USW International President Leo W. Gerard and progressive talk show host Leslie Marshall this week discussed America’s rampant income inequality and the ways CEOs of big corporations manipulate stock prices to benefit themselves at the expense of their workers.
Between 1978 and 2013, CEO compensation increased a whopping 937 percent, adjusted for inflation. The typical worker’s compensation, on the other hand, rose only 10.2 percent, despite steady gains in worker productivity.
“This is the result of corporate greed, of Wall Street manipulation,” said Gerard. CEOs and other top executives have gotten disproportionately richer because they are able to pay themselves in stock—and influence the price of that stock without regard for the long-term prospects of the company.
CEOs commonly do this in two ways. They use corporate profits to buy back stock, driving up the price and making their own stock more valuable. They also pay dividends, distributing profits directly to shareholders, who again are disproportionately made up of corporate executives.
“These corporate guys line their pockets coming and going,” Gerard said.
Research out the University of Massachusetts found that between 2003 and 2012, 449 of the largest companies used a total of 91 percent of their earnings to either buy back their own stock or pay dividends.
“That leaves 9 percent of all the corporate income for wages, for research and development, for marketing, for vision of the future, for preventative maintenance, all of those things you’ve got to do,” said Gerard. “So it’s no wonder that when you come to the bargaining table…we get stuck with the short end of the stick every time.”
“In real terms, I would argue, it’s manipulating the stock prices, and it ought to be unacceptable. It ought to be totally investigated,” said Gerard.
For the full audio, click here.
Background materials:
EPI study on escalating CEO pay.
Allegheny Technologies Inc. CEO Paid $8 Million While USW Members Get Locked Out
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