Question: What do the highest-paid American public university presidents and the highest-paid corporate CEOs have in common? Answer: They both employ workers at the lowest possible wages. University boards and corporate shareholders alike reward the exploitative behavior of top executives with lavish salaries.
The New York Times cites a study by the Institute for Policy Studies, which found that executive pay at the 25 state schools with the highest-paid presidents rose on average to nearly $1 million by 2012. Administrative expenditures outpaced spending on scholarships by more than two to one, while the proportion of permanent faculty declined and the hiring of adjunct (low-wage) faculty soared. According to the report, from fiscal 2010 to fiscal 2012, “Ohio State paid [president E. Gordon] Gee a total of $5.9 million. During the same period … the university hired 670 new administrators, 498 contingent and part-time faculty — and 45 permanent faculty members. Student debt at Ohio State grew 23 percent faster than the national average during that time.”
Neoliberal ideology, which justifies this skewed allocation of resources, has become mainstream in the academic world as it already is in business. The pattern is repeated in America’s low-wage corporate economy as, despite Obama’s political rhetoric, inequality is actively created by corporate CEOs to further enrich billionaire shareholders.
Discussing CEOs’ high salaries in relation to last Thursday’s fast-food workers’ strike, policy analyst Catherine Ruetschlin told Democracy Now she discovered “fast food is a catalyst, with inequality that outstrips all the sectors of the economy. The CEO of a fast-food company in 2012 earned 1,200 times what the typical worker earned that year. … Firms like McDonald’s spend billions of dollars a year buying back their own shares of company stock on the market in order to consolidate ownership and bump up earnings per share and meet these short-term benchmarks. … at these firms that have benefited from economic growth, overall, the CEOs and top executives have been able to capture all of those gains. So, while the fast-food CEO pay grew by 470 percent since 2000, worker earnings only grew by 0.3 percent.”
Most CEOs’ compensation is tied to increasing share prices, which means holding down labor costs and keeping out unions. This leads them to maximize short-term return on capital while in effect eroding their own markets. Walmart, for example, puts in a great deal of effort to utilize capital as efficiently as possible and to accelerate its circulation through centralized “just-in-time” inventory and distribution control – which in turn drives absolute exploitation of labor in their stores, warehouses and supply chain.
This corporate incentive has created a market for anti-union consultants who will work outside of labor laws to suppress union activity. There is a ready demand for their services in low-wage based industries such as retail and restaurant chains. The Nation reports on a key player in this “rising cottage industry of lobbyists and consultants,” one Joseph Kefauver, a former Walmart executive and consultant for the restaurant industry. He warned a conference of executives that the “exponential growth of grassroots networks” could threaten their bottom lines and had established a “left-of-center beachhead in traditionally conservative areas.”
Kefauver’s target is the “worker center” movement, which brings together low-waged workers with community activists and religious groups in campaigns to fight for better wages and conditions in industries where it is difficult for unions to organize. One example is Arise Chicago, which helped win safety agreements for hotel workers, negotiated a city ordinance to crack down on wage theft, and mobilized Walmart employees for an unprecedented set of strikes aimed at increasing pay and benefits. In an underhanded tribute to the effectiveness of these groups, big businesses have financed political front groups such as the Workforce Fairness Institute, “a firm made up of Republican campaign staffers that include Katie Packard Gage, Mitt Romney’s deputy campaign manager in 2012. The Workforce Fairness Institute maintains ties to the Association of Builders and Contractors, an anti-union lobby made up largely of engineering and construction firms, and serves as a clearinghouse for opposition research on worker centers,” according to The Nation’s report.
The network of anti-union consultants played a central role in swinging the vote at Volkswagen’s Tennessee plant through the rapid production of videos smearing the UAW and unions generally. A front group created by an anti-union lawyer, Maury Nicely, set up a website pretending to represent rank-and-file Volkswagen workers while raising funds in the “low six figures” from “businesses and individuals” in Tennessee.” The group hired a leading out-of-state consultant firm, Projections, to produce three videos that featured testimonials from workers at previous UAW plants claiming that the UAW destroyed Detroit and led to the closure of a former Volkswagen auto plant in Pennsylvania. While the UAW focused its efforts inside the factory, the anti-union professionals waged a broader campaign in the community to influence the vote.
However, while the plutocracy musters its armies of lawyers and consultants, the strike movement of low-paid and fast-food workers for a $15 minimum wage and the right to join unions is spreading rapidly. The recent one-day strike of fast-food workers in over 150 US cities contributed a great deal to the increase of class-consciousness and workers’ confidence in their own strength. They have responded to Republican rhetoric by making clear who are the “makers” of wealth, and who are the “takers.”
Commenting on the 1200% pay differential between himself and his CEO, Kansas City striker Terrance Wise, who makes $9.40 an hour at Burger King after working there for nine years, said: “I know that workers like myself and my co-workers across the city, we go to work every day, and we’re the driving force behind his billions in profit he brings in. He’s buying new yachts and new boats and new cars, and I just want to put my kids through college. So, just to see the disparity that I’m making $9.50 an hour and he makes over $9,000, and just to get that out to the public and that information to be known, it’s eye-opening. And it calls for change.”
Rhonesha Victor skipped work at KFC/Taco Bell to join the strike, losing a day’s pay. Alternet reported she feared retaliation when she first joined the movement, but that vanished once she realized it would be illegal for her boss to fire her for organizing. “I learned to not be afraid,” Victor said. “At first, I didn’t want to speak at all because I was afraid of what my boss would say. But all my fear has gone out of the window, and I realized that I do have power…. And today, at my store, half of the people came out to strike. So my boss was unable to make any money, and we were in the lobby and there were no customers. So for about an hour, he wasn’t making any money, and we had power, and he couldn’t do anything about it, and I love that feeling.”
Last week also saw protests at McDonald’s national headquarters near Chicago. Over 2,000 people, including 500 uniform-wearing McDonalds employees from 33 cities as well as local church groups, union activists and community groups took part. It came a day before the fast food company’s annual meeting when dissident shareholders intend to vote against CEO Donald Thompson’s $9.5 million pay package. 101 McDonald’s workers and 38 community supporters were arrested after crossing a police barricade, while workers chanted “Hey McDonald’s You Can’t Hide, We Can See Your Greedy Side,” and “No Big Macs, No Fries, Make our Wage Supersize,” as the arrests were made.
According to the Guardian, which had more detailed reports than any of the US national media, McDonald’s worker Ashona Osborne, who makes $7.25 an hour, travelled from Pittsburgh to protest. She told reporters Thompson’s salary worked out at about $6,600 an hour. “He makes more money than me on the way to work,” she said. “That’s ridiculous. They can afford to give me more money. If it weren’t for us workers there would be no McDonald’s, no Burger King, no Wendy’s.”
The forging of alliances between the low-paid and community activist groups has these corporations running scared: workers who have participated in one-day strikes have overcome fear of their managers and become immune to anti-union propaganda. The Occupy movement already changed the political dialog by dramatizing the inequality between the 99 and the one percent; as the movement for social and economic justice grows it challenges the close relation between big business and government.