FINALLY, SOMEONE IN THE CONGRESS IS TRYING TO REWARD WORKERS, NOT CEO’S

 

…Maryland Representative, Chris Van Hollen

 

Coming from a middle-class family where the head-of-the-household was also a member of a trade union, it’s nice to see today that someone in the US Congress is now looking-out for the American worker.

Everyone has become aware that American incomes for the average worker have been stagnant for at least the last two decades.  Last week, with the backing of the House Democratic Caucus, the Maryland Representative, Chris Van Hollen, who is the ranking Democrat on the House Budget Committee, he is introducing a bill that would prompt corporations to reward America’s workers.  Yes, actually rewarding the workers, not just top executives and the major shareholders for their gains in productivity.

Finally, someone has decided that seeing CEO pay increase 937% from 1978 to 2013, while the average American worker’s pay scale increased by approximately 5%, perhaps something should be done for the workers…ya think?

Let’s look at this from another point-of-view.

Between 1947 and 1972, the nation’s productivity increased by 97%, but the median pay scale also increased at the same time by 95%. 

Unfortunately, since then, as the unions have declined in power, along with a host of other factors, this has weakened the average employees’ bargaining power.  Today, whatever productivity gains have been made, virtually nothing has gone to the workers. Between 1979 and 2011, American productivity rose by 75%, but this is where the average median pay only rose by that measly ~5%.

The new bill being introduced by Rep. Van Hollen would take away the deduction for the top executive pay in excess of $1 million when that pay is “performance-based”.  That means, when the CEO’s compensation is linked to rising share values, the corporation would not be able to deduct the CEO’s excess pay unless the corporation’s employees get a wage boost equal to the nation’s annual increases in productivity plus the cost of living.

So, now that you’ve heard the potential good news for America’s workers, what’s the problem?

Well, obviously, the federal Van Hollen bill won’t go anywhere in the current Republican-controlled House. 

However, it is very important to broaden the efforts for going after today’s economic inequality.  So, it must be noted that state ballot measures to increase minimum wages have passed in nine states over the past 10 years.  During that period, no such minimum wage increase measures in the states have lost. Unfortunately, minimum-wage hikes, while a lifeline for those in low-paying jobs, they do nothing for the majority of America's workers.  But the point is that the workers and the state legislatures are getting the message.

It will probably take another couple of national elections for getting back the Democratic control of the House where the Van Hollen bill will then get the support it needs.  But what has been going on in the states is now slowly moving into the Washington scene.

Average American workers are just now realizing that prior to 1980, union workers had enough bargaining power to win pay increases without any national legislative assistance.  The annual cost-of-living increases and pay raises that were in line with the economy’s annual productivity increases were normal items in most union contracts. 

 

In addition, for keeping their non-union employees on-board, non-union employers usually felt compelled to match those union raises to keep their workers from jumping to better-paying union jobs.  But today, those days are long-gone.

So, bills like Van Hollen’s will now most likely start showing up in the bluer state legislatures.

As an example, in one of the bluest states, California, a bill to lower state corporate tax rates on companies that pay their CEOs more than 100 times the median wage, it won in the state Senate this summer, though it failed to get the required two-thirds majority. But since California is usually one of the first states for starting sweeping national changes, approval is probably just a matter of time.  In addition, by backing Van Hollen’s bill in Washington, the House Democratic Caucus is announcing that raising Americans’ incomes is worth the risk of incurring Wall Street’s wrath.

On a world-wide level, measures that require corporations to represent workers on their boards has contributed greatly to Germany’s broadly shared prosperity.  These measures will be required in the US if Americans’ incomes are expected to rise.

 

…Another support person for helping reduce the nation’s income inequality?

To help with these income inequality issues is the anticipated Democratic nominee for the 2016 presidential elections, Ms. Hillary Clinton.  Ms. Clinton may bring all this to the top of the list.  As was reported in the New York Times, Hillary “is talking about how to address income inequality without alienating corporate America.”

We’ll now see if this becomes a major debate issue when the campaign for the 2016 elections begins in earnest.

Copyright G.Ater  2014