B   M   W   E
The Corporate Agenda

@ box quote: What's good for workers is good for business. But too often, big business forgets. Instead of creating stable job environments, respecting the dignity of workers, supporting workers' right to organize and ensuring diversity in hiring, much of the corporate agenda is marked by shortsighted greed and low-road policies that result in shifting the burdens of corporate citizenship to workers.

When Allied Signal took over the Textron Lycoming plant in Bridgeport, Conn., Robert Zaleski had more than eight years in as a toolmaker and was making $22.60 an hour plus benefits. Then his work and that of 3,000 other workers moved to Phoenix, where wages and benefits are significantly lower. "It kind of collapsed the economy in the area," he says. "It was difficult to get a good-paying job. I used up all my savings to keep a roof over my head."

After bouncing between a number of lower-paying jobs, Zaleski was hired in 1998 by Gold Peak Lithium Batteries in Waterbury at pay and benefits nearly as good as at Textron. But in October, he lost that job, too, when production was moved to Singapore, Hong Kong and Taiwan. Now he faces working two or more part-time jobs to make ends meet.

Like Zaleski, tens of thousands of workers are laid off each year and--if the companies remain in the United States--face part-time, temporary or contingent work--for less pay and skimpier benefits.

While the economy is in its longest postwar recovery, not everyone is sharing in the prosperity.

  • CEO pay skyrockets at almost double the rate of profits, far outstripping real earnings for workers, which in turn barely keep pace with inflation.
  • Productivity far outpaces real compensation--by about double the rate, according to an Economic Policy Institute analysis.
  • Corporations save billions through tax breaks--about $1.7 trillion over seven years, says Citizens for Tax Justice--while working families make up the difference.
  • As health care quality and choice decrease, health care costs go up, with the average premium paid by workers increasing 146 percent between 1988 and 1996.
  • Public schools scramble for funds to pay for repairs, supplies and teachers, even as risky experiments in privatized education drain public coffers and offer little educational return.
  • Legislators, backed by some business interests, want to take the security out of Social Security as more private retirement plans no longer guarantee benefits.

Whether the issue is job security, pay, taxes, health care, education or retirement, a pattern has emerged throughout corporate America: Employers are finding new ways to shift financial risks to workers. While it's the business of business to make money, corporations are changing the rules to maximize profits at the expense of workers. Much of the corporate agenda is marked by big tax cuts for corporations and the wealthy, paid for by steep Medicare and Social Security cuts; privatization of the public sector; trade agreements that sell out workers; "right-to-work" laws; attempts to politically silence workers by funding anti-union legislative drives and the elimination of overtime pay, the 40-hour work week and health and safety protections.

The result? Workers and our communities get trampled in the name of enhancing the return on capital. Corporations seek to enrich their top executives and (sometimes) their shareholders--and everybody else falls through the cracks.

Ironically, business suffers as well. To achieve high profits and the short-term approval of shareholders, today's managers sacrifice the long-term financial health of their companies and the people they employ. Preoccupied with the short-term business cycle, corporations are adept at producing wealth for their officers and for the speculators who provide them with capital. Over time, companies are weakened by an absence of long-term planning and investments--and working Americans are denied their share of the wealth they help create.

In many instances, corporations are further undermining workers by channeling huge contributions to politicians who will support anti-worker laws such as so-called right-to-work measures. Too many lawmakers have come to depend upon money, not the citizens they represent, to make laws.

Work and Wages

Corporations have downsized, re-engineered and laid off hundreds of thousands of workers, yet the work still gets done--often by the same employees, who get hired back as part-time or temporary workers with diminished salaries and minimal or no benefits. Management shifts job insecurity and financial risks--all to boost the bottom line. Data from Fortune magazine indicate that while profits at the nation's 1,000 largest corporations jumped 30.7 percent from 1994 to 1996, employment there rose an anemic 2.3 percent. To do the work, corporations increasingly rely on contingent workers recruited for less pay after they've downsized their own stable full-time workforces. The result: 27 percent of today's workers are nonstandard. America's largest employer is the temporary agency Manpower Inc. with more than half a million workers.

Breadwinners are also working more for stagnant pay. The annual hours worked by a typical married-couple family with children jumped from 3,236 hours in 1979 to 3,604 in 1989--and then to 3,851 in 1996, according to the Economic Policy Institute. "American families today need two people working just to maintain for our children the same standards our parents did for their children," says Ronda Wilson, a member of Communications Workers Local 1089 and a social services caseworker in Bergen County, N.J., who routinely sees families struggling to get by.

Wall Street frequently rewards corporate downsizing with higher stock prices, which increases the value of executive compensation packages and encourages further cuts--a key reason why downsizing occurs even when companies are making money hand over fist. For example, despite record profits for four consecutive years, Caterpillar Inc. outsourced much of its work--and now hires new workers at 70 percent of current workers' salaries.

Workers now benefit from a modest increase in real earnings. Yet last November's average hourly wage of $12.93, after adjusting for inflation, was still 9 percent less than it was in 1973. In 1965, the average chief executive made 44 times a typical factory worker's pay. Today, Business Week reports that same CEO makes 326 times the average factory worker's pay.


While taxes are essential to finance government programs that help everyone, workers suffer when they pay more than their fair share. In recent years, corporations have received huge tax breaks--and workers are making up the difference. While taxes on capital gains, like run-ups in stock and real estate values, were cut in 1997, workers in 1998 were paying 11.4 percent more in personal income taxes than in 1997, according to revenue projections by the Congressional Budget Office. That far outpaced the 4.4 percent rise in corporate income taxes in the same period.

In addition to working longer and harder to maintain income, Deanna Mobelini, a hospital medical records clerk and member of Steelworkers Local 14637 in Hazard, Ky., has lost tax deductions, such as interest on personal loans and credit card debt, that helped her make ends meet. Unlike corporations, Mobelini doesn't get tax breaks on depreciation, capital gains and mergers and acquisitions. "Union members don't mind paying taxes. They just think corporations should pay their share," Mobelini says.

The General Accounting Office found in 1993 that 1,555 U.S.-controlled corporations with assets of at least $250 million--33.4 percent of the total--paid nothing in federal income taxes, despite sales averaging $220 million a year.

Health Care

While the number of uninsured continues to grow, workers who have health coverage increasingly face a new risk: Employers are shifting health insurance costs to employees by lowering benefits and requiring workers to pay higher premiums and co-payments.

Under managed care, the incentive for hospitals and HMOs is to maximize profits--which encourages them to push patients out the door early and limit types of treatment and medication. The result is that financial risk is shifted away from insurance companies--which are supposed to be in the business of protecting against risk--onto providers and , most important, patients.

"We don't have a choice of who our doctors are anymore," Mobelini says. "They've taken away our freedom."

And that's if you have insurance. The average annual worker contribution for employee-only coverage was $453 in 1996, according to a report by the Lewin Group. Depending on inflation and changes to the employer's share, that figure is estimated to reach between $955 and $1,047 in 2002. In 1996, 8 million fewer Americans had employer-based coverage than in 1989, primarily due to cost-shifting, according to an AFL-CIO study. Skyrocketing employee costs mean that many covered workers can't afford dependent care coverage for their families, further shredding their economic security.


Public schooling rests on the notion that we all have a stake in educating the next generation. Through our support of public schools, all of us bear the risk that some families may be less able to contribute toward the costs of educating their children.

Here, too, private corporations squeeze money from the system and shift the risk to individual families and children. In many communities, private education companies offer beleaguered school systems the promise of big savings and quality teaching. But instead of cutting costs, some privatizers have been cutting corners instead.

"Their high-pressure sales tactics are slick, and they have the knack for wining and dining school officials to make the sale," says James Melander, a high school teacher in Duluth, Minn. "But in the end, their product frequently isn't all that it's cracked up to be."

When the Wilkinsburg, Pa. school district invited Alternative Public Schools Inc. to assume teaching and administrative responsibilities at Turner Elementary School, management demanded that 24 teachers be furloughed--and then hired less-experienced replacements, including several who were not licensed to teach, according to AFT. Math and reading scores fell in the first year amid charges by parents of academic and disciplinary problems.

Solving the nation's education dilemma with tempting shortcuts too often results in poorly preparing our children for their future. Privatization efforts jeopardize the resources school systems need to prepare students for the modern workplace. Current and future workers--not the private corporations peddling too-good-to-be-true solutions--assume the risk.

"We need to fix public schools the right way: by insisting on high academic standards, smaller classes and safe, clean schools and a highly qualified teaching staff," Melander says.


Retirement is sometimes described as a stool that rests on three legs: private pensions, Social Security and personal savings. Corporations already have shifted the risks of pensions to workers. Now they're sharpening their saws for Social Security--and the cost of changing to a private system would require slashing guaranteed benefits and raising the retirement age to 70 years or older.

Traditionally, the most common form of private pension has been the defined-benefit plan, in which the employer shoulders the investment risk and makes a regular fixed payment, usually based on length of service, age and pay at retirement. But enrollment by full-time workers in these plans is dropping--30 percent between 1983 and 1993. The growth of defined-contribution plans, in which workers have to make strategic decisions about investing but have no guaranteed payout, increasingly shifts the risk of financial loss to workers. The less income workers earn, the more likely their immediate need for money will force them to cash out or borrow against their retirement future. That means workers with the fewest resources may end up with little or no pensions.

"I think it's a sad thing to have a government that won't take care of its elderly," Wilson says.

For more than 60 years, Social Security has provided a guaranteed safety net for retirees with small or no pensions, as well as for millions of disabled workers and survivors of workers who die. Yet a significant segment of Wall Street stands to gain huge profits by transforming Social Security into a privatized worker-contribution plan. Not only would workers' retirement depend on the ups and downs of the stock market, administrative fees could eat up as much as 20 percent of their nest eggs.

Traditionally, Social Security has been the strongest leg of the retirement stool. By shifting the Social Security risk to workers, the corporate agenda would cut off the most dependable retirement support for workers.

The Union Solution

Individually, workers have power to counter the muscle and resources that corporations can muster. Together, however, workers have the power to bring about real and lasting change. Through unions, workers created and won the Social Security system. The AFL-CIO worked hard on the state and federal levels for the protections that Social Security provides.

Strong unions benefit workers because they are effective in resisting attempts to boost profits at the expense of those who create them. Union workers earn more--34 percent more in 1997--than our nonunion counterparts, and we are more likely to get benefits. Highly organized industries, such as auto manufacturing and steel, mean strong union leverage at the collective bargaining table.

Unions use their investment resources to encourage corporations to become better citizens, neighbors and employers. For instance, through the efforts of the AFL-CIO and other groups, the Securities and Exchange Commission last May adopted rules that make it easier for shareholders to force consideration of proposals management would prefer to avoid, in such areas as job discrimination.

While Big Business has the big bucks, "our strength is in our people," says Mobelini, who helps inform her fellow unionists about working family issues through USWA's Rapid Response program. In the 1998 elections, corporate interests spent more than half a billion dollars on political contributions to candidates--12 times what unions spent. As union members proved in California by defeating a well-financed initiative to silence workers' voices and demonstrated again in Labor '98, unions provide collective strength that individuals cannot achieve. Together, we can elect worker-friendly politicians who work for working families.

Corporate Welfare

There's been a lot of attention to welfare reform in recent years--but the biggest welfare recipients have been overlooked.

With tax breaks and workfare subsidies, corporations and the executives that command them are the real welfare abusers.

  • Corporate welfare in 1995 alone came to more than $167 billion worth of government giveaways, such as tax breaks for mergers, capital gains, accelerated depreciation, tax-free bonds, business meals and entertainment and breaks from multinationals, insurance and financial institutions, according to the Corporate Welfare Project. The federal government directly subsidizes many industries and institutions to help promote the sale of American products. Citizens for Tax Justice expects "tax expenditures" for business and investment between 1995 and 1999 to reach $336.4 billion.
  • At the local level, government giveaways to lure businesses away from other areas or to spark investment can wind up robbing communities of needed revenues. In Youngstown, Ohio, for example, millions of dollars in tax breaks and a big land giveaway backfired when Corrections Corporation of America stopped paying taxes and sold the taxpayer-provided property to its own real estate investment trust, reaping $70 million in the process.
  • Corporate income taxes have dropped from more than 27 cents of every federal revenue dollar in 1957 to 12 cents today, according to the Office of Management and Budget.
  • CEO pay among 365 major U.S. companies jumped 35 percent in 1997, while profits rose only 5 percent, says Business Week.

"A Congress that is eager to challenge low-income welfare entitlements ought to be at least as tough--if not tougher--on welfare entitlements for the well-heeled and politically powerful ... to bring the budget deficit under control," says CTJ Director Robert McIntyre.

The Nike Economy

Corporations need to stay competitive in the new global economy. But that doesn't mean putting American workers in an unfair race with the lowest-paid, most impoverished workers in the world.

Multinationals are often based in the United States, but they respect no flag and are loyal to no one but their officers and shareholders. Case in point; Nike has been a corporate poster child for tolerating below-subsistence wages and dangerous working conditions for the 500,000 laborers at its contracted production facilities overseas--while selling its prestigious sports and consumer products at top dollar. Chiquita Brands, An American company, has crushed labor unions at company-owned farms in Latin America and formed local front companies to further limit union activities.

That kind of "flexibility" may enhance corporate balance sheets. But it ignores the higher domestic unemployment and lower standard of living that can result while stripping workers, here and abroad, of the bargaining power they need to counterbalance multinational behemoths.

To fight this global corporate agenda, Americans must demand that trade agreements insist on basic worker rights. All workers everywhere--no matter how poor their country--should enjoy:

  • The right to associate freely.
  • The right to form unions and bargain collectively.
  • The end of all forms of coerced, unfree labor--including child labor.
  • The end of discrimination in the workplace.
  • Acceptable conditions with respect to minimum wages, hours of work and occupational health and safety.

By penalizing countries that try to sell to us while polluting the air and water of workers within their own borders, we should demand that global corporations respect the environment.

As Chrysler workers are finding in Germany and Sprint workers are finding in Mexico, international labor solidarity can protect workers on both sides of a trading relationship.

Reprinted from America@Work - January 1999 by David Kameras.

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