I have been reading a lot in the news recently about the bailout of some of the old, venerable companies in American commerce. They are in trouble, in a way that hasn't been seen in many years, and the thought seems to be that if they fail, it will bring down the American economy even further.
Fair enough. I am not an economist, and I have no idea what will or will not happen if Citibank goes to bankruptcy court. Well, other than a lot of people will be cluttering up landfills with worthless little plastic cards. However, I do have common sense, which tells me when your lowest paid worker is making minimum wage, and your highly compensated CEO makes more in a minute than most workers make in a year, something is out of whack.
To put real numbers on those statistics, the current Federal minimum wage is $6.55 per hour. If you work a 40 hour week for all 52 weeks of the year, that will get you a whopping $13,624 a year before taxes. For those who don't keep up on these things, that is below the Federal poverty threshold for a family of two. If you multiply that amount even by 20, you will still put the salary at $272,480. I think I could probably just about scrape by on that, how about you?
The most fascinating part of this, for me, has been the vociferous justification of their exorbitant compensation by apologists who have little respect for your average American worker. It has become a spectacle, telling the public, in all apparent seriousness, that if these executives don't continue to make obscene amounts of money, they will run away and take a job somewhere else, leaving their companies in the lurch.
Really, now? From where I'm sitting, it looks like their companies are in the lurch already, if not altogether in the soup. I am left wondering where they might go, and who might hire them? These executives have presided over a debacle of rather epic proportions, and what's more, they seem not to realize it, except as it would affect their own personal lives. I would have to question the judgment of any Board of Directors who would hire a failed CEO or CFO from one of these big firms, knowing that they left their previous company high and dry on the brink of disaster.
I would say I was disappointed, but I am not surprised in the least. They haven't been living in the real world for a long time; there is no reason to think they would start now, just because us little people are struggling.
Apparently the esteemed Senator from Missouri, Claire McCaskill, railed on the Senate floor yesterday against CEO's who ran their companies into the ground, then came and asked for taxpayer money to get them out of trouble. It wasn't the money itself that seemed to have offended her, though. It seems the troubling aspect for her came when those same executives turned around and demanded their bonus money for 2008. Only on Wall Street could accounting be so creatively conducted that losing company value would be seen as just cause for reward, and on an extravagant scale. No wonder I think of it as La-La Land.
Apparently, Senator McCaskill wants to put a cap in place on executive compensation for any company that gets bailout money, and she suggested that it be tied to the salary made by the President of the United States. That is an interesting idea, and at least it shows she is trying, so I give her points for that.
But I think I have a better idea, one that will give incentive to everyone, and raise accountability. I believe executive compensation should be tied to the lowest paid employee in the company, and executives shouldn't be allowed to make more than a certain multiple of that amount. If your lowest paid employee is making minimum wage, then perhaps executive compensation should be limited to ten, or even twenty times that. If your CEO wants to make a million dollars, then perhaps your lowest paid workers should be benefiting, too.
And bonuses should be companywide affairs, based on profits, not on dreams. If the CEO gets a bonus of 10 percent of his salary in stock options for a certain level of success, why shouldn't the every day employees have the same rewards? Although the CEO has an important job, and certainly should be paid for his or her vision and leadership, I believe that the rank and file employees who implement that vision deserve to be rewarded, too.
I believe that the era of outrageous compensation, where the executives no longer live in the same world as their employees, and their compensation isn't tied to anything at all, is part of the root problem that has led to the disastrous situation in which we find ourselves today. When the executives are isolated from the working people who actually make the company go, they no longer share a lunch room or a rest room, and keep their offices on a different floor, they lose sight of the purpose of the company, and its function. Their employees become numbers on a spread sheet, instead of real people with lives to manage, and 8,000 is a number to shift from one column to another, instead of jobs held by real people whose families have now been thrown into turmoil.
They also lose sight of what their customers are facing and dealing with every day. I can understand why someone who makes a million dollars a month or more wouldn't comprehend the hardship caused by increased fees or double cycle billing, or being unable to communicate with the customer service person who is obviously on the other side of the world. If you never have to listen to the people whose services you are providing, and your own lifestyle has nothing in common with theirs, you won't know what the customers are looking for, much less how to provide it.
So as I listened to Claire rant and rail against the highly paid executives, I thought she had the right idea. It is immoral to lead your company into failure, then come hat in hand to demand a bailout from the taxpayers, so that you can first line your own pockets. But I think, instead of tying compensation to an artificial standard, let's tie it to something that will incentivize every employee in the company. I think then, truly, the boat will float, because they will all be in it together.
It will be in everyone's best interests for the company to become more efficient and succeed, and if the CEO wants to make more money, they will have to sell their vision and bring their employees along with them. Employees who believe in the vision will work harder and create better products, which will ultimately increase demand. I think that would stimulate the economy, by putting more real dollars in employee pockets - dollars that would be spent on buying homes, cars, furniture and food.
I am going to write my congressmen today and suggest that they start looking at practical solutions, and my idea will be the first one on my list. I challenge each person to come up with their own ideas, and let's get some fresh new thoughts flowing to the Beltway. We, the people, are a powerful force. We need to hold the feet of every single politician to the fire to do what is right for us, and not what is expedient for their political action committees.
Those millions lining the executive pockets could buy a lot of jobs for the rest of us. Maybe it's time we plug the leaks in the bottom of the boat, instead of simply bailing water to keep those rarified noses dry. They can keep their two dollars, as long as they aren't taking it from my one. But if they want a piece of my pie, they are going to have to sit down at the table and eat it with me. And they had best bring their please and thank you with them.
