The Digital Skeptic: Apple's Big Pay Raise Makes Stock a Big Buy

NEW YORK (MainStreet) -- Let's get the heresy out of the way, shall we? Never mind what you learned in school. Or read. Or heard. In these digital days, the 25% or so raise Apple's John Browett just gave retail employees does not -- I repeat, does not -- kill the company's investor buzz.

In fact, Browett's salary boost is a classic Apple (AAPL) bit of market leadership, one that makes the company a serious "buy." I don't mean one of today's nutty jump-in-jump-out techno buys. I'm talking a back-in-the-day buy it, bury and pass it to the grandkids sort of buy.

By hiking Apple Store employees' pay some 25%, Apple has set an example for other blue chips with cash to follow.

You got that right: Apple -- just like with its groundbreaking approach to electronics -- is leading investors into a new era of valuation. But this one will reward managers such as current CEO Tim Cook for realizing that if they give employees more, their businesses will be worth more.

A lot more.

Higher salaries = higher value
The old, broken American economic saw used to go like this: If costs go up, profits go down and so do investors' fortunes. Yes, it definitely sucked to lay off 1,000 farm workers in favor of a cheaper tractor. But by saving expenses -- no matter how brutally -- productivity was created, the right people got rich and better jobs were created. What drove the cost cutting, of course, were the different roles different people played in different businesses. Owners owned. Investors invested. Managers managed. And labor, well labored.

Who kept what was the struggle. On one side was the patron saint of the bare-knuckled free market, Milton Friedman, who said, "A society that puts equality before freedom will get neither."

And then there was the equally cranky Karl Marx. "Capital is dead labor, which, vampire-like, lives only by sucking living labor" is my favorite ghoulish line of his.

1 2 3 Next › Last »