For almost all businesses, the biggest cost the company deals with are wages. Paying the employees makes up the biggest portion of your outgoing expenditures. So, there are several ways to be more efficient, but, when people in the boardroom of a struggling corporation decide to hire a new CEO who is known for making businesses profitable... among other things, they are looking for someone who is going to downsize their workforce.
And downsize they do. For 21 straight months, the US Labor force has experienced negative job growth. More and more Americans are being laid off as companies continue to attempt to control their costs... and profits.
And as people are let go... as quarterly earnings increase, even if sales do not... the executives get the credit... and the bonuses. Such a great leader... having the strength, and will... to do what is necessary... "for the good of the stockholders." Give that man a raise, for his unique and singular vision!
Millions of Americans are being fired. For the more "fortunate"... wages are merely stagnant, and for some... wages are DECLINING. But work still has to be done. How does the declining size of the American workforce affect US productivity? In recent months... we've actually seen a rise in productivity of the American work force (click here). People are being laid off in large numbers, and for those who are still around, they are actually being asked to take on a larger workload. Someone has to help pick up the slack from those empty desks. So, the average American is working harder, and for less money, than he or she made a year or two ago.
My question is... when do executives take pay cuts? Have you ever heard of a company's upper management slicing their million dollar salaries in half when their companies are hurting? When do multimillion dollar executive pay packages get put on hold? It seems the concept of: "sacrifice for the good of the company" tends to be a one way street. From your pocket, and into theirs. Not only is executive compensation not going down, but there has been anger because of the reported bonuses! Its just weird to me how American workers get treated, and yet, how apprehensive and negative a lot of people are about unions. The power of "collective bargaining." Well... RIDDLE ME THIS... Hollywood actors have the Screen Actors' Guild. Hollywood writers have the Screen Writers' Guild. Major League Baseball... the NFL... the NBA... all these organizations of millionaires... they all believe that they need protection from their management, to bargain as a unit, not a bunch of individuals dealing with management individually... but the guy making $45,000... he's not sure thats necessary???
I already know what executives will say. If this company doesn't pay us. We'll go somewhere else. "Brain drain" Where the brightest minds migrate to another location. They might as well talk like teenagers and say... "well... everyone else is doing it. We have to give big bonuses to our stars or they will go to our competitors." There was a report earlier today that the current CEO of AIG (Robert Benmosche) was thinking about resigning because of the current caps on executive pay. For those who haven't read about AIG, last year, they were only DAYS away from bankruptcy. They begged Tim Geithner and the Federal Reserve for intervention. The United States government funneled hundreds of billions of dollars into AIG to keep them filing chapter 11... they can't afford to pay that money back yet... and this dirtbag is considering quitting because he's not making more money? This is the mentality that we're dealing with.
Another problem is the CEO revolving door of success. For the average American, unemployment... particularly in certain parts of the nation, can be the abyss from which its hard to return. Unemployment is so bad right now, the government keeps working to extend the normal duration of unemployment benefits. Seems Republicans aren't always for smaller government when they want a handout, too? Unemployment is welfare. I dont see teabaggers out protesting that government spending. I suppose you can't be a stupid idealogue when you're hungry. Robert Willumstad was the CEO of AIG in September of 2008. He was fired after the bailout to show they weren't just going to keep the same guys who let this AIG debacle happen. He was replaced by Ed Liddy, who was formerly the CEO of Allstate. And a little more than a year later, they are on their third CEO. When Merrill-Lynch sold itself to Bank of America, John Thain, the CEO who agreed to the sell Merrill, had not been in his job a year. And when one of these yo-yos ruins a company and is, subsequently, tossed out of the executive suite's window...?
He is... somehow... able to land safely. God bless free market capitalism...
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