Where is the money going? Corporate profits are up. Productivity keeps going higher and higher. Despite this “good news,” most Americans feel insecure in their jobs and income. So, where is the money?
Laura Clawson of Daily Kos shows one area where the money has gone: CEO pay. While I recommend that your read Clawson’s article, the whole story is told in a graph that accompanies the article. Before the mid-1990s, CEOs’ average pay was less than 100:1 the pay of average workers. By the end of the 1990s, the ratio had moved to 300:1. Since that time, the average has gone up and down. Still, it has ranged between 200:1 to 400:1.
This trend is only part of the story. If CEOs pay has moved this way, it’s logical to assume that other senior leaders have received healthy raises. I’m not arguing that these salary increases can’t be justified – because anything can be justified. The reality is that if pay disparity rewards the top of the pyramid, those at the bottom and middle will lose. The fight over the minimum wage is a good thing, but we also need to thing about who is being reward for economic growth and enhanced productivity. Do we want a society where a few have security and most people are running scared?
The winners in the salary game also have the most retirement security. Writing for Bloomberg, Carol Hymowitz and Margaret Collins compare the situation of Target’s retiring CEO, Gregg Steinhafel, who will receive $47 million in retirement benefits with the average target employee who has $45,000 in a 401 K plan. Workers who have such plans save about $100,000 over their careers, which means an annual return of $4,000 if the rate is as high as 4%. Hymowitz and Collins tell more stories of CEOs and their retirement security, which you may find amazing or disgusting.
What scares me most about this story is what it doesn’t say about young people in their twenties and thirties who either work low wage jobs or have to pay off education loans. How will they even be able to put $100,000 in a 401 ? Something needs to change soon, or many American workers will face a dark future. Retired CEOs, on the other hand, will be among the few who can live the American Dream.
The Washington Post has announced changes to its pension plans. Current employees will have to find some way to fund their retirements. What’s worse is what will happen to those who already have retired. Steven Mufson of The Washington Post writes: “The changes will hit hardest at employees hired before 2009 who could plan on receiving pension payments based on their income and years of service. Each of those employees could see scores — or hundreds — of thousands of dollars less over the course of a retirement. More recent hires do not have traditional pension plans.”
I understand that the newspaper business, like other industries, has to adapt to being smaller. A friend of mine who worked for the Chicago Sun-Times had his pension cut. However, if a pension fund was properly funded, why are such cuts necessary? Every time a company or unit of government cuts benefits to retired people, the excuse is one of necessity. What happened to the money that the employees and the company contributed to the fund? Why do retired employees pay the price instead of executives and stockholders? We need to start asking such questions.
Three cheers to Laura Clawson of Daily Kos for informing her readers of this story, which for retirees is more than a story – it’s a tragedy.
According to a national poll of HR managers, the minimum wage needs to be increased. 58% thought the minimum wage should be increased. However, the level of increase varied from $8 to $15. Incredibly, 9% actually said there should be no minimum wage.
What surprises me about this poll is that HR managers haven’t done more to address this problem. Maybe it shows that their opinion doesn’t matter to executives, whose first goal seems to protect their own compensation. As I’ve written in the past, many of my clients who make middle class incomes report not receiving a raise or only incremental raises over the last 6 years. The working poor and middle class are being squeezed like a toothpaste tube that is nearly empty. What will the investor class and the executive class do when there is nothing left in the tube?
Aljazeera America has a mind-blowing profile of one of America’s top paid CEOs, Charif Souki of Cheniere Energy. Souki “earned” $142 million in 2013. Not bad for the leader of a company that has never turned a profit. His company is building a natural gas processing facility in Louisiana that is projected to be a big money maker. Investors must agree because the company’s stock has doubled. Aljazeera America points out that the industry is very risky. That doesn’t seem to matter to the people paying Souki or those investing in his company. Profitable companies lay off workers to keep their share price up. Some people win, and some people lose. Charif Souki is a winner, and that says a lot about what’s wrong with the U.S. economy and its politics.
Run a big bank. Buzzfeed reports that James Gorman, head of Morgan Stanley, has been given an 85% pay increase, upping his income to $18 million. To put things in perspective, Gorman is credited with turning the company around, and he still makes less than Goldman Sach’s chief Lloyd Blankfein, whose annual compensation is $23 million. Still, in a time when most Americans consider a 3% annual raise to be normal, an 85% pay increase sounds like some people play a different game. That’s because they do. Momma, don’t let your babies grow up to be cowboys. Send them to a great MBA program that feeds investment banks. It seems that’s the only way to get ahead in 21st century America.
Timothy Eagan of the New York Times has written a great editorial on the current declining state of the middle class. Corporations get tax breaks from the government. Then they do whatever they can to drive down wages. Eagan looks at the case of Boeing, which received an $8.7 billion tax break and then asked its unions to make concessions. The Machinists Union said, “No.” Now Boeing is threatening to leave the state for one where wages are lower (“Right to Work for Less State”).
Is Boeing in trouble? Eagan writes: “Boeing is on a roll, its stock at a record high despite the troubled rollout of its 787 Dreamliner, and the pay of its C.E.O. boosted 20 percent to a package totaling $27.5 million last year.” If Boeing can give its leader such a raise, why doesn’t it want to compensate the people that build its planes? That’s the magic question, and the answer is that executives and boards of directors do not care about their workers or the health of the national economy. All they know is that they want more and more, which means working people have to make less and less.
One of my clients is seeking to make a career change. At three points during a 20 minute meeting, she asked the same question: Should I learn Excel? It’s a great question, but not the most important to ask in a career change. The most important thing to do is to find types of job that fit the kind of skills you want to use at work. The next step is to find some job posts and analyze them. If you keep seeing that the employer wants someone who knows Excel, it’s time to learn how to use that software.
This example is true of almost any job search. Know what the employer requires before you worry about the need to learn new technical skills. Almost every job lists computer skills, but they tend to vary from job to job. Take the time to research what skills are needed for the work you want to do. Don’t waste your time or money on training for a skill you may never use.
Ralph Nader has been trying to keep Americans safe for over 50 years. He has written an essay for Common Dreams that considers the gap between CEO compensation and pay for working people. Today CEOs make 340 times average worker pay. In 1980, that figure was only 42 times average worker pay. Nader suggests that this difference is a good reason to increase the minimum wage. As Nader says, that’s a good “first step.” However, we need to look beyond the minimum wage. Whether we change the income tax structure or add a wealth tax, those who have the most – including very profitable corporations – need to contribute more to the common good. We need to move beyond the greed ethic and think more about how to preserve our common culture.
More bad news for working people. Travis Waldron of Think Progress reports that corporate earnings have increased 20x more than workers’ disposable incomes since 2008. Waldron present another sickening statistic: “From 2009 to 2011, 88% of national income growth went to corporate profits while just one percent went to workers’ wages, and hourly earnings for workers actually fell over that time.”
As Waldron asks, if the job creators (also known as the “makers”) are doing so well, where are the jobs? We might add the questions: Where are the raises? Where are the healthcare increases? Where are the 401K matches? Why doesn’t Marissa Mayer provide her employees the same on-the-job day care she gives herself? It’s pure, simple greed.
Conservatives condemn government action to support workers as a matter of “picking winners and losers.” Given Waldron’s report, workers clearly have been the losers over the last five years. When will they get to win?
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