Post-meltdown America: An economic recovery for the wealthy

As our economy teeters on the brink of another recession (even as the “old” one never seems to have disappeared), here are three indicators that the wealthiest among us have been the primary beneficiaries of any recovery from the big meltdown:

1. Executive raises make a comeback

Matt Krantz and Barbara Hansen of USA Today report that executive raises in 2010 made a comeback after a leaner 2009 (link here):

The heads of the nation’s top companies got the biggest raises in recent memory last year after taking a hiatus during the recession.

At a time most employees can barely remember their last substantial raise, median CEO pay jumped 27% in 2010 as the executives’ compensation started working its way back to prerecession levels, a USA TODAY analysis of data from GovernanceMetrics International found. Workers in private industry, meanwhile, saw their compensation grow just 2.1% in the 12 months ended December 2010, says the Bureau of Labor Statistics.

2. Many of the new jobs aren’t good jobs

We know that the unemployment rate remains at a high level. Unfortunately, it gets worse: A National Employment Law Project report, The Good Jobs Deficit (pdf here), informs us that jobs created since the meltdown have been concentrated in lower wage tiers:

In the weak recovery to date, employment growth has been concentrated in lower-wage occupations, with minimal growth in mid-wage occupations and net losses in higher-wage occupations. From the first quarter of 2010 through the first quarter of 2011, lower-wage occupations grew by 3.2 percent, with retail salespersons, office clerks, cashiers, food preparation workers  and stock clerks topping the list.  Mid-wage occupations grew by only 1.2 percent and higher-wage occupations declined by 1.2 percent. 

3. I shop, therefore I am

Stephanie Clifford reports for the New York Times that the rich are once again whipping out their platinum cards (link here):

Even with the economy in a funk and many Americans pulling back on spending, the rich are again buying designer clothing, luxury cars and about anything that catches their fancy. Luxury goods stores, which fared much worse than other retailers in the recession, are more than recovering — they are zooming.

And everyone else?

Just about everyone else in America (not to mention around the world) is in a state of economic anxiety, if not downright struggle. And until we understand that a small number of people are benefiting from this insecurity and want, backed by complicit public policy makers who gratefully accept their campaign contributions, we will not be able to forge a national and global consensus for humane change.

13 responses

  1. A thought just came to me. . . a rare moment!!

    A suggestion for discussion within the “Super Congress”:

    I’d be willing to take tax breaks for the wealthy off the table in exchange for switching places with rich folks for a couple of months every year.

    Maybe if those with “platinum cards” walked a few days in my shoes (without access to their privileges) it would change a few hearts and minds. 🙂

    Thanks –

  2. This post demonstrates in various ways how spin doctors have corrupted our public discourse. First, Professor Yamada writes, “Matt Krantz and Barbara Hansen of USA Today report that executive raises in 2010 made a comeback after a leaner 2009.” I respectfully beg to differ with that characterization of ’09. “Leaner” suggests “going without” to a significant degree, a reality unknown to corporate fat cats. (Notwithstanding “the early days”, when Wife Number One flipped and re-sewed collars and cuffs on tired Brooks Brothers shirts.) All too often, top CEOs serve one purpose: to find means by which lots of others wind up going without, while shareholders rejoice in profits or apparent profits.

    Unlike us average Americans, most senior executives have enjoyed a series of bonuses and raises, any of which the average person would have greeted with “Hallelujah!” If only Mr. Krantz and Ms. Hansen had run a bar graph of the CEOs’ median raises for the past decade. For a real eye-opener, the reporters could print a dual-bar graph, with the corresponding, annual median raises for the CEOs’ workforces.

    The rhetoric circulated by lobbyists and Congressional stooges seems to have inspired the two reporters’ allusion to these executives’ having “[taken] a hiatus during the Recession”. For one thing, “hiatus” suggests relief from an onerous or difficult task. Worse, in a literal sense, the term is based on the Latin for “opening, aperture, rupture, or gap” — all of which signify emptiness. Yet throughout this past year, we’ve heard tell of CEOs’ skimpy raises.

    Either an increase grew by the same percentage as in 2009 — “$2 million more, again (sigh),” or it grew by a lesser margin: “Only $1.8 million more: I find that insulting!” Salaries aside, such goings-on are what passes for concessions by successful chief executives during hard times. Despite all the wealth enhancements built into a CEOs’ poison pills, or into his golden parachute, golden handshake or golden handcuffs, only the farthest-outlying Board will hand its CEO an empty Christmas stocking — and that, usually per the altruistic Chief’s request.

    Is it not sobering that the 2010 CEO pay hikes could have funded thousands, or tens of thousands, of long-withheld raises? We’re talking about a raise earned but not paid for years running. And is it not morally offensive that we taxpayers underwrite so many financial firms’ profits — at deplorably low interest rates, or none? By extension, we’re helping reward these firms’ CEOs. We and the shareholders are assured that the executives made the “tough, unavoidable choices” of the past year: the very pay-cuts, layoffs, downsizings, outsourcings, and plant-and-equipment cost-cuts championed by these “industry leaders”!

    Imagine the benefit to America’s economy if those rewards went, even in part, to other (many would say “more-“) deserving workers, perhaps to the best, loyalest members of the rank and file, perhaps extending to the aces in midlevel or even senior management — assuming they’re earning under $500,000 a year, which makes them “middle class” by current federal standards. Most people in that whole group would spend their raises in the U.S., rather than steering it to elusive offshore accounts or retirement villas, or to domestic properties used for the twin purposes of vacationing and tax shelters.

    As if all that weren’t enough, it’s high time our reporters stopped speaking of taxes in terms of “high” and “higher” rates, or abandoned politicized terms like “entitlements”. Dollar for dollar, the single-guy millionaire with all sorts of tax shelters may pay less than a couple raising kids on $39,000 a year. And surely, the single mom deserves a hand up — not a handout! — for sacrificing time with her family, venturing into an ultra-competitive workforce with a third-grade education, and then taking on self-funded night-school courses. What about the aging Rust Belt fireman, who for 35 years showed up loyally, worked as hard as he could, and made deposits to his town’s pension fund as a bid for a secure future? He has as much right to his money as does the venture capitalist who profits from only one deal in ten, but that, by far more than the fireman’s whole pension is worth.

    In real terms, the people who feel pain from hard times are not our elite, but the middle-and-lower working classes, including all the retirees who get by on modest incomes and/or savings and Social Security — as opposed to those whose incomes merely appear low, courtesy of an ingenious accountant. Perhaps someone has had financial calamities. They may have lost their car, their home, their their health, their kids’ childhoods, their parents’ company in their final weeks, or all of the above. (Pray you never contract an “orphan disease”.)

    Let’s be honest: modifying or postponing one’s vacation or retirement portfolio isn’t “pain”. Diligent, resourceful Americans nationwide have never had a vacation, even as honeymooners, or never held stocks. THESE are the people whose discretionary income feels the bite of taxes. No matter how much flawed rhetoric gets slung, they belong in our line of vision. They’re in the checkout line at our markets and pharmacies, with basket or carriage, calculator in hand. If you look, their glances may reveal which treat or treatment will be ruled expendable today. Or they’re sitting by you on a bus, subway or commuter train, puzzling over schedules. Maybe they’re calculating the risk inherent in swapping a long commute to a reliable job for a short trip to a lower-paying or less-solid job. Or they’re asking themselves, “Is it time to move? Is that local high school really that dangerous?” Maybe it’s, “Couldn’t we give up red meat?”, or, “What if I took half my blood-pressure medication and postponed some of that dental work?” These are the people who deserve a true hiatus, who know what leanness and belt-tightening really mean. Let’s try to remember what we all believe in, and which quarters our skepticism belongs in.

  3. Optimist Realist,

    I love you. 🙂

    David, I think these economic posts you’ve been doing lately highlight another way many of us are bullied on the job. Even those of us who work in “safer” workplaces experience the economic threats you have written about, and that Optimist Realist just described. The people making our economy so are engaging in a form of meta-bullying on the rest of us.

  4. Pingback: Post-meltdown America: An economic recovery for the wealthy (via Minding the Workplace) | Pilant's Business Ethics Blog

  5. Higher education needs to face fiscal reality and here’s a recommended way forward. University of California Berkeley tuition, fee increases are insult. Californians face mortgage defaults, 12% unemployment, pay reductions, loss of unemployment benefits. University of California shares sacrifices: no layoff or wage concessions for Chancellors, Faculty. If wages better elsewhere, chancellors, vice chancellors, tenured, non tenured faculty, UCOP apply for the positions. If wages are what commit to UC, leave for better paying position.
    UC wages must reflect California’s ability to pay, not what others are paid. There is no good reason to raise tuition, fees during the longest, deepest recession in California’s history when wage concessions are available from Chancellors, Faculty.
    The sky will not fall on UC.
    Share the sacrifices UC President, Faculty, Chancellors, Vice Chancellors, UCOP:
    No furloughs
    18 percent reduction in UCOP salaries & $50 million cut.
    18 percent prune of campus chancellors’, vice chancellors’ salaries.
    15 percent trim of tenured faculty salaries, increased teaching load
    10 percent decrease in non-tenured faculty salaries, as well as increase research, teaching load
    100% elimination of all Academic Senate, Academic Council costs, wages.

    (17,000 UC paid employees earn more than $100,000)

    UC Board of Regents Chair Sherry Lansing can bridge the public trust gap with reassurances that salaries of Chancellors Faculty reflect depressed California wages.

    The sky will not fall on the 10 campuses with UC’s shared sacrifices.

  6. I can’t say I know anything about UC, but the suggestion that all Academic Senate and Council costs be eliminated seems a bit drastic, if we’re discussing sharing the burden. It suggests that their respective efforts and roles hold no value. Are things that bad? I’ve had the privilege of knowing some very dedicated, extremely ethical and capable faculty at six schools, from pursuing a BA at a private art school to my Master’s work at Columbia. My first instinct is to give some credence to faculty members who put in extra time voicing their opinions, suggestions and concerns.

  7. Look closely at the recommendations of the UC Berkeley Academic Senate. Studies result in recommending increases in faculty salaries, increasing the number of faculty positions, and making decision based on seniority. The academic Senate is the Faculty union.
    Walks like a duck, quacks like a duck must be a duck.
    Let’s call it what it is, a Faculty Union.

  8. Again, I don’t know about this faculty, but I’m leery of generalizations. Are you referring to across-the-board increases in faculty salaries? If so, was it supposed to “be their turn, finally”? (Were faculty shorted repeatedly in recent years while others secured or compounded raises?) Likewise, did the faculty senate recommend hiring more faculty because it had held constant despite significant growth in the student body and/or number of full-time students grew, or despite the fact that they had shrunk, etc.? And was the “decision (sic.) based on seniority” a matter of rewarding and fostering longtime excellence in a meritocracy — or chiefly a matter of friends’ scratching each others’ backs? Such questions make or break claims like these. Not all ducks are ducks, once you’ve see them up-close.

  9. My apologies. I realized awhile ago that with UCOP, Moravecglobal was referring to the term “University of California Office of the President”. That could be because this writer seems to use terms like “University of California”, “UC Berkeley”, “UC campuses” and “academic/faculty senate/council” almost interchangeably.
    I found that confusing; even more so, when that person’s writing style appeared to morph between August fifth and ninth. It’s an odd regression: everything started out letter-perfect, but now commas stand in for periods, the possessive apostrophe and the “etc” period are forgotten, and subject-verb agreement seems to have collapsed. Yet somehow, which is to that author’s credit, they remained grammar-compliant on each chorus of “Faculty, share the pain!” (That might be why, by the end of these missives, I caught myself wondering if I could be reading different authors.)
    Proofreading aside, I can’t shake the feeling that at least a slim majority of California’s public-school professors remain in public service with good intentions. My own system, for instance, was honorably served by someone named Alan Rosen. Alan has no mansion, no Jaguar, but I have no doubt he could had both, and more besides. Alan might’ve chosen an entirely different line of work: a lobbyist, say, or a PR spin doctor. Instead, he invested four decades of his life in teaching working-class kids like my husband. (He, in turn, teaches English to adults at another state school here.)
    As I recall, another of Alan’s former students, Brian Helgeland — L. A. Confidential; Mystic River — warmly credited Alan upon accepting his screenplay Oscar. Screenwriting was but one of Alan’s courses, yet by extension it benefited the film industries of California and Massachusetts, not to mention helping to delight moviegoers worldwide. What a return on investment!
    So, with Alan in mind, I read some documents issued by the UC Academic Senate. (The Council is its administrative arm.) Their official statements struck me as reasonable and thought-provoking. I encountered phrases like, “…an overwhelming majority of the Council membership is troubled by the change in direction from what was represented to Council, and accepted by Council… [Our] sense is that the University should maintain a principled consistency between budget principles that are described to the community and those that are ultimately implemented.” It all sounded fair enough to me.
    Perhaps my worldview is limited, but I’ve learned a bit here and there. As it happened, I served on the student senate at two grad schools, one public, one private; once with the troops, once as Parliamentarian. At both, I worked with admirable faculty — both schools’ being comparable. From what I’ve heard, my husband’s and our siblings’ experiences at state and private institutions have been similar. And my parents have two dears friends in teaching: each of them sacrificed time with their families to teach, “compromising” lives of privilege. One founded the art program at a brand-new community college in a struggling mill city, serving on the Board of Directors for many years. The other joined the faculty at a private medical school, ultimately running his department and earning the Nobel Prize.
    In short, the slackers and lowlifes of my acquaintance, and of those among my circle, have been statistically insignificant. If you routinely meet nefarious types who bandy terms like “principled consistency”, California’s state employees might not be the problem. Maybe you’ve just strayed off-course, and tuning up your GPS will put things right again.

  10. Pingback: Post-meltdown America: An economic recovery for the wealthy (via Minding the Workplace) - Pilant's Business Ethics | Pilant's Business Ethics

  11. Pingback: ‘Well, shut my mouth, Jethro! American people still have kick left?’ Wall Street protests to steal Teapartiers’ Christmas! | Center against Social Minimalism

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