(This YouTube is for Beata with love.)
I live about 1/2 mile from an old Levi Strauss factory. One part of it is now combination art studios/apartments for New Orleans Artists. The other–across the street–is a church that houses a food pantry and second hand store. I wasn’t around the neighborhood when it closed, but I distinctly remember when Levi jeans quit making their all-American product in the U.S.A. Nothing says the US west, working class, and hippies like Levi Jeans. The only thing that made it sad news, bad news, but not mad news is that Levi Strauss doesn’t have a lot of government contracts but that doesn’t mean that the U.S. taxpayer doesn’t lose something.
The last major GE factory making ordinary incandescent light bulbs in the United States is closing this month, marking a small, sad exit for a product and company that can trace their roots to Thomas Alva Edison’s innovations in the 1870s.
The remaining 200 workers at the plant here will lose their jobs.
“Now what’re we going to do?” said Toby Savolainen, 49, who like many others worked for decades at the factory, making bulbs now deemed wasteful.
During the recession, political and business leaders have held out the promise that American advances, particularly in green technology, might stem the decades-long decline in U.S. manufacturing jobs. But as the lighting industry shows, even when the government pushes companies toward environmental innovations and Americans come up with them, the manufacture of the next generation technology can still end up overseas.
You’ll notice that this is even more troubling because the push to go greener actually expedited the outsourcing process in this case. I personally like my incandescent light bulbs in the winter. They stop my heating system from coming on full blast. I use them in the winter months. But, I suppose that wasn’t factored in to the equation. Just like the loss of more American manufacturing jobs didn’t appear to be a consideration either.
This is another story that tells a cautionary tell. Lots of workers in their 50s are now obsolete and lost in a never never land of a bit too early for social security/medicare and a bit too late for gigantic student loans and retraining. It’s no wonder that every single community college in the country is popping at the seams and has waiting lists for basic classes. Unfortunately, state budgets are so bad that tuition is up and class and teacher availability are down. All at the time when most universities/colleges have teachers that are also close to retirement.
But officials are working against a daunting trend. Under the pressures of globalization, the number of manufacturing jobs in the United States has been shrinking for decades, from 19.5 million in 1979 to 11.6 million this year, a decline of 40 percent.
At textile mills in North Carolina, at auto parts plants in Ohio, at other assorted manufacturing plants around the country, the closures have pushed workers out, often leaving them to face an onslaught of personal defeats: lower wages, community college retraining and unemployment checks.
Globalization is a two-edge sword and always has been. The first thing that you teach is that it creates winners and losers. Every one who buys the products wins because they will be very very cheap in comparison. The losers are the employees and the municipalities that rely on the company for jobs, incomes, and tax revenues. I don’t think the theoreticians every really looked at how incredibly disruptive the adjustments of wages and prices would be to all this ‘factor mobility’. Most of the time capital wins too.
When NAFTA was signed, Bill Clinton ensured that there would be job training funds for folks that could prove they were displaced due to NAFTA. It was used quite a bit in Mississippi by the women that belonged to the Ladies Garment Workers. Again, like the factory in my neighborhood, women in the south are no longer required to sew Levi Jeans and sheets and blankets like they used to do. What are they retrained to do in Mississippi? Basically, home health care work, practical nursing, and resthome work. Not exactly good paying union jobs to replace the ones that they had. They could become RNs, but many have not followed that path. Here’s a pretty good synopsis of the literature at the time from 2002 that showed how folks laid off from airline jobs in the 1990s were retrained into other lines of work. I guess I went back to that time period because the unemployment rate–even the structural one–was falling at the time which is quite different from right now. As you can see, a lot of these workers who were successful in manufacturing have a different skill set than is needed for service-type jobs.
We just celebrated labor day. It’s become more of day for the last day of picnics than the celebration of American Labor and the progress brought to the American worker by Labor Unions. Forty hour work weeks have been replaced by being paid by the piecework. Everything related to cloth is put together some place else. I can speak to the joyful busting up of teacher’s unions down here in Louisiana as tenure no longer means anything at any level down here. For some reason, it’s okay to hold a teacher accountable for some student’s test score, but not that student’s drug addicted or never-at-home-helping-with-homework parent. You gotta blame some one for all this fail and it’s the role of senior management to pass on the blame but never the profits of their bad decision making.
Sooner or later, this game will end because it is a zero sum game. There’s a new phenomenon in China. It seems that some workers would rather commit suicide than “bend” to the oppressive work environments that they now endure.
Yesterday, the company Foxconn, a leader in technology, which has seen 11 suicides this year in its Longhua factory (Shenzhen), announced 30% wage increase for assembly line workers. But experts point out the need to review the whole organization of work that has made China “the world’s factory” for the price of inhumane working conditions, for the exclusive benefit of Western capitalist multinationals and the Chinese Communist Party (CCP).
Foxconn official sources have expressed their hope “that the wage increase will help improve the living standards of workers and allow them to have more free time.”
Analysts note, however, no one in China seems to want to address the issue of working conditions or the absence of unions to protect workers’ rights.
Faced with suicides motivated by work stress, Foxconn defends itself by saying that it does not violate the law and applies working conditions similar to those in other Chinese factories. According to the workers in the company, the “normal” working conditions include 12-hour shifts, with a ban on speaking with to colleagues, sitting or unnecessary absences. Workers are subject to a military discipline both at work and in company canteens and dormitories and are fined for the slightest offense, even washing their clothes in the dormitory. They are not allowed to contradict their superiors direct orders.
And this is country rooted in Marxist thought?
Oh, any of you members of the IBorg might want to look really seriously into this story. This folks are hard at work producing your Iphones, Ipads, and Ipods along with Dell computers and Nokia phones.
The factory workers are typically very young women from the countryside, sent by their parents into the factories, to supplement their family income. They live in cramped cement-block barracks, eight or twenty to a room. They often work 12- or 18-hour days, under abysmal conditions, with no day of rest for months at a time.
Managers of major U.S. multinational corporations who produce their goods in Chinese factories, told ILO investigators-on condition of anonymity-that 80 percent of their contractors keep double or triple books, to hide the fact that they’re not paying minimum wages, not paying overtime, and breaking China’s maximum hour laws.
The factory conditions are appalling. Chinese workers suffer the highest rates of industrial deaths and lost limbs from industrial accidents in the world.
Chinese factory workers have little recourse against these abuses. If they complain, they’ll be fired, lose the deposit they had to pay their employer, the wages withheld and risk being thrown in jail by the Public Security Forces (China’s political police).
These abusive conditions are so widespread they have spawned new terms like “goulaosi”-death by over working. Another one, “tiaolou xiu,” which means jump-protestors, comes from the growing practice of China’s factory workers to threaten and at times commit suicide over working conditions or simply to get the pay they’ve earned.
One manager from Reebok, who is in charge of labor conditions throughout Asia, spoke openly about labor conditions in China. She said: “Who enforces Chinese labor law? Nobody. If it were enforced, China would be a much better place for millions of people to work in. But it is ignored more than in any other country I work in.”
Each time you turn on a light bulb this year, just think about this.
I’m not sure who I should ask you to send your prayers out to these days. The U.S. workers that will no longer be able to support their families and will be trapped in that never never land of unemployment we have these days or the Chinese workers who get to replace them.
Either way, workers lose, investors win, and you get your cheap electronic products and athletic shoes.
Two high profile economists finally seem to have come to the realization our President pushes Republican Policy and caves into Republicans to make it even more Republican than necessary. He’s enabled by what has to be the most stupid bunch of Democrats in congress in U.S. history. This has been a Republican wet dream and an American nightmare! They get to push right wing legislation through and label it as socialism and get street cred for it! I’m glad some people with the ability to grab headlines are finally speaking truth to power, but it’s too damned late to help the unemployed. My only hope is that it saves Social Security from Obama’s Wall Street cronies.
First there’s this from Robert Reich’s blog: “Why Obama is Proposing Whopping Corporate Tax Cuts, and Why He’s wrong”. You’ll probably recognize this topic from something I wrote about last week. Reich is taking the proposed corporate tax cuts head on. Look at this description.
The economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox.
He proceeds to list all the reasons we’ve talked about before. They don’t need to expand capacity. They don’t have any customers. They can borrow cheaply now.
The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.
In any event, small businesses don’t have enough profits against which to use these tax credits and deductions, and large corporations are sitting on over a trillion dollars of profits and don’t need them.
Republicans and corporate lobbyists have been demanding tax cuts on corporate investments for one reason: Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable.
Dig that last reason. It’s something to add to our list. If they invest in robots, it makes the unemployment situation worse. It’s like giving them more incentives to build a plant in Vietnam too. It doesn’t say WHERE they have to do the improvements either. This is a tax cut made to enhance unemployment, not solve it.
So, what about the two-years-too late proposed infrastructure plan? Oops, I already gave you a clue. Let me give you a second one. The tiny tiny proposed funding for infrastructure. Yup, too late and too little, just like the first stimulus. But, you don’t have to take my word for it. You can take Paul Krugman’s words instead. He’s depressed by the proposed corporate tax cuts also. I’m just glad he posted this on a plane back from Japan where he was too tired to censor himself. POTUS is suggesting $50 billion to do something. That’s a drop in the bucket compared to what’s required for both the economy and the infrastructure repair.
1. It’s a good idea
2. It’s much too small
3. It won’t pass anyway — which makes you wonder why the administration didn’t propose a bigger plan, so as to at least make the point that the other party is standing in the way of much needed repair to our roads, ports, sewers, and more– not to mention creating jobs. Once again, they’re striking right at the capillaries.
Beyond all that, the new initiative is a chance for me to air one of my pet peeves: the stupidity of the claim, which you hear all the time — and you’ll hear again now — that it’s always better to provide stimulus in the form of tax cuts, because individuals know better than the government what to do with their money.
Why is this claim stupid? Because Econ 101 tells us that there are some things the government must provide, namely public goods whose benefits can’t be internalized by the market
Okay, Krugman called the claim “stupid”. What’s Reich calling them? Troubling.
More troubling, Obama’s whopping proposed corporate tax cuts help legitimize the supply-side dogma that the economy’s biggest obstacle to growth is the cost of capital, rather than the plight of ordinary working people.
Plus notice the description. This is Reaganomics. Trickle-down economics. Voodoo Economics. Choose your label.
This POTUS is a DINO. What is taking people so long to figure it out? This is the stuff Republicans suggest, not the Democratic Party. Just like the so-called Health Care Reform was Romney Care/Heritage Foundation’s response to the Clinton Health Care Act.
I just put on a fresh pot of Community Coffee! Whose next? C’mon! Give up the Koolaid before it’s too late!
I’m actually getting a bit of a kick out of this. It’s one of those two handed things. You know, on one hand we’re seeing brutal punishment of people who did us wrong. On the other hand, the only people this truly benefits are bat shit crazies. Anyway, here’s the CBS version of Karma with the fun title of “ Analysts: White House Panicking Over Elections:Say Dems Are Distancing Themselves From Obama, Angry Over Economy, Health Care Fallout”. Excuse me while I laugh for a very long time.
With many polls indicating the Republicans may win back control of the House of Representatives (and possibly the Senate as well) in the upcoming mid-term elections, Jim VandeHei, the executive editor of Politico, told CBS’ “Face the Nation” that the Obama administration is in a horrible position.
“Does the White House understand this?” asked guest host Harry Smith. “Do you feel any sense of panic or concern” on the part of the administration?
“They get it. There’s panic. There’s concern,” VandeHei said. “The reality for this administration stinks, politically and practically, when it comes to the economy. You’re not going to be able to change that 9.6-percent unemployment figure. You can’t get anything from Congress in the next couple of months.”
CBS Congressional correspondent Nancy Cordes said the Democrats are distancing themselves from President Obama.
“Not only are they running away from President Obama, they’re running away from being Democrats in some cases. In some races you actually see the Democratic candidates not really mentioning that they’re a Democrat in their campaign ads,” Cordes said.
Smith asked his guests to try to identify the source of the discontent: “From your experience on the Hill, have you heard any Democrats in private conversations say, ‘You know what? We went down the wrong road. We went after health care. We went after so many other things on the Obama agenda as opposed to, in the end of the day, it’s all about creating jobs?'”
I think we can all agree that nearly all of us at TC can say: WE TOLD YOU SO!!!
(Consider this an open thread.)
There are several things that have me thinking again about the religious and religion. I’m thinking that I had a ‘My Name is Earl” experience yesterday because karma certainly waved a lot of flags at me.
First, the billboard that you see above is one of several being posted around New Orleans by an atheist organization. They’re easy to spot and quite visually arresting. I’m certain this thread will evoke the meme of “atheist proselytizing” which is just about the most ridiculous impossibility I’ve ever heard. But, bring it on.
Second, the deliberate torching of a mosque site in Tennessee and the seemingly complete oblivion of some people that frequent this blog to the issue of religious freedom. I’m getting tired of being accused–unjustly– of calling people bigots in blog threads just because I don’t think you ask people to defer their constitutional rights based on some one’s feelings. (Also, when you repeat bigoted memes, people here will call you out on it without necessarily calling you a bigot.) Thanks for the links that compare us to Obots!! Makes me really glad I put in all that time here to give us all a place to civilly discuss issues.
Then there is this tidbit. I found out that a christian group is insisting on using the Confluence as their new website name despite BostonBoomer and I asking them to reconsider. (Here’s the tweet I intercepted through some kind of karma: “Excited about the launch of the Newfrontiers USA blog, the Confluence. Details to follow soon.” Here’s the info on the person tweeting: Name Seth Hoffman, Location Portsmouth, NH, Web http://www.sethho…)
Karma wasn’t done with me yet, however, as it’s Southern Decadence here. For those of you who don’t know about our unique Labor Day celebration, you can find out more here. Let’s just say it’s one of the biggest celebrations of gayness in the country and one of my favorite things to do each year. The usual group of cross dragging, bull horn bearing bullies are here shouting horrible things to every one on Bourbon Street and the police are basically saying it’s a free speech thing. They’re just making sure the bull horns don’t go louder than the noise ordinances allow. You can go to the WDSU site and watch them ooze and shout hatred if you’d like.
“I’m coming out of the closet New Orleans,” said Bible Believer member Ruban Israel. “I’m in love with Jesus Christ, and his blood is not HIV positive. They have the freedom to be anything they want to. All we ask is for the same freedom to stand here and tell them they are an abomination before God.”
Some people said they find their message offensive and think action by the city is long overdue.
Then Karma took me to another channel where the discussion was all about Stephen Hawking and his new book. Hawking has basically said that a Creator is a redundancy. The universe is perfectly capable of self-creation; a very Buddhist notion, I might add.
God did not create the universe and the “Big Bang” was an inevitable consequence of the laws of physics, the eminent British theoretical physicist Stephen Hawking argues in a new book.
In “The Grand Design,” co-authored with U.S. physicist Leonard Mlodinow, Hawking says a new series of theories made a creator of the universe redundant, according to the Times newspaper which published extracts on Thursday.
“Because there is a law such as gravity, the universe can and will create itself from nothing. Spontaneous creation is the reason there is something rather than nothing, why the universe exists, why we exist,” Hawking writes.
“It is not necessary to invoke God to light the blue touch paper and set the universe going.”
The final thing Karma threw at me was a nearly year old issue of the Shambala Sun I found while cleaning. As an atheist with a Buddhist practice, I subscribe to the magazine. It was the copy with an interview with Huston Smith. He’s the author of the widely acclaimed work ‘The World’s Religions: Our Greatest Traditions’ published in 1958. Smith is a devout Christian. He is, however, responsible for helping the west understand the ‘other religions’ of the world. He devoted ten years each to not only learning about but practicing Buddhism, Hinduism and Islam. His huge volume has been split into smaller books and I urge any of you with issues with Islam to read his book. So here’s what he says about Islam in the SS interview and please, remember this man is a Christian who practiced this religion for 10 years.
“The world overflows with glorious expressions of spirituality,” Schuon told Smith when they met, [dkat note: Frithjof Schuon is a Swiss author who studies and writes about the world’s religious]”but if you want to be in my fraternity, my tariqa, I urge you to become a Muslim.” The World’s Religions presented Islam in an inviting way, but Smith had admitted that its holy book seemed impentrable, writing, “No one has ever curled up on a rainy weekend to read the Koran.” But once he joined Schuon’s tariqa, he came to hear whate he now calls the Qur’an with new ears, understanding the sublime poetry that adherents say is its gift. Smith became a sufi, attracted to prayng with the body through dance.
Smith emphasizes that his embrace of Islam was not limited to Sufism. “Ecstasy is only one mood, and Sufism is only one mode of Islam, and neither exhausted its appeal for me”, he recalls. To the extent possible he followed the five pillars of Islam, answering the call to prayer five times daily for twenty years. It pains him to day, he says, to see the Islam he discovered through spirituality obscured by ideology. For him, the daily greeting of the Islamic world, As-saamu alakum, says it all: “Peace be upon you.”
Which leads me back to my run in with Karma yesterday. There are many things in religion that I find quite troubling. Most of the ‘holy books’ of religions were written in a time of barbarism and they certainly reflect that. I remember first reading about the great religions in my fifth grade social studies class and thinking that Buddhism was the only one that seemed to make sense to me. I guess it’s not a surprise that my inner spiritual growth route took that flavor.
I hate organized religion and the religious but I’m a highly self reflective and spiritual person and I always have been. I see them all as a struggle of primitive man trying to explain things that he does not understand on the surface. Underneath the surface is the organized religion part which has turned believers into irksome missionaries and bomb wielding terrorists and religious institutions into witch burners, inquisitors, and usurper of native traditions.
I’ve had terrible experiences with Christians. My first was being held down on bleachers by two senior boys in high school, splayed cross-like and told that I need to develop Christian humility and really understand Christ. The next appalling event was the stalking of my children and the treatment of me when I ran for statewide office by the local Catholic Churches and big barn Evangelical and Baptist churches.
While Seth Hoffman, true believer (per his twitter profile: husband, father, Jesus follower, coffee addict, music lover, pug owner) , thinks it’s not a bad idea for people to do a google and possibly come up with the wrong site, I shudder at the thought of having hysterical Christians over here harassing us for not finding homosexuality an abomination, for thinking our pro choice stance means we support baby killing, and frankly, trying to tell those of us that are not believers or embrace other religions that we’re going to hell. You can google the organization. They are charismatic and they are missionaries. (Believe me, I miss my French Quarter balcony some times where I used to emphatically water the flowers at the kinds of people that show up for Mardi Gras and Southern Decadence ready to damn us all to hell and have us embrace their beliefs.)
But, is this the religion or a subsect of the religious that simply embrace religion like they would crack, a bottle of Vodka, or anything they can abuse to make their lives less miserable and their selves less inward looking?
There are crackpots in every religion. It truly makes me want to avoid any one I know that’s actively involved with an organized religion. But just as most Presbyterians and Episcopalians are probably not out there shouting ‘whore’ at any woman walking Bourbon street right now and bombing family planning clinics, there are also Muslims that are not contemplating turning the US into an Islamic Republic through terrorism. There are parts of every holy book that are beautiful and inspiring. There are also parts that are horrifying and are used in horrifying ways. The deal is that we embrace a secular society that tolerates religious expression. All of them. I’m appalled that we haven’t internalized that yet. I’m not defending any of them. I’m defending each person’s right to practice them. I’d rather have an Episcopalian church as a neighbor or a Sufi Mosque than whatever it is Ruban Israel subscribes to but it’s not my right to tell him where he can do his thing. It is my right, however, to say that his beliefs offend me to no end. His adaptation of religion isn’t the only religion that offends me. If I could chose my neighbors, I’d take Steven Hawking.
Steven Hoffman and New Frontiers USA appear to have moved into the neighborhood. (Evidently, they aren’t tolerant of our ‘sensitivities’ and appeal. Do I have to announce my snark font here?) We’re just going to have to see what kind of neighbors they turn out to be.
Spirituality should free us. Not enslave us or cause us to enslave others. Perhaps that’s the karmic lesson I learned on the journey yesterday that started with that Butterfly McQueen ad that you see above.
Obama’s and his economic team of two Wall Street insiders are still looking for growth in all the wrong places. I don’t know why they just don’t switch parties and become Republicans and make it official. Join me on a magical misery tour laced with koolaid overdose!!!
For some reason, repeating it enough times some times make people believe it. Problem is that there has to be a grain of truth in the meme and unless you’re part of the bonus class, you’re not seeing a grain of anything.
President Obama on Friday said he has no regrets about describing the last three months as the “Recovery Summer.”
“I don’t regret the notion that we are moving forward because of the steps that we have taken,” Obama said in response to a question after he offered comments on the latest unemployment figures.
The administration described the summer of 2010 as “recovery summer” because a large amount of the 2009 stimulus package was being spent over the summer. But job growth slowed dramatically over the summer amid concerns the economy was moving into a double-dip recession, and Republicans have made fun of the moniker.
The president’s remarks came after the Labor Department released jobs data showing unemployment rising from 9.5 to 9.6 percent. The private sector created 67,000 jobs, but overall the economy lost 54,000 jobs.
And the solution to all this grief? Republican-style trickle up economics.
From WaPo: ‘White House considers pre-midterm package of business tax breaks to spur hiring’ (h/t to BostonBoomer)
With just two months until the November elections, the White House is seriously weighing a package of business tax breaks – potentially worth hundreds of billions of dollars – to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses, according to people with knowledge of the deliberations.
Among the options under consideration are a temporary payroll-tax holiday and a permanent extension of the now-expired research-and-development tax credit, which rewards companies that conduct research into new technologies within the United States.
Administration officials have struggled to develop new economic policies and an effective message to blunt expected Republican gains in Congress and defuse complaints from Democrats that President Obama is fumbling the issue most important to voters. Following Obama’s vacation and focus on foreign policy in recent weeks, White House advisers have arranged a series of economic events for the president next week, including two trips to swing states and a news conference.
I’ve got issues with this strategy from all kinds of angles. First, why is it that the answer to every problem is trips, news conferences and more speeches? Surely, they can see from the polls by now that people don’t buy these PR trips and it just makes Obama look like he’s avoiding the Oval Office and actual work.
Second, why is it always about combating “Republican charges” instead of putting forward a cogent Democratic plan? They’ve had the majority for nearly two years and the Dems in congress still can’t seem to get a real democratic set of laws passed. Is it because they really don’t want to accomplish things because they’re all blue dawgs (aka pseudo democrats) who are bought by the corporate American hands that fund them?
Third, how many times do economists have to tell this administration that giving tax breaks to businesses aren’t the answer? Tax breaks on what income and revenues? The businesses that have the income right now don’t need the tax breaks. For the most part, they’re already the recipients of bailout largess. Most small businesses are not seeing the kinds of demand that this will help at all. It’s a demand problem. They need customers. No one is going to hire or expand if they don’t think they’re going to get ongoing business. This is already evident in the automobile industry where the demand was front loaded into the cash for clunkers program last year, and now, there is no one coming into the show floor. No one wants to commit to buying something when the people around you are losing their jobs. Look around you. The people losing their jobs are your kids teachers and your neighborhood firefighters and police. Does this make you want to go out and by a new refrigerator?
Things are so upside down that Matthew Yglesias is calling these stupid tax programs “New Jobs Program”.
How stupid do they think we all are?
Better question, who really thinks this plan is going to work and how stupid are they?
The current bout of unemployment is so stubborn that there’s now talk of tax cuts coming from the Obama administration even though Obama has made it clear that the debt and the deficit are high on his radar. Too bad they won’t help the people without jobs and the businesses without customers.
There’s also pressure on the Federal Reserve to do something, anything. If you know any thing about money creation, you know that bank lending is the critical channel for transmitting monetary policy into the real sector where the GDP growth resides. No bank lending, impotent monetary policy. It’s very simple.
The recession of the 1980s (Reagan’s first term) was somewhat created by high interest rates. Bringing interest rates down reinvigorated the economy. Well, that and Reagan’s war time spending in a period of relative peace which is basically highly stimulative fiscal policy. Reagan was a huge deficit spender and a lot of it went to rebuilding the Navy in American ship yards. So, that started the “morning in America” phenomenon.
This time things are different; especially if you’re just a little guy or the small business owner on Main street. It’s morning again in America for a the privileged but not for you.
The Institute for Policy Studies has just released its 17th annual executive survey on executive pay. The subheading is pretty telling and basically is summed up “how CEOs laid off thousands while raking in millions”. This recovery and the stimulus package and corporate bailouts have done very well by the nation’s already abfab rich.
Corporate executives, in reality, are not suffering at all. Their pay, to be sure, dipped on average in 2009 from 2008 levels, just as their pay in 2008, the first Great Recession year, dipped somewhat from 2007. But executive pay overall remains far above inflationadjusted levels of years past. In fact, after adjusting for inflation, CEO pay in 2009 more than doubled the CEO pay average for the decade of the 1990s, more than quadrupled the CEO pay average for the 1980s, and ran approximately eight times the CEO average for all the decades of the mid-20th century.
American workers, by contrast, are taking home less in real weekly wages than they took home in the 1970s. Back in those years, precious few top executives made over 30 times what their workers made. In 2009, we calculate in the 17th annual Executive Excess, CEOs of major U.S. corporations averaged 263 times the average compensation of American workers. CEOs are clearly not hurting.
But they are, as we detail in these pages, causing others to needlessly hurt — by cutting jobs to feather their own already comfortable executive nests. In 2009, the CEOs who slashed their payrolls the deepest took home 42 percent more compensation than the year’s chief executive pay average for S&P 500 companies. Most careful analysts of the high-finance meltdown that ushered in the Great Recession have concluded that excessive executive compensation played a prime causal role. Outrageously high rewards gave executives an incentive to behave outrageously, to take the sorts of reckless risks that would eventually endanger our entire economy.
I thought I’d add something here just for Riverdaughter since we know there’s massive layoffs in her industry from CNN.
“I think that really shows a really perverse incentive system in this country,” said Sarah Anderson, lead author of the Institute for Policy Studies’ 17th Annual Executive Compensation Survey. “You are handsomely rewarded for slashing jobs in the middle of the worst economic crisis in 80 years,” she said.
It did for Fred Hassan of Schering-Plough, the man the report dubbed last year’s “Golden Parachuter.” Hassan was the highest paid layoff leader, earning $50 million in 2009 while his firm merged with Merck and cut 16,000 workers.
According to Anderson, “they’re prioritizing CEO pay at the welfare of their workers”.
So how do they get away with it? Anderson said you have to look at the make-up of many companies’ executive boards. She said they’re often made up of CEOs and high level executives from other companies “who really don’t want to question this ridiculous pay system we have in this country that continues to pay people these absurd amounts of money when they’re really not performing well for their company or the overall economy.”
Another disconcerting finding of the report: 72 percent of layoff-leading firms announced mass layoffs while delivering positive earnings reports. Anderson explained layoffs are really driven by efforts “to boost short-term profits even higher and also just to continue to have such high CEO pay levels.” She said these mass cuts are often bad for business over the long-term because they impact worker morale, which can lead to lower productivity. She said they also result in additional costs related to hiring and training new workers down the road
Here’s a link to Market Place from NPR where you can listen to an interview with one of the authors.
Yeah, let’s give them more tax breaks to stimulate the economy. Great idea Obama economic team! No wonder Christie Romer bailed.