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Greedy CEO's get big bucks for layoffs

by Peter Werbe

Getting rid of workers is good businessat least for the top brass. According to a report just issued by two groups tracking economic trends, last year 30 U.S. firms, which announced lay-offs ranging from 2,800 to 48,640 workers, saw their chief executive officers (CEOs) receive higher than average pay rewards for weilding the axe.
The layoff leaders enjoyed an increase in total direct compensation of 67 percentfar above the average of 54% for executives at the country's top firms. By contrast, U.S. workers received only a three percent raise in wages.

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Chuck Collins, co-director of the Boston-based United for a Fair Economy (UFE), which issued the report, told the Metro Times, "This is part of a general breakdown of our social fabric. Particularly the corporate compact between corporations and their workers and communities."
The 20-page paper shows the average gap between the leading job-cutters' salaries and bonuses (even before including stock options and long-term compensation) and the wage of their lowest-paid full-time worker was 178 to one. AT&T president Robert Allen, who booted nearly 50,000 workers last year, received a compensation package of $86.5 million which translates to a CEO-to-worker wage ratio of 232:1.
Collins ascribes this growing gap to the decline of the labor movement which previously fought for wage increases as the profitability of a company rose. "As a result of union busting," he says, "the standard of living for most Americans has been flat for the last 20 years." By contrast, the richest one-half of one percent of American families increased their wealth by $1.45 trillion between 1983 and 1989.
Collins thinks the rules have been changed to favor large asset owners creating a fundamental power shift. "Institutions representing the voice of workers have diminished, civic and community institutions have declined at the same time the power of corporations and the power of money to buy influence has increased," he says. "This is what America looks like when corporations rule. They reward themselves. They get enormous amounts of corporate welfare. They use the government to distribute our wealth to them."
There are currently efforts at the Congressional level to control excessive corporate pay. U.S. Representative Martin Sabo (D-MN) and 35 co-sponsors have introduced legislation that would cap the deductability of CEO pay at 25 times the lowest paid worker in a firm. Currently, all executive compensation is deductable. "Because corporations deduct excessive pay from their taxes, the remaining taxpayers pick up the tab," according to Sabo. If the law had been in place last year, the top 365 firms would have paid an additional $514 million in increased corporate taxes.
Collins admits this reform is "modest," but says it is a step toward the concept that there should be a fairer ratio between the top and bottom. "Ultimately, we have to shift the power back," says Collins. "We have to remove the overwhelming power of money from politics. and restore the ability of ordinary people to have a say in how the economy is run."
Even some members of corporate America agree. Robert B. Zevin, senior vice-president of United States Trust Company of Boston, "a socially responsible investing firm," thinks the problem can best be addressed by a steeply progressive income or consumption tax. "Higher taxes on gargantuan pay packages would protect corporations from wasting their resources on a competitive compensation race and protect society from further demoralization and despair."

Peter Werbe



The Executive Excess Report is available from United for a Fair Economy, 37 Temple Place, 5th Floor, Boston MA 02111 for $6.50 or off the UFE web site at
www.stw.org.

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Last modified: October 21, 1997