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| THE STATE OF THE AMERICAN WORKPLACE September 3, 1997 |
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Questions asked
in this forum:
What role will orgnaized labor play in the new workplace? How has technology changed the way we work? What is driving the increase in contingent workers? How prevalent are the golden parachutes given to CEOs? How do we improve the workplace atmosphere? Why do service jobs still pay so little?
NewsHour Backgrounders
August 22, 1997:
The NewsHour reports on Teamsters' President Ron Carey's election troubles.
August 20, 1997:
Paul Solman explores the fallout from the UPS strike on labor/management relations.
February 20, 1997:
John Sweeney, the newly elected president of the AFL-CIO, discusses the state of the labor movement.
February 20, 1997
Paul Solman leads a discussion on whether an unfettered economy is best.
October 21, 1996
Paul Solman explores the bud vase economy and the wage gap.
September 2, 1996:
The Online NewsHour and the NewsHour's regular panel of historians explore the history of labor day in separate reports.
May 14, 1996
The NewsHour reports on the debate in the Senate over the Teamwork Act.
March 25, 1996
The NewsHour historians examine the history of economic insecurity and economist Harris Sussman on coping with the modern workplace.
A question from Erik Ohrnberger of Troy, MI: Excessive Executive Compensation Packages
In recent years, the mainstream media has brought light to the fact the corporate downsizing appears to have stimulated excessive executive compensation packages, where top executives earn more money in a year that they could possibly spend in a life time, while they are forcing thousands of workers (literally) out of work as part of the downsizing.
Does it appear that the capitalistic system will self correct this situation? Or is it that the abuses of the system by the executives will continue? and further exasperate the wage gap?
Dr. Walter Licht responds:
The wage gap is widening and there little in the winds to stall further disparities. A close analysis of the history of income inequalities in the United States shows that the only moments that have seen more equitable divisions have been during wartime and/or periods when there was a political mandate to tax high income earners at high rates. Hopefully, we will not be at war soon and the political moment does not seem right to increase the tax bite on the rich. No change in corporate structures and accountability either seem in the works to control CEO compensation.
Edward Potter responds:
While it is certainly true that executive compensation for a small group of CEOs has grown quite dramatically in recent years, this growth has little to do with average wage trends for most professionals, managers, and workers. Employee compensation, measured as a share of national income, has stayed relatively flat since 1979 at about 62 percent. In comparison, corporate profits over the same period have averaged around 8 percent, but have increased in recent years. Higher profits are the key to corporate investment, and that is an important determinant of future productivity and wages.
Some compensation specialists suggest that rising CEO compensation has resulted from remarkable stock market performance which was unforeseen when packages were originally designed. Because CEOs derive much of their compensation in stock options, this could explain the observed trend. Ultimately, CEO pay is an issue of corporate governance -- the extent to which boards look out for the principal stake-holders. It is not, in my view, a public policy question.
There is not, however, a clear connection between rising executive compensation and corporate downsizing. Although media reports of downsizing may seem more prevalent in recent years, incidence of downsizing has actually fallen. A 1996 American Management Association survey found that in the last recession, 43 percent of firms downsized; by 1996, only 25 percent had downsized. Furthermore, the average decline in workforce size in downsizing firms has fallen to less than one percent from almost 8 percent in 1990-91. Most displaced workers find new jobs -- often at comparable wages. Why then, has there been increased media attention on downsizing? One reason is that downsizing now increasingly effects better-educated and older workers -- making it more visible to the general public.
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