dispatches from the new world of work

Big League Inequality

The New York Times (Bob Herbert) reported yesterday that the 93 million non-farm production and nonsupervisory workers in the U.S. saw their real earnings go up by $15.4 billion between 2000 and 2006. That's half of the Wall Street bonuses paid by just five firms in 2006.

I believe in markets—and I also believe that we are on the verge of backlash of a magnitude seldom seen.

(Add to the above the Pfizer and Home Depot CEOs' combined separation packages of about one-half bil—one was fired, the other lost over $100B in market cap. That is, two underperforming CEOs are paid for leaving 3% of the raise of 90+ million workers over a 6-year period.)

Tom Peters posted this on 01/09/07.

Comments

And still we wonder why executives are viewed with such contempt by workers. Staff at the front line who do the work and add the value are smarter than most executives will ever know and this is there reward. Thanks Tom for pointing us to yet another OBSCENE example of scandalous unfairness that occurs when workers are abused â€“ â€˜radical givingâ€™ as advocated by Nicky Gumbel is my aim. I thank God for people like Mr Gates who at least recognises the scandalous differential and MORE IMPORTANTLY do something about it by giving away money he does not need â€“ unlike these failed CEOâ€™s â€“ the list grows longer every week - who presumably laugh all the way to the bank which is even more abusive of front line workers. I believe in markets too but only when those doing the work are valued equally with managers. I donâ€™t care if that is old fashioned â€“ this sort of crap makes me sick.

Posted by Trevor Gay at January 9, 2007 10:32 AM

I have been employed at companies where some of the most hideous, selfish, short-sighted, egotistical maniacs were at the helm.
I either a)quit or b)rode things out for my own interest (waiting for my commission check, stock options to vest, profit sharing, etc.).
When "workers" stop looking at employment as some sort of surrogate family and community and instead take a "job" at its' face value (services for pay) - the world of work takes on a new meaning.

Posted by Jack at January 9, 2007 11:16 AM

1. Quit sniveling & make a few $$$ Million like the rest of us

2. Soon my best-selling book, "Front-liners Can Eat Scraps" hits DVD status

3. ... plenty of wonderful scenes of laughing all the way to the bank, while newly laid-off front liners must drive away in leaky Yugos

Posted by sean_$3million_free at January 9, 2007 11:53 AM

Wonderful Sean - I love that! :-)

You will make an excellent CEO of some crooked company that robs it front line staff and runs away with the pension funds, laughing all the way.

Jack - 'hideous, selfish, short-sighted, egotistical maniacs were at the helm'

How come you know my ex-boss? :-)

The serious point remains - whatever happened to ethical behaviour at executive level.

Posted by Trevor Gay at January 9, 2007 12:41 PM

Jack,
Great points. My experience has been that when I begin treating my "job" more like a hobby because everything else in life seems more interesting and enjoyable, it's time to move on.

As for the issues of inequality in pay. I started reading the BusinessWeek cover story on Bob Nardelli leaving Home Depot and was incredulous. Apparently a big part of the reason he left was because he didn't want a big chunk of his compensation tied to stock performance. His excuse was that as CEO he had no influence over the market - which I interpret as his saying "Pay me as much as I want and I don't care how well the company performs." You must be kidding me. Try telling that to CEO's like Steve Jobs and Gerstner when he was at IBM!

Posted by Andrew Hayden at January 9, 2007 1:08 PM

1. The beatings shall cease once front-liner morale improves

2. Whilst management enjoys all organic chef prepared fine dining - front-liners eat scraps in their basement cafeteria

3. Did I mention watery gruel Fridays for front-liners?

Posted by sean_talent at January 10, 2007 9:59 AM

I wonder what kind of backlash Tom has in mind. The best case would be for markets to punish companies with out of control executive packages. The worst case would be for the new Democratic controlled Congress to impose new penalties on excess executive pay, which have never worked in the past.

I have gone dumb repeating this: There is no correlation between executive pay and corporate performance. Why do Boards have so much trouble understanding this?

Posted by Gregory Tucker at January 10, 2007 11:12 AM

Sean - your manifesto to become a CEO will be very appealing to many companies. It is clear you have been on all the right management courses :-)

Posted by Trevor Gay at January 10, 2007 11:45 AM

And, of course, as the private sector has increased compensation of top executives, the Bush administration has cut taxes on the highest incomes.

Since 1980, the top tax rate on dividends has dropped from 70% to 15%. Meanwhile, income inequality has increased and economic growth has slowed.

Posted by Frank Palmer at January 10, 2007 12:39 PM

1. Transfer ALL taxload to front-liners

2. 3 day workweek for Managers [like Congress] - 6 day for front-liners

3. MBWOF - management by walking on front-liners

Posted by sean_income_transfer at January 10, 2007 1:14 PM

Come on Sean - a 3 day week for managers? - that will be 2 more days per week than they have been used to working!

Posted by Trevor Gay at January 10, 2007 3:06 PM

The inequality in pay between the bottom and the top only matters if you believe the economy is a zero-sum game. Would I make any more money if my CEO made less? Probably not, so who cares if he makes a ton? Now, if he makes a ton and tanks the company--that's a problem, but it has nothing to do with my salary as compared to his. The economy actually creates money instead of just moving it around, so the monetary pie keeps getting bigger--thus it matters not whether my CEO's piece is bigger than mine. To proclaim otherwise smacks of populist (liberal) pandering.

Posted by Mike at January 10, 2007 3:22 PM