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AUGUST 8, 2023
On the Prospect website
David Dayen on why Bidenomics has yet to alter public opinion
<[link removed]>
on the economy (and on Biden); Bob Kuttner on how Biden may take a hit
from the it-doesn't-really-count New Hampshire primary
<[link removed]>;
and Elizabeth Meisenzahl on the fate of the guaranteed income programs
<[link removed]>
that cities implemented with funds from the American Rescue Plan.
Meyerson on TAP
Why Should CEOs Make 300 Times What Their Workers Make?
The UAW is asking the Big Three automakers to raise wages by the same
percentage that their CEOs' pay has risen.
Among the many demands that the new leadership of the United Auto
Workers has made to the Big Three legacy automakers, I have a personal
favorite. It calls for a 40 percent raise for its members
<[link removed]>
over the four-year period of its next contract, which is based on the 40
percent compensation increase that the companies' CEOs have received
during the past four years.
In other words, if the bosses are raking it in, why aren't their
employees?
The demand is my favorite because it goes to the core of how the
American economy has become so misshapen, and because it dramatizes that
misshapenness in a way that can both inform the public and build public
support for systemic change.
Back in the 1960s, when the New Deal's laws and norms had yet to be
degraded, the ratio between CEO pay and median worker pay was roughly
20-to-1. That ratio began to expand in the following decade and began to
soar in the Reagan '80s. As taxes on the top incomes were greatly
reduced, as CEOs began to be compensated not just with salaries but with
their companies' shares, and as Reagan's SEC permitted those CEOs to
have their companies buy back shares, which increased the value of the
shares with which they were awarded, that ratio zoomed past 100-to-1.
Today, several organizations calculate that ratio every year, and in
recent years, it has hovered in the 300-to-1 range.
That, to put it mildly, raises a host of questions. How, exactly, are
today's CEOs worth so much more than their mid-20th-century
predecessors? Why is General Motors CEO Mary Barra's work worth 300
times the value of GM's employees' work when Alfred P. Sloan
<[link removed]>, GM's legendary leader
from the mid-1920s through the mid-1950s, who first devised and
implemented such industry practices as yearly styling adjustments (i.e.,
planned obsolescence) to its cars and who led GM to the very pinnacle of
American capitalism, was worth just 20 times what his employees made? Is
Barra really 15 times more valuable to GM than Sloan was when compared
to his employees? Or, to look at the other side of the ratio, are GM
employees today worth just one-fifteenth of their 1950s predecessors
when compared to their CEO? Even though the dollar value of the median
worker's output today, even when adjusted for inflation, is many times
higher than the dollar value of a 1950 worker's output?
By highlighting this absurd discrepancy in pay, the UAW can help inform
an American public that completely fails to grasp just how great that
discrepancy really is. A 2016 survey
<[link removed]>
by the Stanford Business School revealed that Americans on average
believe that CEOs are making roughly one-tenth the yearly income that
they actually pull down. Even with that misunderstanding, more than 70
percent still believe that CEOs are overpaid. Indeed, they also
responded that the right ratio between CEO and median worker pay should
be 6-to-1.
Corporations generally issue threadbare explanations for why their top
executives make so much. They argue they need to offer pay packages
comparable to other corporations' pay to attract top talent (of
course, pay is set by corporate boards fairly larded with other
companies' CEOs-what a racket). They also contend that paying a CEO
with shares gives that CEO a stake in the company's performance (as if
workers don't have a stake in that, too). These are the companies'
apologias for CEO pay; as to the issue raised by those stratospheric
ratios, companies hardly ever address that at all.
The UAW is now forcing the Big Three to defend those ratios, which would
be a disaster for them in the court of public opinion and just might lay
the groundwork for some long-overdue changes in public policy (taxes?
buybacks?) and the scope of worker demands and rights. So: Go, UAW!
~ HAROLD MEYERSON
Follow Harold Meyerson on Twitter <[link removed]>
[link removed]
It's Natural That People Feel Bad About the Economy Right Now
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Look past the headline numbers and the story begins to emerge. Whether
Biden's strategy can outlast this rough patch is another question. BY
DAVID DAYEN
Biden's New Hampshire Blunder
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Thanks to an ill-considered move by Joe Biden and the DNC, several
fringe Democrats will be on the ballot in the nation's first primary,
and the president will be on the sidelines. BY ROBERT KUTTNER
Guaranteed Income Gets a New Life
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A surge of federal funding from the American Rescue Plan has helped
cities develop pilot guaranteed income programs. Will they last? BY
ELIZABETH MEISENZAHL
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Â
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