioQuest fortifies your business with agentic defense AI that detects, contains and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest agentic defense for the enterprise. Learn more at reliaquest.com that's R E L I A Q U E-S-T dot com.