Category: Worker Wages Page 1 of 2

The Big Myth: Stock Buybacks Boost the Economy & Create Jobs

On February 12, 2019

In Corporate Debt, Corporate Power, Corporate Reform, Productivity, Stock Buybacks, Uncategorized, Worker Wages

After the recent NY Times op-ed by Senators Bernie Sanders and Chuck Schumer to require corporations share profits with workers before stock repurchases, there has been a lot of confusion about how stock buybacks work and their impact on the economy. Let’s clarify how share buy backs work first.

Corporate stock is bought and sold in open markets between a buyer and seller. On any one day the share price moves up or down depending on the demand for shares between a buyer and seller. Corporate executives can manipulate the price of shares by reducing the pool of shares on any trading day, according to SEC rules up to 25 % of the daily volume and not executing a repurchase within the first 30 minutes of the open or the close. If shares are taken off the market on any one trading day, posted to the books of the company those shares are effectively taken out of the market and if demand stays the same the price goes up. Of course, the share price can go down as well, if demand drops on the repurchase day.

Stock buybacks cause misleading reports on earnings per share. A simple example, if Gigantic HiTech has profits of $1 million for the quarter and 1 million shares are outstanding in the market, then the EPS is $1.00. However, if the firm purchases 100,000 shares during the quarter and takes them off the open market the total number of outstanding shares is reduced to 900,000 artificially boosting EPS to $1.11 or 11 %. The company has not increased profits during the period they have just reduced the number of shares outstanding and report the EPS figure in non GAAP reports. GAAP reporting requires EPS be calculated on the number of outstanding shares before repurchase.

So, the dollars spent on stock share repurchases do not go into ‘jobs, the economy or re-invested’ the money is spent on goosing stock prices. The SEC in 1982 prior to the Safe Harbor policy that allows for stock repurchases called corporate stock repurchasing ‘stock price manipulation’. From 1982 to today the policy allowed corporations to execute market stock purchases and not be held liable in shareholder lawsuits for price manipulation. Plus, companies only had to report open market purchases each quarter voluntarily. Effectively, the SEC gave companies the green light to drive stock prices anyway they wanted. Just because time has gone buy that does not change the manipulative character of the stock repurchase practice.

How big a problem is it? Goldman Sachs estimates that $940 billion stock repurchases were made in 2018, and they continue to forecast a similar figure for 2019. Major players in FAANG stocks repurchase billions of dollars of shares supporting stock prices. Forbes estimates that Apple spent $100 billion in share repurchases in 2018. CNBC calculated a year ago that Apple share prices were inflated by as much as 20 %. Between 2015 through 2017 S & P companies spent 60 % of all profits on stock buybacks, according to Forbes.

So, where else could they be spending the money instead of driving stock prices up and increasing the compensation of executives? On employee wages, but wage increases are not happening, interestingly since 1982 when the SEC Safe Harbor provision went into effect real wages have declined.

Source: Global Technical Analysis – 2/5/19

Real wages after inflation have continued to decline when allocated across all persons employed. Bankrate surveyed 1,000 workers at all income levels last year finding only 27 % received raises. Corporations are not increasing wages even to keep up with inflation.

What about capital expenditures are they up? No. With all the pronouncements of executives that they are investing in their companies to increase innovation and productivity they are in fact not performing, here is the analysis of business investment as percent of GDP since 1998:

Sources: The Wall Street Journal, The Daily Shot – 11/9/18

Note the declining business investment line in the chart from 4.5 % of GDP in 1998 to 2.5 % in 2018, a 44 % reduction.

Maybe corporations are still increasing productivity anyway so they can afford to do stock repurchases? No. Productivity continues to stall. The following chart shows total factor productivity (TFP) since 1948, the long term average is the green line from 1948 to 1971 versus 1972 to today red line today, plus growth in productivity is close to zero:

Sources: San Francisco Federal Reserve, Real Investment Advice – 1/16/19

Executives have made decisions about how to allocate profits that are not increasing productivity, raising wages, hiring workers or reducing prices. Our economy and our workers are the losers while executives and the wealthy elite who own stocks profit from these short term decisions.

Next Steps:

Do executive decisions on profit allocation really affect workers and consumers? Yes.

GM last year announced the closing of their Lordstown plant and the layoff of 15,000 workers due to a shift in consumer buying to trucks and misallocated investments in poor selling product lines. Yet, since 2014 GM spent $13.9 billion in stock repurchases according to the Wolf Report. GM could have spent that money on employee training, shifts in product development, the phased closing of plants and phased in building of new plants and likely would not have had to resort to massive employee layoffs.

Mylan announced 18 months ago a 584 % increase in the price of EpiPen’s used in life – death situations to counter act food allergy shock. At the same time Mylan executives took care of themselves first with over $1 billion in stock repurchases to drive stock prices up. Analysts evaluated the product cost of goods and assembly for EpiPens and estimated it cost Mylan about $2 billion to manufacture, so the $1 billion could have gone toward reducing the cost of the EpiPen by 50 %.

In both examples corporate executives took care of themselves first, and their employees or patients second. This profligate management of profits from customers and patients was not allowed prior to 1982. Corporate executives have a social and ethical responsibility to allocate funds in the balanced interests of the company, employees and the community

Executives are executing stock buybacks at the cost of sound financial management as well. The debt to cash ration of S & P 500 corporations is at 18 %, a lower level than at the 2008 recession. When the economy slows corporations will be squeezed between debt loads, operating costs and low cash reserves.

Sources: Wells Fargo Investment Institute, Factset – 2/14/19

Our economy continues to decline as GDP shrinks year over year, in part by trillions of dollars being wasted on stock repurchases instead of being invested in worker training, wages, capital equipment and research and development. A trillion dollars is 5.26 % of the U.S. economy shifting buy back dollars could have a huge impact. Corporate executives have magnified the problem by borrowing money at low interest rates to keep stock repurchases going even when profits lag. Today, corporate debt is 45 % of GDP at all time high inflating the economic bubble.

Sources: St. Louis Federal Reserve, Real Investment Advice – 2/21/18 (recessions in gray)

A reduction in corporate borrowing to inflate stock prices would go a long way toward putting the economy on a more solid business foundation. A major SEC policy shift ending stock buy backs would need to be phased in as a percentage over several years to allow markets to adjust, yet if we are to build an economy that works for all we need to end this misleading, damaging and costly practice.

Only 27 % of Workers Received Raises in Past Year

By Patrick Hill

On December 18, 2018

In Corporate Power, Corporate Reform, Labor, Stock Buybacks, Uncategorized, Worker Wages

(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.)

Last month, Bankrate.com completed a survey of 1,000 workers from all income levels across the U.S. and found that only 27 % of existing full time and part time workers had received wage increases. For all the recent news about wage inflation, from the worker perspective they just aren’t seeing the wage increases. The wage inflation reported by government surveys is an average and does not take into account income levels. The higher paid workers are getting the raises so the average moves up.

Sources: Bankrate.com, Marketwatch – 12/14/18

If a worker changed jobs then the pay raise figure rises by 5 %, though from our perspective that still seems low. When workers change jobs shouldn’t they be receiving a raise in this tight labor market? This trend seems to indicate that wage leverage for workers is still quite low compared to the power businesses have over wage increases. As we have noted in the past businesses enjoy leverage over workers by automating jobs, Internet access to hundreds of candidates nationwide and outsourcing of non-core functions. Plus, executive power is increasingly concentrated with mergers and acquisitions cutting down the number of competitors that workers can chose to work.

Pew Research reports most pay raises going to the top 10 %,while non-supervisory and production workers barely received any wage increases.

Sources: U.S. Bureau of Labor Statistics, Pew Research – 8/7/18

Real wages (taking into account inflation) have risen 4.3 % since 2000 for the lower quarter in income. Yet, for the top 10 % wages have increased by 15.7 % or $2,112 per year. Some of the pressure employers feel is from increased health insurance costs and adding non-wage benefits to keep pace with competitors. The reality is that wages are what workers have to use to make the majority of their payments for housing, food, and necessities. Plus, wages for the top 10 % keep going up anyway, so why don’t workers get the same rate of wage increases?

Wage stagnation has been happening for years. Since 1964 an analysis of wages for production and non – supervisory workers by Pew Research shows that today’s wages have just not kept up with inflation.

Source: U.S. Bureau of Labor Statistics, Pew Research – 8/7/18

Next Steps:

For all the discussion in the financial media about a wage inflation spiral the reality is that structurally workers in the lower 80 % income bracket are not getting their fair share of the economic pie. While, there have been federal laws proposed for limiting CEO pay Portland, Oregon has passed a law with a limit for executives at 150 % of worker pay or tax penalties are paid. Regulating pay in this way seems to be micro managing pay scales. However, we have a fundamental issue with pure capitalism of the American economy not delivering wealth to the vast majority of workers. In the 1970s, 1980s workers were receiving wage increases at 6 %, 7 % and sometimes 8 %. After the Great Recession workers are just averaging 2 % to 2.5 % in wage increases. Globalization caused outsourcing of manufacturing jobs held by the working class which hallowed out good paying lower education jobs. Millions of manufacturing job have been lost and not replaced. Our economy is 70 % services based with highly educated knowledge workers receiving most of the benefits. Ending stock buybacks would certainly put more cash into corporate coffers to distribute to workers – but will executives raise wages? Raising wages is an expense on the corporate ledger, and executives are paid to increase profits not reduce them. Executives are at the pinnacle of their power. Yet, as a society we have to fundamentally rethink how we make the economy work for all not just the few at the top of the corporate pyramid.

Memo To CEOs: Invest in the Company, Not Yourself

By Patrick Hill

On November 5, 2018

In Corporate Debt, Corporate Power, Executive Compensation, Families, Labor, Public Interest, Social Responsibility, Standard of Living, Stock Buybacks, Worker Wages

Photo: wikipedia.org

To: CEOs – S & P – 500

From: The Progressive Ensign

Subject: Stock Buybacks Are Out of Control

Date: November 5, 2018

Congratulations, this past quarter you knocked earnings out of the park, profits were higher in particular, though revenues lower and you did well by raising stock prices to new highs in September via stock buybacks.

Source: Standard & Poors – 11/4/18

Ok, you did well on stock compensation too with soaring stock prices. You can take that trip to Cancun, buy a boat and a villa for extended stays. You have worked hard, your team has gone all out to make your companies successful, and worked harder. Remember, while you were traveling and making decisions on sales, financing, product development and marketing they are actually designing, building, shipping, selling and supporting your products and services.

Sources: The Labor Department, The Wall Street Journal, The Daily Shot – 11/5/18

Next, you have not been making the investments in capital equipment , R & D and innovation to move companies along and be prepared for more overseas competition or increase productivity. Thanks for moving wages higher for less than high school educated workers recently they still aren’t enough to keep up with inflation though. If you can increase productivity we can give workers raises without it hitting the bottom line an increasing cost, and earning would be stabilized or even get better. You wouldn’t need to use financial gimmicks like stock buy backs to take stock off the market, and goose the price so earnings look better on a per share basis. Between 2010 and 2017 S & P companies spent 51 % of their operating earnings on stock buy backs. That’s money just hyping stock nothing else. Note that business investment is continuing to decline with lower highs and investments flat since 1998.

Sources: The Wall Street Journal, The Daily Shot – 11/5/18

Your joy ride on $1 trillion of stock buybacks needs to end. We want to see a plan by the end of the month on how you will use that $1 trillion dollars in meaningful long term ways such as raising wages, job training, purchasing new equipment and systems, and innovating new products. You are basically taking away the future of your workers and the country for your short term gain. Show by quarter how you will implement the plan and get your businesses actually growing again (in real dollars not financial gimmicks), workers supporting their families in sustainable lifestyle and making America stronger.

P.S. By the way, it is time to end your constant borrowing, rates are going up, and you spent most of the money on stock buybacks or other goodies not investing in the company. You are mortgaging the future of the business by taking on a record amount of debt. Please submit a plan for retiring this debt as part of your financial plan for investing in the company by the end of the month.

P.P.S. For those of you ( a minority) who are not doing stock buybacks, thank you, and you who are spending on capex and raising wages thanks a lot! Just submit a set of graphs showing your investments so we can show the other CEOs how it is done – as a best practice.

Corporations Are Taking Worker Wages To Increase Profits

By Patrick Hill

On July 3, 2018

In Common Good, Corporate Nation State, Corporate Power, Corporate Reform, Worker Wages

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.”

The Rich View Our Government as A Trusted Rule Keeper, The Common Man Not So Much

By Patrick Hill

On June 15, 2018

In Common Good, Corporate Nation State, Environment, Executive Compensation, Labor, Stock Buybacks, Student Debt, Worker Wages

Image: Your Little Planet

Thomas Jefferson and James Madison saw the need to frame a government such that ‘forced compromises’ would push political leaders to focus on the Common Good. The institutions that maintain our common good include the federal government three estates: The Supreme Court, Congress and The Executive. In addition, the Fourth Estate, a Free Press is crucial for our citizens to have access to fair and impartial reporting about the activity of government officials and their policies. We have spotlighted the key role Education, as the Fifth estate, plays in educating our people to make critical decisions and understand comprehensively the information they receive from a Free Press.

Trust in our federal government has been falling since the presidency of Lyndon Johnson in 1965.

Source: Pew Research Center – 12/14/17

We noted in our first post on the Common Good that there were two factors contributing to the decline in trust:

“We see two major factors for the lack of trust. One, is that economic inequality has been increasing over the last 60 years to the point where it is at the worst it has ever been since 1929. Americans expect their government to be the rule keeper of a fair shot at economic opportunity not a bastion for the rich and powerful. As wealthy donors have taken over control of both major parties, the influence of the average citizen has been reduced to nearly nothing except at the ballot box – but not in legislative policy.”

The second major factor is the change in information access and news viewing habits of our society.

“In the 1950s and 1960s families gathered around the television set to watch Walter Cronkite or Huntley and Brinkley bring them the news for the day. These news anchors had teams of trained journalists in how to gather news, provide airing of opposing views and investigation to reveal the facts of the story. As cable news programs became popular people drifted away from central network journalist supported news programs toward popular ‘viewpoint news’ programs like Fox News or CNN. Then, from 1995 until today, the Internet was a catalyst for the growth of blogging, and ‘friend news’ on Facebook which had virtually no formally trained journalists and limited understanding of the difference between facts and opinions. Opinions spread virally through the Internet often with no foundation in formal fact gathering or fact finding investigation techniques. Today, we even have presidential spokespersons talking about ‘alternative facts’ to justify their policies or opinions.”

Trust gaps by income level are increasing around the world with many developed countries showing double digit gaps between the top income quartile and the bottom income quartile and the U.S. with the largest gap:

In the U.S. incomes for the lower 80 % have been largely stagnant for the past three decades since the Reagan years, higher education costs rising to levels never seen before with student loan debt at $1.5 trillion dollars. In short, lower and middle income parents expect their children to have fewer opportunities and to make less money over their lifetime. This growing sense of hopelessness is in part triggering the populist movements we see world-wide. The top quartile trust government institutions the most because they are getting the benefits, tax cuts, relaxed environmental policies to allow their businesses to make as much money as they can, and continued stock buy backs to make even more money instead of increasing worker wages. Workers see their votes not making a difference as Congress is at the beck and call of Corporate Nation States who make multi-million dollar campaign contributions and the Executive Branch now run by billionaires.

Little wonder the Common Good is not embraced by all people, for the rich they are on top of the economic pyramid. The rich get the laws they want and aren’t interested in sharing their wealth or time to build the Common Good.

Here is what will likely happen, 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.

Workers Struggling Under Credit Card Debt

By Patrick Hill

On June 13, 2018

In Corporate Nation State, Corporate Reform, Debt, Labor, Low Income Finance, Worker Wages

Photo: finder.com.au

While consumers did pay down their credit card debt by $40 billion during the first quarter of 2018, they still owe a giant $1.021 trillion in revolving debt. Credit card debt is at the second highest level since 2008, during the Great Recession. Consumers piled on another $91.6 billion by the end of 2017, at a run rate of 104 % of the average over the past 10 years.

Sources: Marketwatch, WalletHub – 6/13/18

Adding to consumer woes are interest rates that are rising, adding to the servicing costs of credit card, auto loan, and student loan debts. Below the chart shows debt servicing costs as a percentage of disposable income, while mortgage debt servicing is declining consumer servicing costs are rising.

Sources: Federal Reserve, National Bureau of Economic Research, The Wall Street Journal, The Daily Shot – 6/13/18

Finally, non-supervisory worker’s wages are stuck at 2.5% and when inflation is taken into account are largely flat. As consumers continue to try and maintain their standard of living, they are taking on more revolving debt which is costing more for them to pay. This financial squeeze is sustainable as long as jobs are abundant as they seem to be now, but if the economy turns down and layoffs happen it will be hard times for workers. A survey published today in the Wall Street Journal blog – The Daily Shot showed executives plan layoffs as the first approach to deal with tightened financial conditions and slow sales.

Next Steps:

Workers need to receive a living wage that is not stagnant as wages have been for the past 10 years since the recession. Over 14 % of all workers have not received a raise in the last year versus 11% prior to the recession. Stock buy backs need to end and those funds invested in raising worker wages, increasing productivity and providing job training and development. Corporations stash over 40 % of their profits in overseas tax sheltered accounts – all those funds need to come back to the US with companies paying their fair share of taxes. Corporations are the beneficiaries of job training and education, and should pick up more responsibility in terms of taxes for apprenticeship programs on par with those in Germany to provide US workers with the advanced skills needed to obtain a good paying job and create a dual track besides college. Today, there are more job openings than candidates available to fill those jobs, we need to invest developing worker’s job skills to close the gap.

Opioids Are Killing Our Young People Reducing Our Labor Force

By Patrick Hill

On June 6, 2018

In Heartland Economics, Labor, Millennials, Worker Wages

Image: thetab.com

The Opioid Epidemic is devastating for our young people. The size of the opioid addiction death wave is so high that it is leading to a sharp decrease in the size of the 24 – 54 year old labor force group.

Sources: JAMA Open Network, Marketwarch – 6/7/2018

A paper recently published in the Journal of the American Medical Association found that 20 % of all Millennials deaths in 2016 were caused by opioid overdoses. From 2001 to 2016 opioid deaths have increased by 292 %. Experts believe the dip in the size of the 25 – 54 year old group is in part caused by the opioid epidemic compared to other developed countries.

Source: OECD Employment and Labor Market Statistics – 6/7/18

A comparison to OECD countries finds the U.S. labor force in the key mid-career 25 – 54-year-old group at 5 % less, which converts to millions of our young people left out of the labor force. When our labor force is not growing in this key age segment we are in store for a continuing decline in GDP growth, standards of living and few people to support our retired population. The total labor force even with the recovery since 2008 has been dropping to a 10-year low of 63 % overall:

Source: Department of Labor, The Wall Street Journal, The Daily Shot, 6/3/18

Certainly, more than the opioid epidemic is contributing to our low labor force participation rate including: companies automating many jobs so they are not hiring more workers, workers leaving the work force due to not finding work, a skills mismatch between job openings and candidates with the right skill set and the baby boomer population aging into retirement.

Next Steps:

The opioid epidemic strikes hardest in our Heartland as we recommended in an earlier blog on Heartland Development Centers that among other development investments to fund mental health, addiction and counseling services to help our young people in rural regions of the Midwest and South to return to active productive lives. Every day, families are suffering from the drug addiction crisis and our economy is suffering along with our young people. Our Congress, corporations, non-government organizations, government and health services groups need to establish a partnership to target the problem of drug addiction head on, with a major funding commitment, the latest strategies in drug rehabilitation, and job training programs which include high quality apprenticeship skills development leading to good paying jobs.

14 % of Workers Have Not Received Wage Increases In the Last Year

By Patrick Hill

On May 30, 2018

In Automation, Corporate Reform, Stock Buybacks, Worker Wages

Photo: theaustintimes.com

While CEOs at the top 100 corporations received a 5 % raise in average compensation of $15.7 million last year, 14 % of all workers have received no raises at all, higher than before the Great Recession. The recovery has not come for many workers.

Sources: San Francisco Federal Reserve, National Bureau of Economic Research, Haver Analytics, Marketwatch – 5/29/18

Prior to the 2008 recession there were 11 % of all workers not receiving raises, still too high but much lower when considering the size in millions of the US workforce. After the recession companies were slow to give all workers raises as the rate rose to almost 17 % without raises. Then, over time more workers are receiving raises as the economy recovered for the top 20 % in income. Still, 14 % is still too high. The Federal Reserve economists note that the no raise rate would have to drop to 12.5 % or so for enough wage pressure to cause a move from the present stagnant 2.5 % to increase to 3 % and cause wage push inflation. The fact the number of employees not receiving wages is actually going up is a concern that wage raises may actually fall or stay the same.

Next Steps:

We continue to see the extreme inequity of executives and professionals continuing to receive raises, for many twice the 2 % inflation rate versus workers. The reality is that employees just do not have the same wage power that they used to. We have previously discussed the combination of factors that contribute to extreme lack of wage power for workers including: lack of union representation, automation, fewer corporations due to mergers reducing the number of jobs, low wage H1-B visas being approved, using profits for stocky buybacks instead of investment in productivity increases, Internet recruiting nationwide and worldwide for some positions, and the shift to outsourcing jobs and the gig economy.

We recommend the following actions be taken by Congress and Corporate Leaders:

Place Workers on Boards– as Germany has so effectively setup, engaging management with required representation of workers on Boards.
End Outsourcing– corporations would pay 50 % tax on each job moved overseas making the move costly, encouraging corporations to move jobs to low cost or inland areas of the US, or innovation economic zones (special tax geographies) and to invest in worker training to receive training tax credits.
End Low Cost H1-B Visas– the practice of importing inexpensive labor to drive down wages in US markets would be ended.
Offer Lower Taxes on Repatriated Funds– only if the profits from overseas are invested in productivity actions, increasing wages of workers (not executives), reducing costs or innovation. Stock buybacks or dividends would be prohibited.
End Stock buybacks– these funds are totally wasted, mislead investors on earnings reports and only serve to increase compensation for executives and shareholders. These funds are better allocated to increase worker wages or increase productivity so workers can receive higher wage increases.
Breakup Oligopolies– breakup market concentrations in key sectors: information technology, banks and financial services, health insurers, airlines, hospitals and clinics, entertainment, media and distribution and others as deemed in the public interest.
Balance Job Market Process– require companies over 100 employees to offer information on their website for contacts, phone numbers, job listings with identified contacts, and to let the candidate know the status of his consideration, and candidate introductions held monthly for F2F communication.
Balance Worker and Executive Pay– tax corporations 25 % surcharge on any corporate income where any executive makes greater than 150 % than any the average worker wage – this would force executives to share their income with workers while not increasing costs. End federal tax deductions on corporate income taxes for executive stock compensation above $1 million. End golden parachute packages by taxing 50 % of every dollar received above $1 million. Severance packages for workers would have to be in proportion to the highest executive package ie, executive receives 10x of monthly salary a worker would receive 10x of his/her monthly salary.
Fund Worker Training and Increase Wages – for each robot employed, the corporation would be required to offer training, skills development for the displaced worker to find a comparable job within the company or outside. Where automation software or technology is deployed 10 % of the realized cost benefit would be used to raise the wages of all workers in the company.

Corporate Executives, Congress Misled Citizens On Tax Bill Benefits

By Patrick Hill

On May 23, 2018

In Heartland Economics, Tax Bill, Worker Wages

Photo: newsweek.com

The latest reports show that Corporate Executives, and Congressional GOP Leaders misrepresented to us the benefits of the Tax Cut Bill – capital spending has gone down, wages have stagnated and stock buybacks have hit $1 trillion. So much for stimulating the economy, raising wages and making capital improvements.

The latest report from the Richmond Federal Reserve shows capital expenditures falling:

Sources: Federal Reserve – Richmond, The Wall Street Journal, The Daily Shot – 5/23/18

Other regions in the US show similar falloffs. While some jobs and regions are showing increases in wages in our Heartland they were lagging and still lag at 2 % wage growth vs 8% nationally:

Sources: US Bureau of Economic Analysis, The Wall Street Journal, The Daily Shot – 5/22/18

Today, corporate executives are doing a good job of juicing the price of their company stock with stock buyback funds that could be invested in increasing productivity, raising worker wages, reducing the price of their products and services or increasing job and career training. Corporate stock buybacks have hit a new all-time high with repatriated funds from overseas at steep tax discounts and tax bill operating income reductions to $1 trillion!

Sources: Standard and Poors, The Wall Street Journal, The Daily Shot – 5/22/18

Donors told our elected representatives ‘not to call’ unless they got a tax bill done – which of course 80 % of the benefits went to them not the people. The top 1 % wealthy class has control of the key levers of government – our elected representatives by providing hundreds of millions of dollars in campaign contributions which corrupt their representation of us.

Next Steps:

We need to win back control of Congress to set the right priorities for taxes that are fair for all not just a gift to the rich.

In congressional primaries across the country many women and progressives are winning in districts where Democrats did not run or corporate controlled Democrats held seats for years. In Pennsylvania, seven women won primaries from the suburbs of Philadelphia to the rural conservative regions of the southwest. Democrats are focusing on small donor funding to bring representative power back to the people.

Sources: The Wall Street Journal, The Daily Shot – 5/23/18

Plus, Democrats are beating the GOP in the funding race by appealing to the people again, some are renouncing PACs as Sen. Kamala Harris of California has done, others will follow. The mid-term election is crucial to win back the House and maybe the Senate and put an end to the oligarchy running our government.

Employers Should Pay Hourly Employees Fairly, Not Chip Away at Stagnant Wages

By Patrick Hill

On May 21, 2018

In Automation, Corporate Nation State, Wages, Worker Wages

Photo: smallbusiness.chron.com

As more corporations use software to track hourly employee hours some have tipped the data collection rules in their favor. American Airlines is facing a suit from 400 employees for shorting their hours, Kroger and Montage are facing similar suits. We realize that corporations are under great pressure to cut costs on labor to increase profits and meet shareholder and Wall Street expectations. However, since the wages of production employees and non-supervisors have been essentially stagnant for the past 5 years we ask: who is really getting hurt? Corporations have all time low taxes, all time high stock buy backs to juice executive salaries, and all time cash nearly $1 trillion stashed in most offshore accounts.

Meantime employees are at the lowest point of wage power in the workplace in decades with reduced health benefits at greater cost, competition for their jobs from other workers on the Internet, automation, corporate mergers reducing the number of jobs available, and union busting laws. So who are the wage scales tipped toward? Corporations. Average hour worker income has continued to fall when inflation is included.

Sources: Bureau of Labor Statistics, Real Investment Advice – 5/15/18

So, when companies use software to track employee hours, then ‘round hours up’ for breaks or deduct breaks that didn’t happen – like for nurses in healthcare at the University of Missouri Health Care using time tracking software where they cared for patients during their breaks but the software recorded a break anyway. The nurses are losing money, and even more than just wages respect for the work they do.

Next Steps:

Employers wake up! Work is a social contract that is two-way and should be equitable, time cards should be signed by employees in some manner before wages are dispersed. The signing which used to be performed is a confirmation that the employee and employer understand the work being performed and the fair hours completed. Software should not just automatically capture data and cut checks. When time cards were used, filled out by employees – now done online, yet most systems allowed for electronic signatures. In haste, these companies are just using the software to capture the hours, record the hours and post checks. Company IT departments set the rules of the software sometimes in favor the company not the employee. These rules changes can be for just minutes or more but at infrequent times so it is hard for employees to discern what is happening to their paycheck. Time tracking software should be required to show an audit trail for the employee to see to ensure that it is a just capture of their hours. Let’s be clear when these systems don’t treat employees fairly, and allow for confirmation of hours worked the employer is committing a real in justice to the employee. Corporations need to review the process of their time recording software for hour employees, ensure adequate safeguards are in place for employee input and install these systems with employee support.