Record profits, CEO pay hiked by 60%, company wants wage concessions from workers
June 04, 2012
(NATIONAL) -- Some say the year 2012 may not be the best time in American history to be a regular working stiff. There are serious head winds out there when it comes to getting ahead in addition to the job market being weak.
In a recent article on his blog former U.S. Labor Secretary Robert Reich, in discussing the recent dismal jobs report, made note of something few Americans seem to be aware of: that part of the jobs problem in the U.S. – along with the fact that all major economies around the world are slowing down – is that big American companies are still sitting on a huge pile of cash and, “They won’t invest it in new jobs because American consumers aren’t buying enough to justify the risk and expense of doing so. Yet American consumers don’t have the cash or the willingness to spend more. Not only are they worried about keeping their jobs, but their wages keep dropping.”
American wages have been dropping for some 25 years when adjusted for inflation. An average worker in the 1970’s had more purchasing power than the average American worker does now in 2012.
“The median wage continues to slide, adjusted for inflation. Average hourly earnings in May were up 2 cents – an increase of 1.7 percent from this time last year – but that’s less than the rate of inflation. And the value of their home – their biggest asset by far – is still declining. The average workweek slipped to 34.4 hours in May,” notes Reich.
Yet corporate profits are healthy largely because companies have found ways to keep payrolls down –such as substituting lower-paid contract workers, outsourcing good paying jobs abroad, using computers and new software applications.
“But that’s exactly the problem,” he says.
“In paring their payrolls, they’re paring their customers…and we no longer have any means of making up for the shortfall in consumer demand. Federal stimulus spending is over. In fact, state and local governments continue to lay off large numbers. The government cut 13,000 jobs in May. Instead of a boost, government cuts have become a considerable drag on the rest of the economy.”
Now comes word that workers at an Illinois plant for the manufacturer Caterpillar have been on strike for a month after rejecting a “concession-heavy contract” proposed by the company, say union officials. Last Friday workers rejected a second Caterpillar offer, by a vote of 504-116.
According to a new report by Nation of Change the contract “provided no raises, eliminated the defined benefits pension program, weakened seniority rights and required machinists to pay higher contributions for health care.”
“All of this, at a time when the company is making record profits. In fact, Fortune Magazine recently said the company is “crushing it” when it comes to profitability,” yet at the same time refuses to give its workers a raise while the company did see fit to increase its CEO’s pay by 60 percent.
The annual compensation of Caterpillar Inc.’s chairman and chief executive rose 60 percent in 2011, as the company posted record revenue of $60.1 billion.
Douglas Oberhelman earned $16.9 million in 2011 in salary, bonuses, stock and option awards and retirement plan contributions.
The typical American worker would have to work 244 years in order to earn what the average CEO makes in just one year.
Over the last 30 years, CEO pay has increased 127 times faster than worker pay, says the report.