It's been a great day. The Cubs beat the Cardinals, and I met some friends for a steak dinner. So, now while chilling out listening to blues and catching up with The New Yorker, I read these words in Amy Davidson's October 8 profile of GOP presidential candidate Carly Fiorina: "When HP fired her, she got a twenty-million-dollar severance package, plus fifteen thousand for career counseling. Only in this country, perhaps, could a C.E.O. receive compensation worth more than a million hundred million dollars in six years, get fired, and use the money to enter politics."
I don't believe in salary restrictions of any kind. If a company wants to pay any employee any amount, that's the company's business. At the same time, voters should be able to ask about a candidate's history and what it says about his or her potential leadership. In Fiorina's case, she laid off thousands of workers before she took the money and ran. As far as I can tell, none of her current positions would do anything to help American workers. "Only in America."
Daily Kos features an article by Hunter on presidential candidate Rand Paul’s explanation for income inequality. The senator from Kentucky told Chris Wallace of Fox News: “The thing is, income inequality is due to some people working harder and selling more things.” Hunter asks an important question: How much is Senator Paul’s own success a matter of his hard work and how much of it is based on the great base of support built by his father’s decades of hard work? The same question could be asked about the Walton heirs.
From a different angle, how much harder do CEOs work than the average U.S. worker? According to the SEC (as cited in yesterday’s Chicago Tribune), some of Chicago’s CEOs must be working incredibly hard:
- James McNerney of Boeing earns $28.9 million annually, 611 times the average worker’s annual income.
- Peter Liguori of Tribune Media has annual compensation of $23 million, 487 times what the average worker makes.
The rest of the top ten Chicago CEO earn between $21 million and $15.6 million, which is also 466-331 what the average American worker earns.
My problem is not simply income inequality. When Senator Paul and other conservatives talk about hard work and “takers,” they disrespect the work done by millions of Americans. They project a divided society where the lucky few deserve wealth and security and most Americans live pay check to pay check in constant fear of losing a job and have little hope for the future. I don’t think the problem of income equality is simple to explain or solve. Dismissing it as a matter of hard work is insulting to all Americans.
In today’s Daily Kos, the great labor reporter Laura Clawson examines the wealth of an average worker compared to Sam Walton’s offspring. According to research by the AFL-CIO, the six Walton heirs total wealth is the same as that of 52.5 million American families (42.9%). The study points out that some families have negative wealth. Adjusted for that, the number of families needed to equal the Walton wealth drops to 1.7 million. However, that adjustment also indicates that many American families have issues with “negative wealth.” Clawson also notes that a Walmart worker being paid $9 per hour would have to work 1,036 hours to make what the company’s CEO Doug McMillon makes in one hour.
Do the Walton heirs deserve to be very rich? I believe they do. Their father created an innovative business model. The bigger question is how much wealth should anyone – rich heir or CEO -- have. What is the cost to society of an economy where a few are very rich and secure and many working class and middle class families are falling behind and less secure?
Bruce Rauner announced that he is seeking the Republican nomination for Governor of Illinois. According to the Chicago Sun-Times, Rauner claims he is not “anti-union.” He then goes on to bash leaders of public sector unions for the state’s pension problems.
Let’s step back and ask why so many public pensions are in trouble. Over several years, union leaders negotiated with both Republican and Democratic “leaders.” The constant trade off was better pensions for lower raises. Politicians from both parties then failed to make regular contributions to the pension fund. In essence, money that was to go to workers via the pension fund was not paid.
Rather than talk about wage theft, millionaires like Rauner put the blame solely on the unions and the Democrats. Public and private sector unions have made concession after concession over the past three decades to save jobs. People like Mr. Rauner ignore these compromises. Instead of calling out mismanagement by public and private sector executives, they pile all blame on workers and unions.
I don’t know how the pension problem in Illinois can be resolved. However, we should be honest about how it came to be and who is at fault. Unions are fighting for a negotiated benefit, part of the compensation their workers have every right to expect. As a business man, Rauner should respect contracts and not use terms like “pay-to-play” unless he also wants to extend that language to sweetheart deals that let corporations avoid millions in tax payments. We need political leaders who will be honest and fair in calling out corruption. Politicians may cut public sector pension benefits, but let’s call that action what it is: wage theft.
I’ve blogged recently about how most new jobs are low paid ($30,000 a year or less). I’ve cited writers like Paul Krugman about the flatness of wages for averages workers. Clearly, every day working people aren’t doing so well in the pay game. Who’s winning? CEOs.
Writing in Daily Kos, Laura Clawson examines compensation for CEOs. In 1982, CEOs made 42 times what the average worker made. 30 years later, that ratio has increased to 354:1. Production has continued to increase. Where does the money go. To the top. This trend cannot continue without big consequences for the American economy. Working people and the middle class drive the economy with their purchasing. If their wages continue to be stagnant or falling, rich CEOs will have to deal with an economic crash and a country filled with very angry people.
I saw some interesting news in Saturday’s Chicago Sun-Times. First the real winner: Boeing CEO James McNerney received a 20% pay increase, which cashes out to a sweet $27.5 million for 2012. Meanwhile, Ford’s CEO Alan Mulally saw his pay cut by 29%. He will only earn $20.95 million. Before we feel too sorry for poor Mr. Mulally, we should note that he will still receive $680,809 in other compensation that includes a private plane, housing, and security. Most American wish they could get such a pay cut.
Daily Kos has linked to a great chart from Forbes that documents 20 years of CEO compensation. As Kos writer Shanika puts it, “If you are a low wage worker busting your butt harder than ever before for a large corporation, you've probably just wanted to say to the Man, "Show me the money!" Here's why most of them won't: They continue to keep a lot of it for themselves.” Smells like Mitt Romney!