The number of people who are unemployed in America is almost equal to the number of people who belong to a labor union. Both groups are being blamed for the faults in our economy.
Don’t have a job? Are you one of the 40 percent of jobless Americans who are “long-term unemployed”? The political spin blames you. In America, if you want a job, you should be able to find one. Never mind that there are four applicants for every job available and it’s been that way for the past two and a half years.
Don’t like budget deficits? The political spin blames unions. Wisconsin Governor Scott Walker passed $120 million in tax breaks—and then said his budget deficit was caused by labor unions. Then he stripped collective bargaining rights from unions. That same blame game played out across the country this year. It looked like an epidemic of legislation to end collective bargaining rights. Then there was a wave of legislation to end state-level minimum wage laws; then to repeal workplace safety laws; then to repeal child labor laws—all in the name of “fixing the economy.”
Who broke the economy? Look at the compensation agreements for corporate CEOs. CEOs get huge bonuses if they succeed in “reducing personnel costs.” The fastest way to do that is to eliminate jobs.
Some CEOs get bonuses if their company pays stockholder dividends above certain levels. The easiest way to increase dividends is to pay out profits rather than reinvesting them in the company’s employees. There is no incentive for corporate CEOs to expand hiring and create new jobs with decent wages; instead, CEOs have a strong incentive to cut positions and reduce wages and benefits.
In 1965, American CEOs were paid 24 times more than an average worker. Now CEOs receive 336 times more than an average worker—and that’s probably an undercalculation.
These days, a lot of CEO compensation is structured as stock options, rather than salary or cash. That has two effects. First, it allows the CEO to pay less in federal taxes, because compensation structured as capital gains or dividends is taxed at a lower rate than ordinary income. Second, it increases the CEO’s incentive to pay out dividends rather than hire new employees. Maybe that’s why the private sector isn’t creating millions of new jobs. And maybe that’s why tax revenues have fallen. It’s not just CEOs who pay less in taxes. People without jobs don’t pay much income tax, either—and they also spend less, reducing sales tax revenues and weakening the economy in a never-ending spiral.
How, exactly, is this the fault of unemployed workers and labor unions?
If we allow our legislators to repeal child labor, workplace safety, minimum wage and collective bargaining laws, they will eradicate a century’s worth of progress in employee rights and what’s left of our middle class. Sending America backward in history won’t create jobs. Unemployed workers and unions aren’t the ones who decide whether to hire new workers. Maybe it’s time to take a page from the playbook of those who propose limiting the scope of union contracts and employee rights. If legislators can dictate the terms and conditions of a union contract, then surely they can limit the scope of executive compensation contracts. This Labor Day weekend, take the time to write your legislators. Ask them to prohibit CEO contracts from incorporating incentives to eliminate jobs. That might actually help fix the economy.”
Tom Iacobucci is the treasurer of Massachusetts Jobs with Justice, an instructor at the Archdiocese of Boston’s Labor Guild and the Director of the Massachusetts Carpenters Apprenticeship & Training Fund.
