As the Supreme Court determined last year, corporations are people, and people sort of suck. Thus, it’s not surprising to learn that although the U.S. economy currently has the same stability as an advanced game of Jenga, corporations are raking in sufficient profits to build and stock their own money bins. And like Scrooge McDuck’s shrine to capitalism, the impact on the economy is not especially positive.
According to this AP article, despite strong second quarter corporate earnings, job growth is “moving kind of slow at the Junction” and wages are as stagnant as the crowd at a Pat Boone concert.
Wages and salaries accounted for just 1 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009, according to Sum and other Northeastern researchers.
In the same period after the 2001 recession, wages and salaries accounted for 15 percent. They were 50 percent after the 1991-92 recession and 25 percent after the 1981-82 recession.
Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during those first 18 months. That’s compared with 53 percent after the 2001 recession, nothing after the 1991-92 recession and 28 percent after the 1981-82 recession.
Yeah, that’s peculiar. However, there is some logic behind the discrepancy. Corporations, despite their growing coffers, aren’t hiring and they aren’t raising salaries because there’s no need to remain competitive in a job market where no one’s hiring.
I should clarify that many companies are adding jobs overseas. This is often referred to as “optimization,” which is more correctly called “exploitation.” U.S. workers want living wages and health insurance. That does not help the bottom line. But wouldn’t it be a grand show of patriotism to take a relative profit hit and keep those jobs in the states? Instead companies employ a strategy straight from the “Animal Farm Guide to Corporate Management.” The spin is that companies have no choice but to cut these jobs in order to remain viable. Your colleague lost his job but you got to keep yours, right? And that’s why we also can’t increase your salary even though rent and groceries have increased. This is all necessary so that Farmer Jones doesn’t come back.
Meanwhile, the remaining employees trudge on like Boxer, striving to “work harder.” This was discussed in a recent Morning Edition on NPR. Much of these corporate profits stem from “relentless cost cutting” and increased productivity (e.g. one worker doing the job of two while making the same as he did three years ago). Of course, this business model — crafted in the same section of hell that creates abusive spouses — only works as long as employees have no shelter elsewhere. And though there might be some sinister logic in increasing profits by curbing “discretionary spending” (corporate speak for basic, cost-of-living raises that simply ensure you are not effectively making less than you did last year), Vulcan philosophy appears to peter out at the C-level, as evidenced by CEO pay inceasing 24 percent in 2010.
At Viacom, CEO Philippe Dauman got an impressive $84.5 million last year, or 1,990 times what the typical Viacom worker got. This assumes his workers make the $42,500 a year, on average, reported by the Bureau of Labor Statistics as the typical pay for employees in arts, design, entertainment, sports and media.
Dauman reduced Viacom’s workforce 7 percent (about 850 positions) in 2008. He did volunteer to not accept a pay increase in 2009, but he certainly made up for his year spent scavenging through trashcans and sleeping under the BQE by almost tripling his salary in 2010. Granted, that’s cigar-lighting money compared to what school teachers make, but it does seem a tad excessive for someone with a whopping 38 percent approval rating on Glassdoor.com. OK, I concede that this is based on only 13 reviewers but when you “optimize” your workforce, you also “optimize” your sample size.
You could take Dauman’s $50 million increase and give all 10,000 of his employees a $5,000 bonus (more than 10 percent of their estimated average salaries) or you could hire back the 850 employees he released (about $35 million) and still have a little more than $1,000 left for everyone (George W. Bush only sent me a check for $350 in 2001). Although “punishing” Dauman for his success this way would be quite a blow to the private jet and luxury yacht business, it would be a much-needed injection of cash into the gas, food, and lodging industries.
This is in itself pretty appalling but what’s worse is many of our elected officials would sacrifice your own children — certainly not theirs — on the altar of Baal to preserve tax cuts for people like Dauman, who by accepting such a salary adjustment demonstrated that either he can’t do math, in which case he shouldn’t even be a CEO, or that his soul evaporated around the same time as M. Night Shyamalan’s talent.