Many economists are claiming the nation’s worst recession since World War II may now be over. On Thursday, the government announced the US economy had expanded by 3.5 percent in the third quarter, snapping a record streak of four straight quarterly declines. But it appears that most, if not all, of the growth can be credited to government stimulus efforts, including the cash for clunkers program and the first-time homebuyer’s credit.
Despite the latest growth figures, workers are still struggling to find jobs. The Labor Department announced yesterday that 530,000 people filed for unemployment benefits last week for the first time. Many analysts expect the nation’s official unemployment rate to soon top ten percent.
Jonathan Tasini talking:
When you have an unemployment rate that is ten percent, we really are talking about an economy where one out of five people really does not have full-time paying work, because that ten percent number, does not include people who’ve stopped looking for work, people who would like to have full-time work but can only find part-time work, and it doesn’t even include all the people working at minimum wage, which is really a poverty-level wage. America accept the notion of poverty as part of the economy, as part of the functioning economy. That’s a moral outrage. And we see it today throughout the economy, where people are just very, very distressed.
Americans lived for twenty years with the notion of the American Dream, but people really only rented the American Dream. People never achieve the American Dream. Most of the American people, survive on credit cards. That’s maxed out. People then turn to their home equity. That’s gone. And so, what are people now going to fall back on, when wages have been flat for thirty years? Productivity has been skyrocketing, and wages have been flat. So this has been a temporary shot in the arm. And what we really need is a real re-inflation of people’s wages. And the so-called recession and the longer-term depression for people is not going to end until we have higher wages, which I believe will only come when we have a stronger labor movement.
We sort of know about the greed now. It’s almost commonplace. I think people are almost immune to seeing the next article on the Goldman Sachs CEOs that are making tens of millions of dollars in compensation.
One of the things that is ignored is that the real riches for the corporate CEOs is in the pensions, that when they go home and they retire after having already made tons of money, they make even more in pensions that they take away, at the same time that regular workers almost don’t have pensions. We were saddled with this notion that Americans should not expect real pensions anymore. They’re going to rely on the 401(k)s. I think a year ago we realized that that’s not much of a foundation to base your retirement on, when trillions of dollars evaporated. So that’s a huge piece of the greed and the divide between rich and poor that we see in the CEO suites.
The robbery and the division between the rich and poor is not just about CEO greed; it’s about the fact that we have not had real wage inflation for thirty years. So people have been working, their butts off for thirty years, productivity has been skyrocketing, and wages have been flat. That’s the real story of what I think has been the greed in America, that workers have not received their fair share.
The big hedge fund owners and managers, who are—really dwarf the CEOs, in terms of their—the money they made, many of them betting on this financial collapse.
The beauty of their business is that they like when things collapse, because if they made the correct bet against a currency dropping or something happening that’s bad in the economy, against —they bet that the housing crisis would happen—they actually make a lot of money. And that’s, moral obscenity.
If you look back at the guys who ran some of the big hedge funds, the Vanguards and the folks who are out there, and they’re still out there, they were really at the core of that kind of collapse, that they were betting against the housing.
George Soros, who funds many liberal causes. Actually, he goes back to having bet against the English pound, and he made a huge amount of money on currency trading and betting that a currency would drop. And you make an enormous amount of profit if you get the bet right.
What’s happening in—almost behind the scenes, and I think we’re not paying attention to it as much because we’re focused, rightly so, on jobs and on the “recession,” quote-unquote, is that there’s an enormous attack coming from the same financial interests that created the crisis in trying to prevent this again. One of the things that the Obama and his administration, did right was trying to create this Consumer Financial Protection Agency. There’s a tremendous amount of money now flowing from the banking interests and financial interests to undercut that agency, which is designed to protect the consumers, so that these people who, both from greed and because of their incompetence, aren’t allowed to do this again. And already, one of the proposals is that 98 percent of the banks will be exempted from this new regulation, and they’re slowly but surely eating away at that.
The second broader thing is that one of the reasons this is happening is that the same people who created the crisis and the same ideology that created the crisis are in charge still, not only running companies, but the highest levels of the administration. We have what I call the Rubinites, the people who I think should not only be fired, but never have any kind of high policy-making job in any administration, certainly not Democratic administration, because it’s their ideology—the notion of, leverage, the notion of the so-called free market—that got us to where we are now.
J Street was started because, for too long, American policy has been influenced by AIPAC, and legislators across the political spectrum have been forced to, see a one-sided solution to that. And J Street, will be effective. Its notion is that—its goal is to bring about a two-state solution. And I’m very optimistic. It was huge energy in that room. There were over 1,500 people that came from all across the country. There was a lot of excitement that finally there will be a voice that will contest that—what I think is a wrong and very small-minded approach to the solution in the Middle East.
Discussion with Jonathan Tasini.
Jonathan Tasini, executive director of the Labor Research Association and author of the new book The Audacity of Greed: Free Markets, Corporate Thieves, and the Looting of America. He runs the blog WorkingLife.org. He is challenging Senator Kirsten Gillibrand in the Democratic primary for the 2010 US Senate special election in New York.
– from democracynow.org
Consider this, in the early 1980’s we witnessed two significant changes among those who ran America’s major corporations. Terminations moved from becoming a decision of “last resort” to a decision of “first resort” (Kochan, 2006), and at the same time CEO pay packages began to dramatically increase. In agreement Hickok (2008) maintains that during the period between 1980 and 1995 record layoffs occurred, for example during 1980’s layoffs accounted for 9 percent of the adult population in the U.S. At the same time senior executive salaries increased more than 1,000 times.
Rennie (2006) confirms this phenomenon. She compared CEO’s who terminated employees and those who did not. She discovered CEO’s who terminated employees obtained greater increases in compensation then those who did not terminate employees. She studied 229 firms that terminated employees at least once between 1993 and 1999, and found that in the year after layoffs occurred CEOs of these firms received 22.8 percent more in total pay than CEOs of firms that did not have layoffs. Rennie (2006) also discovered that the year layoffs occurred, CEOs of layoff firms received 19.6 percent more stock-based compensation than CEOs of non-layoff firms. This stock based enrichment increased significantly over the years following layoffs. One year after layoffs, CEOs of firms that terminated employees received 42.6 percent more stock-based compensation than CEOs of non-layoff firms. Two years after layoffs, that percentage rose to only 44.9, but jumped to 77.4 percent after three years. Research by the Policy Studies Institute confirms this, suggesting in 1996, the CEO’s who laid off between 2,800 and 49,000 employees received an average salary increase of 67 percent (Leondar-Wright & Cavanaugh, 1997) . The average increase for all CEO’s in 1996 was 39 percent (the average increase for all workers was 3 percent). They identified the Downsizer Dozen those CEO’s who gained the most from the pain of terminating their own employees.
Highlights from the Downsizer Dozen
• American Express Company announced the termination of 3,300 employees in 1997. CEO at the time, Harvey Golub earned 229 percent increase in his take-home pay over 1996, including $27 million in options gains. His annual compensation of $33.2 million equals the total annual pay of 1,500 employees earning the average 1997 weekly wage of $424.
• Eastman Kodak terminated over 20,100 workers in 1997. They have made additional lay-off announcements in 1998. CEO. George Fisher didn’t get a bonus in 1997, but he exercised stock option gains worth $8.7 million, increasing his total 1997 compensation by 96 percent. Fisher’s total compensation of $10.7 million is equal to the pay of 487 average US workers.
• International Paper Company announced plans to terminate 9,215 employees in 1997. They rewarded their CEO John T. Dillon with a 140 percent increase in salary and bonuses.
• Whirlpool Corporation announced 4,700 terminations and gave CEO David Whitwam a 47 percent pay hike. Adding in long-term compensation and exercised stock options Whitwam obtained a 133 percent pay hike. In October 2010 he terminated another 400 employees and the following month 590 were let go.
• Barbie-maker Mattel announced over 3,174 terminations. CEO Jill Barad received a 29 percent increase in salary and bonuses from 1996 and her $9.1 million in long term compensation gave her a 126 percent total pay hike.