It's Time to Tie Executive Pay to Worker Pay

In the past 40 years or so, CEOs have gone from earning 20 times more than the average worker, to more than 230 times the average worker. Over the same period of time, unions have weakened to the point that successful companies feel comfortable asking for unprecedented concessions from workers at the same time the company is reaping record profits. What do these things have to do with each other? Everything.

Take a moment to reflect upon just how much contempt the Çaterpillar corporation has for the union that represents its workers: as Steven Greenhouse reports, the company—in the midst of our nation's worst economic crisis since the Great Depression—is demanding wage and benefit concessions from its unionized work force while profits are booming and executives are receiving pay increases:

Despite earning a record $4.9 billion profit last year and projecting even better results for 2012, the company is insisting on a six-year wage freeze and a pension freeze for most of the 780 production workers at its factory here... Caterpillar, which has significantly raised its executives' compensation because of its strong profits, defended its demands, saying many unionized workers were paid well above market rates. To run the factory during the strike, the company is using replacement workers, managers and a few union members who have crossed the picket line.

Caterpillar does not fear the strike by its own workers. Caterpillar does not fear any PR repercussions. Caterpillar does not fear any political action from the International Association of Machinists or its fellow unions. Caterpillar has quite simply calculated that it has the leverage at this moment in time, and that it will use that leverage to enrich itself and its executives. Caterpillar has made the cold calculation that unions are weak, the public is uninterested, and the workers themselves are easily replaceable. Caterpillar's executives have decided that they can penalize the lowest-paid part of their work force in order to save the company money, and reward themselves for doing so.

And who's to say they're wrong? There was a time, in the 20th century, when this type of overtly outrageous corporate action would have brought down a thunderstorm of consequences. A strike that would actually shut down the plant; a deafening outcry from pro-labor voices; and a public shaming of the company that, combined with the political fallout and the muscular union action, would cause executives to reconsider. And now? What does Caterpillar have to fear? A strike? There is a strike. They simply broke it with scabs. The union cannot shut down the plant. Perhaps if a coalition of unions banded together and declared an industry-wide strike that shut down many plants in many places and if they were able to hold the picket lines and keep out replacement workers until Caterpillar really felt economic pain... but that, realistically, is not about to happen, right now. What else? Bad PR? Caterpillar executives clearly don't give a fuck about that, if the money is right.

None of this political reality should obscure the fact that what Caterpillar and its executives are doing is wrong. They are taking from the poor to enrich the already wealthy. They are using the unemployment crisis as a weapon to pitch working class people against one another. So here's an idea: let's just tie executive pay to worker pay, by law. Pick a maximum multiple that a CEO can make. 20 times that of an average worker? 50 times? 100 times? The number is less important than the principle. Once corporate executives are tied to their workers in pay, the low man needs to get a raise in order for the high man to get a raise. The economic interest of the executive class is aligned with that of the working class.

Unions are largely political lobbying organizations already. Put that muscle to good use. A law could be written strongly enough to avoid easy loopholes. Think a law like this is a liberal pipe dream? Why? Look at our economy. Look at our unemployment figures. Look at the widening wealth gap. And look at this company, Caterpillar, brashly ordering hardworking Americans to accept less while paying executives more. There are a million more people whose interests align with unions and workers than there are people whose interests align with rich executives. A small step towards wage sanity would not be remarkable. What's remarkable is how much inequality we've conditioned ourselves to tolerate.

Want to raise the minimum wage? Tie it to the maximum wage, and watch it fly.

[Photo of striking Ormet steelworkers: AP]