GM, Jobs, and Corporate America’s Incentive to Exploit

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

On Monday morning, November 26, the auto giant General Motors announcedplans to shut down production at five plants in the United States and Canada and shear off 15 percent of the company’s salaried jobs. The moves will cost 14,700 GM workers their livelihood.

The communities where those workers live will lose out, too. In Lordstown, the Ohio locale that hosts one of the plants set to be shuttered, officials estimate that every GM job cut will cost seven other workers outside GM their employment.

Did the GM executives who made the shut-down decision take that spin-off devastation into account? Did they soberly conclude that they had no choice, that only massive job cuts could ensure their enterprise a stable and sustainable future? Or do the GM job cuts reflect, in the end, nothing more than naked self-interest on the part of those executives, an attempt to enrich their own future — at worker expense?

The simple answer: We can’t get into the minds of the GM execs who’ve ordered the job cuts. We can’t divine how much greed determined their decision. But we can, rather easily, see who stands to gain from GM’s massive job cutting. Certainly not GM workers. In the wake of the GM layoffs, thousands of workers and their families will be poorer. GM execs, on the other hand, will be richer.

Substantially richer. At GM, as at all major U.S. corporations, the ultimate compensation top executives take home rests either directly or indirectly on their enterprise’s share price. The more that price rises, the more they pocket. In the afternoon after the GM job-cut announcement morning, Wall Streeters bid up the company’s shares a whopping 7.9 percent. Shares ended the week almost as high.

Corporate execs at GM and elsewhere tend to fixate on their share prices. They’ll do most anything to jack them up, even have the corporations they run expend big bucks — an estimated $1 trillion this year — to buy back their own corporate shares on the open market. This maneuver has just one purpose: to heighten demand for a company’s shares and raise the price they sell for. GM execs last year spent $100 million on “buybacks.”

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. He is an associate fellow at the Institute for Policy Studies in Washington, D.C. Last year, he played an active role on the team that generated The Nation magazine special issue on extreme inequality. That issue recently won the 2009 Hillman Prize for magazine journalism. Pizzigati’s latest book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives (Apex Press, 2004), won an “outstanding title” of the year ranking from the American Library Association’s Choice book review journal.

Posted In: Allied Approaches

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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A Friendly Reminder

A Friendly Reminder