Corporate executives don’t give a damn about their workers, and it’s all because of Reagan. A new analysis released by the Economic Policy Institute shows just how much of a “screw the workers” mentality today’s corporate executives have. According to EPI, in 2013, the share of corporate income that ended up in the pockets of the men and women who make corporate executives so filthy rich hit its lowest point since 1950.
And, as Think Progress points out, corporate profits “have risen nearly 20 times faster than workers’ incomes since 2008, and on the whole workers have seen a lost decade of stagnant wage growth.”
So, corporations are taking in more and more money, their executives are getting bigger and bigger paychecks, but the workers responsible for all of that wealth are barely seeing a dime of it.
Why is that? Reagan.
Before Reagan came to Washington, corporations knew they had a responsibility to a number of groups. They had a responsibility to their workers, to their community, to their customers, to the institution of the company itself, and to the stockholders. Believe it or not, they actually cared about their workers making decent wages, their customers buying reliable products, and the impact of their behaviors on the community.
When people got laid off, it was considered a "failure of management." Offshoring was unheard of. But then things began to change.
Suddenly, thanks to Chicago School Boys like Milton Friedman, there was this idea floating around that CEO’s and corporations only should do what was best for the shareholders. Screw everyone else. Screw the community, screw the company, screw the customers, and, most of all, screw the workers.
Tragically, Ronald Reagan was a fan of that toxic thinking. So, in the early 1980’s, his administration changed tax laws and rules, to turn CEOs more into shareholders than employees. All of a sudden, CEO’s were getting huge chunks of their salaries not from regular payroll, but from stock options (with a lower tax rate), something that had been previously illegal.
Because of that, CEO’s began to care more and more about what was best for the shareholders, while saying screw you to the workers, to the communities, to the institution of the company itself (if they could chop it up and sell or merge it, that's just fine!) and to their customers. Any loyalty to anyone or anything other than the stockholders was lost.
And that’s why today's CEO’s are raking in hundreds of millions dollars, while workers are seeing their lowest share of corporate income in over six decades.
Just look at UnitedHealthcare’s CEO, Stephen J. Hemsley. According to Forbes, in 2013, Hemsley had a base annual salary of $1.3 million. BUT, thanks to Reagan, Hemsley also has over $700 million in unexercised stock options at a maximum 20% income tax rate. That’s quite the nest egg, and it’s only getting bigger.
America is one of only a very few countries in the developed world that rewards its CEO’s with stock options. That’s crazy. This is bad policy for America, its workers, and for the corporations themselves, and it’s time we change it.
Corporate executives today need to have more skin in the game. They need to be thinking about more than just the rises and falls in their stock.
We need to undo the damage done by Reagan, and make America’s CEOs answerable once again to their companies, their communities, their customers, and their workers. Only then will Americans overall begin to reap the rewards of corporate successes.
