Workers Need Added Clout To Close The Pay Gap with CEOs
Polls show that most Americans are outraged by sky- high CEO pay. And why shouldn't they be? A generation ago, top CEOs made 30 to 40 times the pay of average workers. Last year, CEO pay outpaced average worker pay by 344 times.
In effect, the gap between worker and executive pay has multiplied an amazing tenfold since the early 1980s.
How could that be? Are executives working 10 times harder than they did three decades ago? Are they 10 times smarter? Of course not. Not one iota of evidence supports that notion.
So what's changed? Today's executives may not be smarter or harder-working. But they do wield more power. Plenty of it.
The reason: The mid-20th century checks and balances of our economic system -- the building blocks of post-World War II American middle-class prosperity -- have been swept away.
Government regulations, for instance, used to discourage shady corporate practices that pumped up profits at consumer expense. Corporate lobbyists have had these regulations erased, over the last 30 years, in industry after industry.
Something else has changed, too. We no longer have a vital trade union presence in the U.S. economy.
Back on the 1950s, more than one-third of American private-sec tor workers belonged to unions. Bargaining between these workers and their employers helped raise wages for all workers and, at the same time, kept executive rewards reasonable.
Today, only 7.4 percent of private-sector employees belong to unions. This absence of a union check on executive power leaves CEOs free to pocket rewards at levels that would have seemed recklessly greedy only a generation ago.
Recent academic research has demonstrated the difference that a union presence can make on executive pay. One survey, published in the Journal of Labor Research, found that CEOs at nonunion companies take home nearly 20 percent more than executives in unionized firms. Workers in union companies, meanwhile, make $200 more a week than their nonunion counterparts.
CEO-worker pay divides run particularly wide in the service in dustries, where only a tiny percentage of workers belong to unions. In food services, workers average only $18,877 a year. The CEOs of the top 10 firms in this industry -- we're talking outfits like McDonald's and YUM Brands, the owner of KFC and Pizza Hut -- took home 354 times that much in 2007.
By contrast, in many manufacturing industries, CEO-worker pay gaps run half that wide. Workers in these industries have, over the years, used union leverage to bargain for decent compensation. Unfortunately, "free trade" agreements and other factors are slashing employment in these traditional union strongholds.
If these trends continue, the enormous divide between worker and executive pay will only grow wider -- and make a mockery of the values of economic fair play we're supposed to celebrate every Labor Day. But these trends don't have to continue. We can stop our national slide to a totally top-heavy economy by restoring to workers what they had back in the middle of the 20th century: the right to organize a union.
One bill pending before Congress, the Employee Free Choice Act, could start this restoration process. If lawmakers enacted this legislation, workers would be much better able to exercise their lawful right to organize and bargain collectively.
This November's election will likely determine the Employee Free Choice Act's future.
CEOs, no doubt, will be watching closely on election night.
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21 Comments so far
Show AllAnybody know why many unions seem so inactive and are not trying to organize new sectors? Is it because workers are more scattered, such as restaurant service vs. steel plant? Is it because some workers like high tech and computer programmers feel they are professionals and shouldn't organize? Are the unions lazy? What?
I think unions are an essential part of the solution to poverty. Otherwise what is to counterbalance the initiative of management?
I was in so-called "management" in one job. I actually managed nobody but myself and my work and mentored a couple of people. When raises came around our layer was told we would not get raises because all of the raise money had gone to the unionized workers. In actuality the union people barely held the fort, got tiny raises and kept their health benefits. We got no raises for several years and had to start paying for our own health coverage, which amounted to substantial downward slide in take home income.
We accidentally found out that top management (the guys who sit around the board room and laugh HAH HAH HAH) gave themselves huge bonuses and raises. I finally understood why they were always laughing.
Joe
Localism fixes CEO pay along with all the other problems created by elites (90% of all planetary problems). Get local today in all your exchange/association. You'll be glad you did.
redrooster, please tell me more about that. Where did you hear it? Whose plan is it? Thanks.
This is so simple to understand. The monied class steals the wealth of those economically beneath them by measley wages, confiscatory taxes and inflation.
The only recourse for workers (other than a riotous revolution that destroys everything--and those so inclined need to study the histories of China,the Soviet Union, Cambodia, and N. Korea, to see that such a course usually creates more and worse problems than it solves) is for workers to compel employers to adjust wages for inflation, enforce increased pay for increased production, and tax otherwise windfall profits for the sake of all.
The rich people will still be rich--just not as extremely so--and more importantly grinding poverty of the type that reduces life expectancy and creates all manner of social ills will be reduced.
Poet
Wasn't it Bill Clintok who said "set great goals"?? Ok, so even the most extreme right Demok party loyalist will have to agree that there are better alternatives to begging the capitalist beast for crumbs.
Set great goals: Starve the beast. Set great goals: Cage the beast. Set great goals: Embrace localism. Set great goals: Shift your exchange to small independent farmers, craftsmen and merchants. Become one yourself! Learn the wisdom of the ages: You can only be free when you are independent.
The great thing about unions is that in the services industry, you can't just pack up and move abroad. McDonald's won't leave the U.S. People in America EAT in America. Whether you want your car washed, help finding something in a store or to see a doctor, there is a limit to how much corporations can outsource.
Unfortunately don't hold your breath thinking Obama will change all that. McCain meanwhile has a mandate to dismantle the few remaining unions out there. Nader anyone?
oh yeah? What will CEO's be watching? Who is going to support their vast corruption for the next 4 years?
Please... Elections matter nil. As Stalin said, it's who counts the votes.
rocyahsoul@yahoo.com
www.lamegame.name
Daniel Vincent Kelley
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http://www.votenader.org/media/2008/09/01/tafthartley/
NADER/GONZALEZ DEMANDS REPEAL OF 1947 TAFT-HARTLEY ACT WHICH STIFLES WORKER RIGHTS
Statement by Ralph Nader
On Labor Day, and American Workers' Rights
September 1, 2008
This August marks the 61st anniversary of the Taft-Hartley Act, one of the great blows to American democracy, going into effect.
The Act, which was drafted by employers, fundamentally infringed on workers' human rights.
Legally, Taft-Hartley:
impeded employees' right to join together in labor unions;
undermined the ability of unions to represent workers' interests effectively; and
authorized an array of anti-union activities by employers.
.
I would like to see Nader in the debates making points like this. Few people know about Taft-Hartley provisions or why they should care about them.
Joe
How about benefit? Is the gap between employee and CEO would be less if the companies would pay for healthcare and more vacation time like in europe for the employees?
AldoinSF
The only added clout that would work would be a complete collapse of our economy. Everything in government serves corporate/multi-national interests. Nothing short of worldwide economic depression will change this.
And, even though people are outraged at the "pay gap," they continue to vote against their economic interests, returning those who give the tax breaks to the wealthiest and to corporations back to power again and again.
We often think of the pay ratio between CEO's and the actual line workers however the gap is widening greatly between CEO's and the managerial ranks as well.
In fact the "executive floor, carpet row" crowd is stripping clean the entire organization for their own short-term, board-sanctioned enrichment.
The problem resides with complacent and complicit boards who spout the line that goes something like, "We have to pay this level to get and keep the talent. Other CEO's are making as much or more."
We are against monopolistic actions in this country (we say we are anyway) but apparently not when it comes to corporate boards and pay of CEO's.
The way to reverse this is through product boycotts until executive compensation is brought down to earth.
You Decide
The best thing workers could do to help themselves against the rapacious corporations and their thuggish executives is to support the passage of this proposed 28th Amendment to the US Constitution that would state the following: only natural persons are entitled to equal protection under the law, and corporations, who are considered "de jure" persons. This would gut Santa Clara vs. Union Pacific and approximately 50 other Supreme Court decisions that have lead to the current situation where corporations have full rights of citizenship, but due to their corporate structure, have much less legal liability than a natural person. Another article of this proposed 28th Amendment would require that social responsibility carry as much weight as fiduciary (financial responsibility to the corporation and its' shareholders) ones. Until the law of the land catches up with the legal armor that corporate structure allows, then any law passed will either be gutted by the very corporate friendly Supreme Court, or slowly subverted to death by corporate lawyers.
The Employee Free Choice Act alone is reason enough to commit to an Obama victory - and to the election of progressive Democrats running for Congress and the Senate around the nation - in November.
That will be a start; this act will help open the door to a huge opportunity for organizing the working people into unions - and a huge need for organizers - as happened after the passage of the Wagner Act in 1935. For the working class to organize on the scale of what happened during the New Deal, however, new forms of organization are needed that reflect the realities of the US and global economy and workforce.
In the 1930’s, giant plants with thousands of workers in one building or complex were common; today they are rare. Today’s corporations often have hundreds of smaller shops scattered around the globe, and are able to move work from country to country or contract work out to subsidiaries in search of the most favorable conditions with relative ease. Court rulings in the ‘70’s opened the way to using this power freely to break or tame unions. Meanwhile the commercialization of much of what was formerly household labor has helped generate a huge “service sector” ranging from small enterprises and scattered franchises of global giants to “Big Box” merchants like WallMart. Surveys show that there are tens of millions of non-union workers who wish for a union, but the obstacles to organizing them into the old formats are huge.
One thing that has to happen is international organization of the workers to confront the global corporations. This could mean either true international unions or multinational bargaining alliances. The chief obstacle to this in the past was the role of the US labor hierarchy in promoting the Cold War agenda, working aggressively to undermine and replace progressive-led rank-and-file unions in other countries. One sign that we may be moving beyond this is the recent (and little-reported) merger of the United Steelworkers Union with the largest labor union in Britain and Ireland, the successor to the United Transport Workers, to form the world’s first transatlantic union, Workers Uniting. (Time Mag. July 1) One of its purposes is to promote multi-national bargaining.
Another problem is the fragmentation of the workforce. The AFL/CIO recently launched an initiative to address this, “Working America”, billed as a “grassroots organization for people who don’t have a union,” with several million members and a staff of organizers. I joined it, but all I have seen so far is requests for money for lobbying campaigns; which is all well and good, but not nearly what I had hoped for.
Using the Internet, an organization like Working America could build a rich network of local, state, national and industry newsletters supported by paid and volunteer organizers, at once working like a working-peoples’ MoveOn.org and supporting the formation of organizing committees in tens of thousands of workplaces. These committees could bring outside pressure to bear on owners and win gains for the employees long before the majority were willing to risk and commit to an open organizing drive; and they could work for gains across a whole city or region, defining targets with great flexibility.
Something like this was done in the ‘20’s: the Trade Union Educational League, or TUEL, which operated like an underground movement in thousands of shops, laying a foundation for the CIO organizing drive that transformed America.
"The Employee Free Choice Act"
I understood this eliminated the secret ballot for organizing Unions. Is that true?
I would also suggest that since the AFL-CIO betrayed the American worker along with a number of other Unions, Unionization may not help workers after all.
True; but it also eliminates what is often an extended period of management threats and intimidation - both of individuals and of the whole shop, reclassifying workers, layoffs, forced propaganda sessions and firings, often under the direction of paid professional union-busting agencies. Much of this is illegal, but the fines are "reasonable" and the NLRP stacked with Republicans.
As for the benefits, statistics show that unions are able to negotiate substantially higher wages and benefits than can individual workers - about a 20% differential under present conditions - and when much of the workforce is unionized it raises the prevailing standards for all workers.
Plus one can't place a price tag on the difference in well-being that not being at the mercy of a capricious foreman or supervisor can bring. It can mean the difference between coming home tired and coming home exhausted, angry and sick to the stomach. The difference between going to work with a peaceful mind and dreading going to work. I've experienced both, and many people know what I mean. Of course if you're young and without children you can always just quit if your boss is being an anatomical part, but most people aren't that lucky.
Chris Horton
I take your point as to the value of Unions to the worker. Though I don't believe an open vote would benefit the worker himself. To many opportunities for abuse.
The main thing I feel now is that till Unions clean up their house and stop betraying American Workers they are no better than the Merde's at Walmart.
Pax
Americans are biased against labor unions because American culture worships the rights of capital. The American dream is all about financial success over all other endeavors. In the U.S., the rights of capital rule over human rights, period.
Americans don’t like to see the system “ rigged” for someone else’s benefit like union wages and the minimum wage. It is the American paradox. Americans fail terribly to see that the capitalistic system is rigged only for people of wealth.
Any shift to the rights of labor will require a shift in American values.
"If these trends continue, the enormous divide between worker and executive pay will only grow wider -- and make a mockery of the values of economic fair play we're supposed to celebrate every Labor Day. But these trends don't have to continue. We can stop our national slide to a totally top-heavy economy by restoring to workers what they had back in the middle of the 20th century: the right to organize a union."
Allowing workers the right to form unions will do nothing as long as companies can and are even encouraged to pick up lock, stock, and barrel, and move to overseas low wage areas of the world.
Lobo Gris
I'd heard there was a plan to confiscate, through the IRS, all of the assets of any American citizen who attempted to leave the USA permanently. Why is this considered for people, but not for corporations?
Stop giving tehm tax breaks fo rit, and revoke their US citizenship