House Dems Slam Big Bank CEOs Over Pay Disparity

Sarah Anderson Director, Global Economy Project, Institute for Policy Studies

For the first time in a decade, CEOs of America’s mega-banks were summoned to Capitol Hill on April 10 to face scrutiny from lawmakers. House Financial Services Committee Chair Maxine Waters (D-Calif.) explained that her goal was to find out what — if anything — the seven Wall Street leaders had learned since the 2008 financial crisis.

In a fearless grilling of the Wall Street heavyweight, first-term California Democrat Katie Porter, a former consumer protection attorney, skewered Dimon for pocketing such a massive sum while paying his entry-level employees poverty wages. Using the example of one of her constituents, a single mom earning $16.50 an hour as a JPMorgan Chase teller, she pressed Dimon for solutions to the woman’s household budget shortfall.

“I don’t know, I’d have to think about that,” Dimon admitted.

“What I’d like you to do,” Porter scolded, “is provide a way for families to make ends meet, so that little kids who are six years old living in a one-bedroom apartment with their mother aren’t going hungry at night because they’re $567 short.”

Citigroup CEO Michael Corbat stands out among the group for having the largest gap between his pay and that of the typical employee at the bank.  Last year, he pocketed $24.2 million — 486 times more than median pay at Citi of $49,766. Corbat squirmed under intense questioning from New York Democrat Nydia Velázquez about this pay disparity. When he attempted to shift responsibility onto his board, Velázquez was having none of it. “Just unbelievable,” she said, shaking her head in disgust.

One Wall Street titan was happy about the hearing — or at least happy not to be among those brought before the klieglights. Lloyd Blankfein, who became a billionaire as the CEO of Goldman Sachs before retiring last year, trolled his former counterparts before the testimony began, sarcastically commenting, “Boy, I really miss my old job!!!”

In a preemptive move, Bank of America announced before the hearing that it would raise their U.S. bank employees’ minimum wage to $20 an hour in the next two years, up from the current $15. With the tightening labor market, other banks are likely to boost starting pay as well.

But on the CEO end of the pay gaps, much more needs to be done to rein in the excess. Policymakers should push regulators to finally implement the banker pay restrictions in the 2010 Dodd-Frank financial reform legislation. For nine years now, powerful Wall Street lobbyists have succeeded in blocking Section 956 of that law, which prohibits financial industry pay packages that encourage “inappropriate risks.” Regulators were supposed to implement this new rule within nine months of the law’s passage.

Lawmakers should also support growing efforts to use tax policy to encourage banks and big corporations to narrow their pay gaps. One model already in force in Portland, Oregon slaps a 10 percent surtax on companies that pay their CEO more than 100 times median worker pay. The gaps at all the mega-banks exceed that level. The tax penalty rises to 25 percent for firms with pay ratios greater than 250 to 1.

Such proposals have been introduced in seven states and the U.S. Congress. As a new Roosevelt Institute report puts it, these taxes send “a clear message that local governments — and the federal government — can use this pay ratio as a powerful tool in highlighting bad governance decisions that harm workers and our economy.”

Posted In: Allied Approaches

Union Matters

Steel for Wind Power

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

Siemens Gamesa last month laid off 130 workers at its turbine blade manufacturing plant in Iowa, just months after GE Renewable Energy decided to close an Arkansas factory and eliminate 470 jobs.

The companies reported shrinking demand for their products, even though U.S. consumption of wind energy increases every year.

America’s prosperity depends not only on harnessing this crucial energy source but also ensuring that highly skilled U.S. workers build the components with the cleanest technology available.

Right now, the nation relies on imported steel and turbine components from foreign manufacturers like China while America’s own steel industry—well equipped for this production—struggles because of dumping and other unfair trade practices.

Steel makes up the bulk of turbine hubs and the wind towers themselves. It’s also used to make the cranes and platforms necessary for installing the towers.

Yet the potential boon to America’s steel industry is just one reason to ramp up domestic production of wind energy infrastructure.

American steel production ranks among the cleanest in the world, while China has the highest carbon emissions of any steelmaking nation and flouts environmental regulations.

The nation’s highly-skilled steelmaking workforce must play an essential role in the deeply-needed revitalization and modernization of the nation’s failing infrastructure. Producing the components for harnessing wind energy domestically and cleanly is an important step that will put Americans to work and position the United States to be world leaders in this growing industry.


More ...

There is Dignity in All Work

There is Dignity in All Work