Labor Day 2003
Happy Labor Day. Labor is pretty basic stuff, isn't it? The basis of everything we have. There isn't a bite of food we eat, a highway we drive on, even a television show we watch that isn't the product of labor. And look at all we have. Now that's a lot of labor. We deserve a day to acknowledge that.
I want to urge you this Labor Day to keep an eye on what's yours so you get the full fruits of your labors, and to warn you about one big blow to what's yours that could be right around the bend.
You would not expect to be able to leave your wallet on the street corner and come back next week and find it all there. If there is money unwatched, someone will generally come along and make it disappear. Some parts of what is yours are easy to watch. If your bank statement doesn't add up you can go and challenge it. But some things are more subtle and long term and harder to keep an eye on.
Sometimes it is a creeping loss. Over recent years the income of many CEOs grew. That's fine. The question is, did yours go up in equal measure so you continued to get your share? After all, all of that wealth is the product of labor. Or did the pie get cut into less even shares? According to the National Bureau of Economic Research, in 1970 the top 100 CEOs earned 38 times what the average worker did. In 1999 it was 1,045 times what the average worker earned. (Westchester NY Journal News, 12/15/02. Source for worker average was the National Institute of Pension Administrators. Source for CEO pay was Forbes.)
And the pay of those on the low end is falling. In April the New York Times reported the weekly pay of workers of median pay fell 1.5 percent in the preceding year. (New York Times 4/27/03. The article says in part, "For the first time since the 1980s the average pay of workers at all levels is falling..."
Sometimes it is a big loss. The AP reported that in Colorado alone workers lost $2.6 billion (that's $2,600,000,000.00) in retirement assets in the previous year due, partly, to declines in stock, but also to corporate scandals. (AP 12/1/02.) Even the portion that was lost to declines in stock would seem to be a matter of mismanagement. You would think those who manage something as important as retirement funds would be cautious about investing it, wouldn't you? Seems like something that ought to be carefully regulated, doesn't it?
Well don't hold your breath. The Treasury Department is proposing rule changes affecting how companies can change their pension funds to a cash-balance plan. (AP 12/11/02. "Bush plan protects employers.") This shortchanges older workers unless adjustments are made. The proposed rules donít require such adjustments, leaving older workersí pensions vulnerable to the disposition of the company.
This at a time when pension funds in general are at risk. Last month the agency that guarantees pension funds was listed as a high risk for default because of all the pensions that are likely to fail, and the Treasury Secretary warned of a "meltdown similar to the savings-and-loan collapse." (New York Times 7/28/03.)
You remember the savings-and-loan collapse, don't you? Rules regulating them were loosened. They got into trouble and had to be bailed out. If you're a typical taxpayer you are still paying hundreds of dollars a year in taxes to cover that bailout, and will continue to for the next twenty years. (AZ Republic 6/15/02, column by Ralph Nader.)
We haven't finished paying that off and now working people have to pay for the losses to corporate scandals and the energy gouging of those in California. Just as in the savings-and-loan case, just as with the those Colorado pension funds lost to scandal, just as with the energy gouging, so too if this "meltdown" occurs, the money is not lost. It's still out there somewhere, in somebody's pocket. Just not in the pockets of those whose labor created it. In this case either the pensioners will lose it or there will be a bailout, and those who will be hardest pressed by the additional taxes to cover it will be average workers.
Do yourself a favor after this Labor Day. Pay a little attention to those guarding the henhouse and what kind of critters they are. To mix metaphors, if they look like a fox, wag like a fox, and are eating through the eggs in a hurry, get them the heck out of there.