The Progressive Ensign

insights and analytics to build an economy that works for all

Category: Corporate Reform (Page 1 of 2)

End Offshore Corporate Tax Havens

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: marylandpirg.org

In 2016, multinational U.S. corporations booked over 50 % of their foreign profits in overseas tax havens.  Whether the profits are made in Casablanca or Singapore corporations are using lax US tax laws and accommodative offshore tax haven laws to book profits where they can’t be taxed at fair share rates.  Note that pre-tax profits viewed as a percentage of wages paid ranged from 200 % in Singapore to 800 % in Ireland!

Sources: The Wall Street Journal, The Daily Shot – 9/12/18

Combine this tax information with the soaring use of stock buybacks by moving dollars from these offshore accounts to juice the price of their stock and we see corporate executives doing a great job of increasing their stock based compensation.

Sources: Compustat, Bloomberg Finance LP, Deutsche Bank, The Wall Street Journal, The Daily Shot – 9/12/18

The US stock market has dramatically diverged from overseas markets where China markets are down in bearish territory at 20 % for the year and emerging markets down close to 18 %. Yet, the  S & P 500 Index of U.S. stocks is up 7.4 % for the year.  With all the uncertainty in emerging country currencies, trade wars, lack of wages, falling home and care sales, the U.S. stock markets keep rising being propped up by stock buybacks. Nearly $1 trillion of buy backs have been announced for the year. Buy back dollars are not going toward raising employee wages which are 312 times lower than CEO wages.

Sources: The Wall Street Journal, The Daily Shot – 9/12/18

Little wonder workers are not getting a fair wage in many industries with corporate executives stashing money overseas where it is out of reach of U.S. tax laws.  Plus, executives are compensated for increasing profits, not increasing wages that would cut into profits.

Next Steps:

Corporations received a windfall from the Tax Bill last year which did not change taxation of U.S. corporate profits overseas, but instead gave corporations a huge one-time tax break on repatriated funds from the listed rate of 35 % to 15.5 % for cash related assets and 8% for illiquid assets.  Many corporations did bring funds back to U.S. this year, yet 70 % of the funds were used for dividends and stock buybacks. Only a small percentage of repatriated funds went to raising worker’s wages which is what CEOs promised they would do when lobbying for the Tax Bill.

It is time for corporate leaders to understand they need to start paying their fair share of U.S. taxes for entities overseas, and they need to pay a share of the cost of our armed forces overseas.  They benefit directly from having safe countries, government protection through embassies and staff and safe passage of cargo worldwide.  Plus, the U.S. government working in partnership with corporations provides businesses opportunities that firms from other countries with less presence don’t enjoy.  U.S. corporations need to pay up, and recognize profits in their respective countries where they do business with a share going to the U.S. government for the offshore benefits they receive.

57M Gig Economy Workers Hit Benefit Limits

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: thcceomagazine.com

Gig workers create millions of dollars of goods and services for the U.S. economy yet remain frustrated at not picking off a benefits stream for themselves. While, gig economy workers enjoy ‘lifestyle benefits’ they are lacking in good health insurance, retirement plans, stock options and addons like commute cost compensation, discounts at restaurants, staff lunches, evening taxi service, onsite laundry and company cafeteria.  Income is irregular and unpredictable for contractors whether the gig is a project or a longer term assignment with an agency.

In Silicon Valley and many high growth regions jobs in security, food concession, facilities management, IT, accounting, travel, web design, and HR have been outsourced, contracted or shifted to independent contractor roles working in their home. While independent contractors have autonomy and work flexibility they are missing key benefits.  Contingent workers like Uber drivers using the Uber app to find riders and handle billing are essentially working for the company yet not enjoying full time worker benefits.

So, how widespread in our economy is the contractor workforce?  Gallup completed a recent survey and found about 36 % of the workforce is engaged in some type of gig work.

Sources: Gallup, The Wall Street Journal, The Daily Shot – 9/5/18

Seven percent of workers had one traditional job and a gig job while 3 % had two gig type jobs for a total of 10 % with two jobs.  Workers in the bottom 80 % in income have seen their wages actually decline over the past 10 years. So, it is no surprise they need to hold at least two jobs to maintain their standard of living.  The number of workers holding multiple jobs has skyrocketed in the past few years.

Sources: Deutsche Bank, The Wall Street Journal, The Daily Shot – 9/5/18

Note the high during the Great Recession of multiple job holders, and yet today in a strong economy we see a similar peak in workers with multiple jobs.  Is this economy really working for the majority of the labor force?

Next Steps:

The economy has not ‘lifted all boats’, we know that the top 10 % in income received 90 % of the income gains since 2008.  The most recent Tax Bill from Congress benefited the top 1 % and corporations to the tune of a $1 trillion deficit to be paid by all taxpayers who are seeing their incomes and benefits decline.  The gig economy has been a mechanism for corporate executives and their wealthy shareholders to cut costs, pass along retirement benefits responsibility to employees and shut many workers out of profit sharing programs.

We have proposed in previous posts that in addition to raising worker wages, gig economy works would be well served if they received health insurance from birth, a retirement program in tandem with Social Security at the time of a worker’s first job and other income protections.

It is time we recognize that the gig economy is here to stay, it is a key component of the dynamism and flexibility in the workforce to drive growth and innovation – we need to plan for the just needs of workers to make the economy work for all.

Labor is Our Most Productive Asset

 

Image: progressivebumperstickers.com

“Nothing will work unless you do” – Maya Angelou

On Labor Day it is a good time to reflect on our labor force – the people who make our economy go. What has become of labor in America? Does labor hold equal power with capital? No.

Wall Street, the citadel of capital,  wields supreme power focused on profit throughout our economy and control of our government. Corporations pander to financial leaders with ever higher profits manipulated by stock buybacks juicing the value of share prices. Management ensures investors are pleased with financial results using loose financial gimmicks and laying on record debt. While workers have seen their wages stagnate for 30 years since the 1980s.

Executives are handsomely compensated at 300% of the average worker’s wage. Why? They think they ‘are’ the company. At a $400 million biotech firm, this author listened to a VP extoll the value of management over workers, “we have all the power; we decide wages, allocation of resources, when and how work is done, and we can fire them anytime”.  Yet, workers make the company go.  Nothing works until the employees make it work. Managers don’t do the work, they manage the work that is getting done.

Managers are doing what they are compensated to do – increase profits and reduce costs. In Western accounting labor is viewed as an expense while money and machines are viewed as assets. Wait, aren’t employees assets? CEOs are always telling employees at ‘all hands’ meetings they are the companies’ most important asset. Do they treat employees that way?  What about when things get tough; instead of selling equipment, moving out of buildings or reducing executive benefits they lay off employees who can least afford it. Executives need to start treating employees like they are an asset.

Maybe we need to start recognizing labor as an asset from an accounting perspective. When we label capital an asset and labor a cost we are fundamentally placing a higher value on money and a lower value on people. That framework us wrong – if anything it should be the other way around. Because people create value in corporations not money. Money does not come up with the latest innovation or new process or service – people do. We need to require corporations to report on how they are building employees as assets and worker contribution to increasing company value.  The next step is for Wall Street to recognize social responsibility in their investments as Blackrock, CEO Larry Fink, has in a letter to CEOs of companies in their portfolio that he will be looking beyond profit, for implementation of policies by management in sustainability and worker advancement.

Unfortunately labor power is at an all-time low when in a great ‘boom’ economy now the 80 % in income have experienced declining wages since the Great Recession. On Labor Day we need to dig deep and renew our commitment to recognizing labor must share equally in all corporate prosperity.

Our Internet Purchases Are Private, Let’s Keep It That Way

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: scienceprogress.org

A year ago, Mastercard sold consumer store transaction data to Google, who sells the store transaction information and correlates it to searches for the same product or service to advertisers.  Advertisers can see patterns in consumer behavior from the ads that are run and whether a prospective buyer went to the store to buy the item or online (online tracking databases). This strategy by Google is focused on Amazon’s business, and their recent moves into in store retail to dominate emerging sectors.

Google is dominant in digital advertising:

Sources: eMarker, Recode – 2018

In digital advertising Google has 2 times the share of its next largest competitor – Facebook.  In mobile advertising, Google has a 1.5 times greater share of the advertising business. In short, Google is the digital advertising player for most advertisers to work with, and Google is interested in maintaining that dominant position versus possible competitors like Amazon. Amazon now has 50 % of the eCommerce business in the U.S. The eCommerce behemoth is in a position to both track consumer behavior and offer point of decision purchase capabilities.

So, what does this mean for us as users and our privacy?  Google is no longer a company just setting up a partnering relationship with Mastercard, they are controlling the retail market and manipulating data to put us under constant surveillance. We did not give our permission to Google to constantly put us under surveillance.  It is dangerous to our private lives to have a big corporation or partners knowing everything we are doing and buying.  What happens if hackers break into these databases and begin to use the data to find us or siphon off our purchases or find out our transaction information or credit card data?

Next Steps:

First principle is that we own our data, and we own the patterns of our searches that is our propriety information because it is our behavior and is not owned by the company. When users search on Google, they are looking for an idea, a product or a service or a person – not to be spied on.  Recently, Google was still keeping user location even when the user turned off  location services.  A couple of years ago Google tracked words in user email messages and sold the information to advertisers, so if a user mentioned their child’s bike, all the sudden bike ads were showing up in the side bar – they finally ended this practice after a lot of complaints it was just too spooky.

Second, Google and Internet companies can’t build trust with users if they are constantly telling us one thing and doing something else to their benefit and not ours. The U.S. should look at implementation of a policy like the EU General Data Protection Regulation (GDPR) plan which could be widened to include schemes like the Google – Mastercard deal. The GDPR provides users with control over their personal data and how or if it may be transmitted outside of the country. The GDPR policy particularly focuses on personally identifiable information and how this information is to be handled in a confidential manner, not disclosed to third parties and the information made anonymous to outsiders.  In a provision we particularly like the information processor (ie Google) must enable users to be able to erase their information on the system.

We need to take a stand as a user community that user rights come first. User’s own their data not the processors.  Users should have control over any processing of that data and who has access to their personal data. Otherwise, we are opening our citizens to corporate spying for any reason, and targeting of the linked Mastercard – Google profile data to hackers.

Workers Facing High Prices, Stagnant Wages Are Taking On Debt

 

Image: guardiandebtrelief.com

Worker pay continues to stagnant. Yet, companies are raising prices.  The price increases are due to tariff based supplier cost increases and government tax credits juicing the economy.  The Federal Reserve survey for July in the Philadelphia area showed that manufacturers plan on raising prices by 3 % versus 2 % last year.

Source: HIS Markit, Bloomberg – 8/28/18

How did companies get this pricing power?  Corporations have received a $1 trillion tax cut,  reduced regulations by the Trump administration, less oversight by the EPA, and less scrutiny on mergers.  Companies are at the zenith of their power allowing them to raise prices, keep wages low – below inflation, while increasing profits and executive compensation.

Source Bureau of Labor Statistics, Bloomberg – 8/24/18

Worker economic power continues to wane, as real wages actually turned negative this past month. Worker share of income as a percentage of non-farm business income is at a 70-year low even in a strong economy.

Source: Bureau of Labor Statistics, Bloomberg Businessweek, The Wall Street Journal, The Daily Shot – 8/27/18

How are consumers handling the budget shortfall?  By borrowing, the debt as a percentage of income of the bottom 80 %  is 4 times the debt of the top 20 %.

Most of this debt is in the form of credit card, auto loans and home equity lines of credit.  Home owners have done a better job keeping their first mortgages in line with incomes this year versus the housing bubble of 2008.

Next Steps:

Caught between high prices and flat real wages, consumers are filling the budget gap by piling on debt. Companies are getting even richer from both sides of making a profit – increasing income by raising prices and reduced costs by keeping worker wages low.

Why is this vise tightening on worker budgets?  Corporations are accumulating power every day at an ever increasing rate; buying other companies, issuing stock backs to hype stock price, increasing lobbying budgets to get the federal government to make rules that tip their way, consolidating supply channels, distributing manufacturing world-wide and automating every job they can conceive be done by a robot.  Prices are rising due to tariffs in many industries, the wide spread use of tariffs on some consumer goods, contagion of one product category to another (tit for tat) and shrinking channels of distribution reducing price competition.

Meantime, workers continue to lose power at even faster rate than corporations gain power.  Wages have been stagnant for 20 years for the bottom 80 % in income.  We have outlined in previous posts why wages have actually declined – rise of corporate power, fewer unions, automation, mergers in the same industry reduce the overall number of jobs, increased availability of candidates over the Internet, outsourcing, and the gig economy.  Workers are getting some relief in the gig economy with lawsuits to recognize Uber drivers as employees, but it is a tough long slog through the courts.  Overall, most court decisions are favoring companies in reducing union power, allowing companies to give millions to campaigns unchecked (Citizens United case) and overtime pay.

Eventually prices will rise too high for declining incomes causing consumer spending to fall. Consumer spending has been falling this year, with the most recent decline announced today, as a revised downward revision to 3.8 % in 2nd quarter.

Sources: BEA, Factset – 6/1/18

Remember, corporate executives are compensated handsomely for what?  Making more profit by increasing income and reducing costs.  Workers, after all the PR from executives are viewed as a cost when managers get into salary and compensation review meetings. Workers are being squeezed between low wages and increasing prices nationally to feed the ever increasing profit making systems of corporations. Until, we as a society start to see that workers need to be an equal partner in corporate management, sharing in profits and benefits things will not change.  Without workers receiving a fair share of the economic pie, the common good will suffer and will lead to civil unrest and a contracting economy when consumer spending evaporates. The economic reality is that the U.S. economy is not working for the bottom 80 % and until it does we are faced with major disruptions in our economic life.

Disney, Walmart Begin Offering Education Aid

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab.)

Source: payactiv.com

Disney announced this week that for 80,000 hourly workers in the U.S. to take online courses beginning this fall.  The media and entertainment giant will invest $50 million to kick off the ‘Disney Aspire’ education program with $25 million each year afterward.  Disney will provide up front funding for degree programs, high school diploma or learn a new skill.  The jump start funding enables  workers with little savings to begin taking courses right away. The program will begin with online courses only though classroom course programs may be added later.

Last May, Walmart introduced a tuition assistance program for 1.4 million hourly part-time, full-time and salaried workers to take courses online in business or supply-chain management. Employees will pay just $1 a day to participate in the assistance program. The retail colossus is looking to increase retention rates, and draw more new workers.  Drew Holler, VP of Innovation at Walmart U.S. was excited, “We know we’re going to see an influx of applications.”

Other major corporations are feeling the pressure to be competitive in benefits for hourly or retail workers. Starbucks offers a full tuition degree program for baristas at Arizona State University.  Chipotle Mexican Grill offers $5,250 in tuition assistance for degree programs.

However, for many hourly workers they have a difficult time committing to education programs due to erratic work schedules.  Our Walmart, an employee advocacy group, completed a survey of worker needs finding that 70 % of workers wanted more time scheduled to work full time, and more predictable timing.  Hourly workers are busy balancing work time with family commitments, like child care, doctor appointments and caregiving.

We have commented in our posts about the necessary investment corporations and government needs to make in education.  Hourly workers in particular have a difficult time getting more education due to random work schedules, little savings and limited study time.  Many of these programs begin to address the issue of upfront funding now they need to enable workers to actually go to school while working by offering predictable work schedules and flex time to handle family commitments.  We are pleased to see Disney, Walmart and other companies  respond to the need for workers to get a better education by investing in their employees’ future and to see the move as good business.

Verizon Shows Its More Interested In Revenue Than Firefighters

 

Image: theverge.com

During the Mendocino fire in California last month, firefighters using the Verizon service went over their data plan limit.  So, instead of helping to alleviate the problem, Verizon made it worse by throttling down their data rate to 1/200th until they switched to a new higher cost plan.  Plus, they made the firefighters do the work to switch plans – doesn’t Verizon get the fact that the firefighters are a little busy saving lives and property?

Santa Clara County Fire Chief, Anthony Bowden explained, “Verizon representatives confirmed the throttling, but rather than restoring us to an essential data transfer speed, they indicated that County Fire would have to switch to a new data plan at more than twice the cost, and they would only remove throttling after we contacted the department that handles billing and switched to the new data plan,”   Bowden wrote up the incident to support a law suit filed by 22 state attorney generals to stop the net-neutrality policy from being implemented by the FCC for the major carriers.  Bowden noted that Verizon had throttled firefighter data rates in the past when fighting fires.  A company spokesman said the throttling was a ‘customer service mistake’, and they would try to respond without throttling in future firefighting crisis situations.

Version is a huge wireless company with over 30 % of the wireless market:

Source: Statista – 2018

By size alone they command significant market power over users.  With this market power comes community and public interest responsibility. When Verizon, Comcast, AT&T and others lobbied for a waiver of net neutrality provisions they said they could be trusted to protect the needs of the public and small internet users.  Clearly, Verizon can’t be trusted to be a part of the community and put the Common Good over profits.

Next Steps: 

First, Verizon needs to make restitution to the Santa Clara County firefighters and any other group involved in fighting the fire, by giving a credit for any increased costs and to make sure there is a hot line in place to an executive who can cut through all the bureaucracy and do the right thing.  Verizon has demonstrated they are using people, even at the cost of lives and property to make a profit.  Last year, the communications giant announced a $5.4 billion stock buyback program until 2020 to goose their stock price resulting in soaring executive compensation and shareholder returns.  They could use some of this stock buyback money and help out all first responders!

Second, net neutrality provisions need to be restored so that common service providers are required by law to treat all users fairly no matter their size and not use predatory tactics like throttling to force users into upgrading plans. Verizon and and other common carries did not build the Internet, taxpayers did with DARPA (Defense Advanced Research Projects Agency) funds in the 1970s.  DARPA built a breakthrough set of communication and HTML linking technologies with a number of universities to establish the Internet channel backbone in the United States. The government built it, it is a public service and we should not be turning control over to private companies that are not serving the public interest.

It is about time huge corporations started solving the major problems we face in protecting the security of people and build the Common Good rather than being a major obstacle when the community is facing a crisis.

Update: August 24, 2018 – Verizon announced that it would not throttle first responders to wildfires on the West Coast including Hawaii.  The backlash was so strong from the Mendocino fire the firm had to respond. Too bad management did not take the opportunity to be proactive about supporting the Common Good.  We appreciate the late data rate support move by the company.

Families Are the Place to Start Building the Common Good

Image: sleepingshouldbeeasy.com

We all have a mother and father, and may have brothers and sisters.  We come into the world born of our mother with a bonding to her, and if all goes well the father is there to raise us too.  We can all agree that families are a priority – when things get tough our families come first.

Bo Lotzoff, philosopher and counselor helping many prisoners and poor people turnaround their lives, observed about American society that we ‘love things and use people’. It should be the other way around, ‘love people and use things’. Think about this insight.  When we look objectively at what has happened to family life in the past 30 years, the slice of time devoted to family versus work has progressed in reality to not much time, or invested engagement by the working parent.

In Silicon Valley, the heart of technology innovation world-wide, it is the standard expectation for most workers at top companies to be at work until 8 or 9pm, just leaving barely enough time for fathers or mothers to read a story and tuck their children into bed.  Management expects knowledge workers to check for text messages at least 19 hours a day and email before coming into the office, responding to work requests on weekends too.  Even, on vacations, if project reviews are planned workers are expected to phone in for the key meetings and ‘stay on top’ of what is happening.  When global conference calls are involved, the calls may start at 6am to Germany and continue to 7 or 8 pm to Japan or China.  What all this connectedness means is that the company owns the mind and emotions of the worker 24 by 7. At one startup  ‘all hands’ meeting just prior to the Christmas holiday the CEO thanked everyone for their hard work over the past year and declared, “have a fun Christmas or holiday rest for a day, then let’s make our numbers!”  He made the statement kind of in just but half serious, the workers got his point, see your families and friends but stay connected 24 by 7.

Corporate life is destroying family life and our connectedness as a community.  Being totally connected to the corporation is more important if we want to maintain our standard of living is the message.  Corporations are using people and loving things (sounds like high tech).

Nourishing, sustaining and building stronger families would do a lot for solving our societal and economic issues.  Crime would go down as young men who are left to live on the streets would be learning skills, playing a team sport or having a family supporting his life, and where after school programs were funded and staffed well. Groups like Thread, in Baltimore actually use the family structure with Parents and Grandparent surrogates to support youth in poor parts of the city where there may be only one parent and that parent is not home much of the time working two or three jobs to support the family.  Today we are missing millions of our youth to crime, opioids and dead end jobs that could be active productive members of our labor force. Our labor force is declining with the aging of baby boomers, we need all the paycheck workers we can to support our aging population and for young workers to save for their futures.

So, let’s look at the policies of our federal government using the family yardstick which most people right or left, Republican or Democrat agree:

  1. Family Separation – recently we saw that there was consensus that children should be kept with their parents – even immigrant children
  2. Health Insurance – a Pew Research survey showed that 58 % of all Americans believed that every person should have affordable health insurance for which the government is responsible
  3. Childhood Health Insurance Program (CHIP) – most Senator and Congressmen agreed and renewed the CHIP bill to protect children caught between Medicaid and being too poor to afford an individual health insurance plan in this past December’s spending bill.
  4. Flexible Job Definition – more social and family counselors see a need for men and women to have flexible time jobs meaning that when a family emergency comes up like an illness or doctor appointment the worker can take time off and make the appointment without repercussions in job performance, salary or benefits.
  5. Parental Leave – Federal law of 1997 requires private employers to provide maternity leave up to 12 weeks of unpaid job-protected parental leave to bond with a new child within one year of birth, adoption, or foster care placement (parental leave).  The US is the only country in the developed world that does not have paid leave for parents.
  6. Wages – real wages (after inflation) for the 80 % of workers in the U.S. have basically been stagnant for the last 30 years. Instead, corporate executives use excess profits to juice their stock prices with stock buybacks instead of raising wages. They are wasting nearly $810 billion that Goldman Sachs estimates is being spent in 2018 on stock buy backs. That $810 billion could go a long way to providing decent wages for workers. Analysts estimate the S & P 500 index is at least 20 % higher from what the prices of company stocks would be without stock buybacks. The reality is that workers and their families suffer having to work two or three jobs because of the greed of executive management. 

We could add to the list, our point is made, when we have a consensus that families need to be placed as the first priority, not the second or third or thirty-fifth, then our legislative priorities are clear.  Other countries seem to make a thriving economy and support of families work. Germany has paid parental leave, a net export economy, good wages, employee councils and at least 4 weeks of paid vacation for most employees.  Most German families feel secure.  This author asked a co-worker from Germany if he considered working in the U.S., he noted,  “I would get sharper, get closer to engineering and innovation, yet, there is no real recognition of families, In Germany, I have paid leave for a new child, four weeks of vacation every year, a good guaranteed retirement program, health insurance and I participate in our employee council…I don’t want to live under constant stress in America.”

Families are the basic economic building block of our country.  When corporations take control of our government and run our families into oblivion we all are hurt as a country.  In the end corporate executives need to wake up and support family sustaining policies in their company, their management culture, wages and in Washington to build strong families. Otherwise, someday corporations will discover as is beginning to happen today, that young women having the fewest babies ever since WW II, the lowest level of family formations ever and lowest number of millennials buying homes will lead to shrinking markets, falling margins and reduced sales. We need to monitor what is happening to the health of our families to know if our societal values, economic values, government policies and corporate behavior are strengthening or weakening families.

Corporations Have A Responsibility for The Common Good

 

Image: Your Little Planet

Corporations provide the economic foundation for the common good in supporting a community.  Air, water,  and land need to be kept in good stewardship by companies using these natural resources and returning them as they found them.  Yet, there is an economic responsibility too – good jobs for fair pay while keeping the social contract with the worker.

The New York Times returned to the Carrier site in Indianapolis that 20 months ago President Trump ‘saved’ from being moved to Mexico. Today, the furnace plant is plagued by absenteeism and concerns that the plant will be shut down when the political light is gone.  Management has not helped when the CEO of the Pratt and Whitney that owns Carrier said that there would be lost jobs and automation would help to reduce costs. Unfortunately, the Carrier situation is true for many blue collar workers in America, always looking over their back, with a cloud hanging over their job future.  There isn’t a cloud hanging over executives careers.

How can workers make commitments, to their families, pay mortgages, make car payments are send children to college when there is economic uncertainty hanging over them.

It used to be that corporate management was concerned with the future of their workers in a deep and personal way, which was reflected in their policies.  All too pervasive in executives suites throughout America is the focus on profits, stock price and how to make more money – with worker security and careers taking a second place or not at all in the financial plan.  Certainly corporations have extreme competitive pressures worldwide, government regulations and personnel laws to adhere to.  Yet, when companies announce automation plans, they seem to forget the people losing jobs to robots are unlikely to get another job that pays as well.

Automation is a social concern, damaging the common good that workers can’t be just flung out of work while all the executives left make more money.  There is something intrinsically unfair with this model.

People are the most important resource in our economy, we need to be thinking of how we treat people when economic storms come.  When companies automate workers out of job they need to take the social responsibility for ensuring the worker thrown out of work and still progress positively in their economic life. While, a capitalist democracy supports corporations as private property and run entity, with the onslaught of automation corporations can’t just run the other way after giving the laid off worker a small severance check and say ‘good luck’  That approach is just not enough, the corporation profits the worker losesWe need to end the spiral down for workers, they need to be guaranteed a productive economic life just the same way an executive who is left with the benefits of an automated factory.

Corporations Are Taking Worker Wages To Increase Profits

 

Image: csmonitor.com

Eight-three percent of all workers are ‘non-supervisory’ workers in the Federal Reserve classification of types of workers, yet they have not seen a fair cut of the profits since 2000.  Corporations have used financial engineering techniques like stock buybacks where funds are used to buy corporate stock and goose the price up. J.P. Morgan estimates that with dollars repatriated from the tax cut bill, that stock buybacks will hit a new record of $800 billion for 2018.  This $800 billion is absolutely wasted on driving stock prices up while not investing in employee wages, capital expenditures, research and development, instead stock buy backs increase executive compensation tied to stock price.

Source; Real Investment Advice – 6/29/18

Since before the Great Recession wages have been stagnant for working class people, the 80 % of the workforce that make corporations prosper.  The wages to profits ratio arc shows a continuing decline since the 1980s – interestingly when the GOP was telling us that ‘trickle down’ economics would bring economic prosperity to all.  Instead working class families are having to take two or three jobs and borrow on their credit cards just to keep their household finances afloat.

Next Steps:

The country is run by Corporate Nation States who make the contributions, fund the campaigns and essentially buy off the legislative influence that counts in the U.S.  Each year corporations spend hundreds of millions of dollars in Washington DC lobbying alone, i.e. Amazon has 94 lobbyists keeping DOJ anti-trust lawyers distracted, the FCC at bay on drones and lobby other interests to keep its juggernaut growing.

It is time we wake up to what is happening from Supreme Court decisions that favor American Express over merchants, to the GOP tax cut bill, to relaxing the Dodd-Frank rules on banking Corporate Nation States are running this country.  The basic economic trends in America are not going to change unless we have corporate reform.  Will this reform come in the form of legislation like Sen. Booker’s Dividend Reform Act or letters from investment banks to corporate CEOs like Blackrock CEO Larry Fink sent recently.  We are not sure, but we need to take a path that takes on the dominant power of Corporate Nation States or we are going to see the middle class wiped out and our economy with it. After all, as we pointed out in a recent post on the Common Good, when the working class has little money to spend the rich will lose too.  The working class has earned a fair share of the profits. Fair share means when profits go up by 5 % wages go up by at least 5 % otherwise the economy deteriorates like it is today deeply in public and corporate debt.

in the end the rich will need to see that it is in their interest to build the Common Good, by contributing to our institutions of government and common people or they will lose what they already have and probably a lot more.”

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