Stealing the Economy in 6 Easy Steps

So… How Does So Much Wealth End Up in the Pockets of CEOs and Wall Street Firms?

1. Companies buy other companies using borrowed money.
Since the 1980s, corporate raiders, corporations and hedge funds have looked to take over any company they could. But here’s their secret.

2. Raiders use the assets of the targeted company to pay for the costs of the acquisition.
The target company is weakened because it has to pay back millions of dollars. Worse, the corporate raiders pay themselves from the assets of the acquired company, too, in fees and special dividends. The CEOs and bankers get their cut as well. Not much left to share with the workers from a once-successful company.

Stealing-the-Economy-in-6-Easy-Steps

3. CEOs get paid with stock incentives.
That means when a company’s stock goes up, CEOs get even more money.
Unfortunately, in the U.S., most CEOs are focused on very short-term goals, like improving their own compensation. They most likely aren’t looking at long terms goals like increasing productivity or reinvesting in research and development. They aren’t interested in increasing workers’ real wages and benefits. So what does the CEO do?

4. CEOs use company earnings not to invest in better equipment or operations, not to pass along gains to workers, but to buy more stock.
That raises the stock prices and raises the CEO’s salary.

5. CEOS IMPLEMENT “THE SQUEEZE.”
The company downsizes, and workers get laid off. Jobs are shipped offshore. Pension funds are frozen. Wages and benefits are cut.

6. Results
The earnings of the corporation are redistributed to executives and Wall Street bankers.

What’s left for workers?

NOT MUCH.

Like Union Buiilt PC on Facebook and subscribe to our monthly eNewsletter for the latest Union and Labor Movement news.

Five Dumb Things People Believe About Unions

1. Unions are no longer necessary
Wage stagnation and a decline in real incomes for middle class families has become one of the biggest problems facing the country. The middle class is shrinking and college graduates are putting off buying homes and cars because of low salaries. Meanwhile productivity is higher than ever and corporate profits are through the roof. So where is the money going? Instead of to the worker, more and more of it is going to corporate execs and CEOs, leading to increasing income inequality.

walmart-union

2. Unions are undemocratic
Nothing could be further from the truth. In fact, one could argue that unions are among the most democratic organizations. Unlike a corporation, for example, unions are bottom up organizations where the members elect their officers, approve bylaws, and vote on contracts. Each union has member committees, member meetings, member-driven elections, and so forth that help to ensure that the opportunity for member participation is available to all.

3. Unions pay their officers and staff obscene amounts
Union salaries are determined democratically, often with the salaries approved by delegates and set forth in the bylaws or constitutions.

The reality is that most union officers are local officers. They get paid very little especially when you take into account the hours that they put in when it comes to negotiations, union administration, and contract administration. And many don’t get paid at all.

Some officers and staff at the national level get paid more but it is far from obscene. They often work long hours in cities with very high costs of living, such as DC and New York, where many unions are headquartered. And when compared to their peers in corporations, and some non-profits, their pay is often low.

4. Unions increase labor costs, leading companies to send jobs overseas
This allegation is completely refuted by recent history. If a highly unionized workplace was, as the argument goes, the cause of companies sending jobs overseas, then the absence of high union density should lead to very few jobs going overseas, right?

Well, union density in the private sector has been declining for decades and is currently less than 10%. Yet for the last few decades, American businesses have shifted millions of good paying jobs overseas, despite the huge increases in productivity at home and the stagnating wages.

It’s not unions that lead to job loss. It’s greedy corporate executives who simply don’t want to share the fruits of higher productivity and profits with American workers – unionized or not.

5. Unions lead to lower productivity and worker laziness
No. Not even close. Studies show that productivity in unionized American workplaces is actually higher, with a meta-analysis noting that “”a positive [association between unions and productivity] exists for the United States in general and for U.S. manufacturing in particular.”

Your Turn

Sound off in Comments, on the Union Built PC Facebook Page and #UnionStrong Facebook Group, and on our Twitter or LinkedIn Pages… And don’t forget to subscribe to the Union Built PC monthly eNewsletter for topics like this delivered straight to your inbox.