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CEO Pay in the New Gilded Age

[ 66 ] June 24, 2016 |

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Where are the pitchforks?

Growth in median compensation may have slowed lately, or even fallen for some of the highest-paid chief executives. But this is little recompense for workers who have seen their wages stagnate or fall for decades.

Last year, the average chief executive of an S&P 500 company was paid 335 times more than the average nonsupervisory worker, according to the AFL-CIO’s useful interactive site, Executive Paywatch.

This stunning disparity has been the norm since the 1990s, but it wasn’t always this way. In 1965, the average CEO made 20 times the pay of the average worker; it was around 34-to-1 in 1980. By 1998, it was nearly 322-to-1.

What to do about it is fairly obvious. Tax the living heck out of them:

One measure would be returning to the progressive taxation system that operated from the 1940s until 1981, with a top marginal rate of, say, 70 percent as opposed to today’s 39.6 percent.

Another is to eliminate the tax-option loophole, which helps subsidize high compensation. (It allows companies to deduct the market value of the options, even though they are not a real expense, thus lowering their taxes. This arguably encourages companies to grant even more options in big comp packages.) According to a report from Citizens for Tax Justice, 315 big companies have used this to avoid $64.6 billion in taxes over the past five years.

Corporate tax rates could be set higher for firms with high CEO-to-worker pay differentials. Say-on-pay could be made mandatory rather than advisory. Public companies could be required to separate the chairman and chief-executive jobs. And unionization could be made easier, giving workers greater bargaining power.

Unionization certainly does need to be made easier, although I’m not sure that it would really make a difference unless unions start bargaining over peak executive pay. I’d love that, but it seems that tax, tax, tax is the answer, in a variety of ways. Time to reclaim that money for the public good.

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Hidden Sexism

[ 99 ] June 24, 2016 |

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Will hidden sexism hurt Hillary Clinton this fall? Quite possibly, although I’d like to see more than yet another story on Real American Voters, i.e., working-class white men from the Rust Belt, to suggest it may be so.

Ralph Stanley, RIP

[ 32 ] June 24, 2016 |

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The great Ralph Stanley died last night at the age of 89. Stanley was the last major living figure of the early bluegrass era. He began recording with his brother Carter in 1947. They never had major financial success–really only Bill Monroe and Flatt & Scruggs did. They were a great band, pretty squarely within the emerging bluegrass tradition. But when Carter died in 1966, Ralph took his music back in time a bit. He always thought of himself as an old-time singer and banjo player, not a bluegrass musician. And that’s accurate. Bluegrass quickly developed into something pretty slick, with fancy instrumentals and a certain sense of virtuosity. Monroe developed the music by taking old-time and combining it with jazz, pop, and country music. While Stanley never completely rejected that, he emphasized the old-time Appalachian music much more. This led to some really outstanding music in the years after Carter’s death. I want to point out a few starting points for Dr. Ralph’s (he received an honorary Ph.D. from Lincoln Memorial University in Harrogate, Tennessee) discography. His 1969 album, Hills of Home, is an outstanding entrypoint. While I don’t care about the subject matter, the 1972 gospel album, Cry from the Cross, is probably the best bluegrass gospel album ever recorded. During these years, he mentored a number of young Appalachian singers, including Roy Lee Centers, Keith Whitley, and Ricky Skaggs. The last two of course became stars after switching to country music while Centers was pointlessly murdered. My collection of Stanley is this 2-CD set from these years, including live performances from all three. Really amazing stuff.

I saw Ralph Stanley perform twice. The first was in about 1998 at the Tennessee Theater in Knoxville. By this point, he was signing with his son, Ralph II. His son doesn’t have a good bluegrass lead voice. Good enough for country music, but not good enough for that style. So it wasn’t like seeing him in the 1970s, but was a ton of fun nonetheless, especially in front of a crowd that cared deeply about that style of music. I saw him again in about 2002 in Albuquerque. By this time, his late-career revival thanks to O Brother Where Art Thou had kicked in. He played to a packed house, played “Man of Constant Sorrow” like 3 times, and during the set break, shook every hand and sold every piece of merchandise he could. An old man now, he was going to cash in while he could. And who could blame him, given his long struggle to be financially successful, even if this meant the set break was a full hour.

Rest in Peace, Ralph. You were a true giant of American music. A few sample cuts:

And since this is a political blog, let’s not forget his endorsement of Barack Obama in 2008.

Trump & Cohn

[ 32 ] June 23, 2016 |

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A match truly made in Hell.

Donald Trump was a brash scion of a real estate empire, a young developer anxious to leave his mark on New York. Roy Cohn was a legendary New York fixer, a ruthless lawyer in the hunt for new clients.

They came together by chance one night at Le Club, a hangout for Manhattan’s rich and famous. Trump introduced himself to Cohn, who was sitting at a nearby table, and sought advice: How should he and his father respond to Justice Department allegations that their company had systematically discriminated against black people seeking housing?

“My view is tell them to go to hell,” Cohn said, “and fight the thing in court.”

It was October 1973 and the start of one of the most influential relationships of Trump’s career. Cohn soon represented Trump in legal battles, counseled him about his marriage and introduced Trump to New York power brokers, money men and socialites.

Cohn also showed Trump how to exploit power and instill fear through a simple formula: attack, counterattack and never apologize.

Since he announced his run for the White House a year ago, Trump has used such tactics more aggressively than any other candidate in recent memory, demeaning opponents, insulting minorities and women, and whipping up anger among his supporters.

Cohn gained notoriety in the 1950s as Sen. Joseph McCarthy’s chief counsel and the brains behind his hunt for communist infiltrators. By the 1970s, Cohn maintained a powerful network in New York City, using his connections in the courts and City Hall to reward friends and punish those who crossed him.

He routinely pulled strings in government for clients, funneled cash to politicians and cultivated relationships with influential figures, including FBI Director J. Edgar Hoover, mafia boss Anthony “Fat Tony” Salerno and a succession of city leaders.

In the 1990s, a tragic character based on Cohn had a central place in Tony Kushner’s Pulitzer prize-winning play, “Angels in America: A Gay Fantasia on National Themes.”

Trump prized Cohn’s reputation for aggression. According to a New York Times profile a quarter-century ago, when frustrated by an adversary, Trump would pull out a photograph of Cohn and ask, “Would you rather deal with him?” Trump remained friends with him even after the lawyer was disbarred in New York for ethical lapses. Cohn died in 1986.

All the Record Heat

[ 65 ] June 23, 2016 |

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In case you want to feel depressed, you can follow the monthly updates at Gizmodo as the Earth keeps breaking its all-time heat records. This will end well.

See also.

Non-Compete Clauses

[ 96 ] June 23, 2016 |

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It’s completely ridiculous that it took the New York attorney general’s office to force this to happen, but Jimmy John’s is finally ending its practice of making its employees sign non-compete clauses so they can’t take the valuable skills they learned and get a job at Subway.

The Illinois-based sandwich chain has agreed to stop including noncompete agreements in its hiring documents, a practice that was deemed “unlawful” by the New York attorney general’s office.

The announcement follows an investigation by that office into Jimmy John’s use of noncompete agreements with franchisees in New York, which began in December 2014. The agreements had barred departing employees from taking jobs with competitors of Jimmy John’s for two years after leaving the company and from working within two miles of a Jimmy John’s store that made more than 10 percent of its revenue from sandwiches.

“Noncompete agreements for low-wage workers are unconscionable,” Eric Schneiderman, New York’s attorney general, said in a statement. “They limit mobility and opportunity for vulnerable workers and bully them into staying with the threat of being sued. Companies should stop using these agreements for minimum wage employees.”

It seems that this agreement only covers its New York stores, although Illinois is going after it now, so maybe that will finally stop the practice entirely.

FARC Ceasefire

[ 22 ] June 22, 2016 |

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Great news out of Colombia, where the government and the FARC have finally come to an agreement to call a cease fire in the 50-year civil war, a cease fire that probably means the end of the conflict as FARC members are laying down their guns.

This Day in Labor History: June 22, 1896

[ 11 ] June 22, 2016 |

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On June 22, 1896, mine owners in Leadville, Colorado agreed to lock out their unionized miners, presenting a united front against unionism. This action would spur one of the largest battles between unions and employers in the 1890s, one that typically would be ended by the Colorado militia’s use as a private army of the employers.

Silver was discovered in Leadville in the 1870s, eventually making it one of the nation’s leading mining towns. In its first years, Leadville mines were generally unconsolidated, owned by the people who staked the claim. This did not change until the early 1890s, when capitalists began investing in the silver mines. Taking control of the city, the culture of mining in Leadville changed almost overnight. The Panic of 1893, the worst economic depression in the nation’s history to that time, shook the silver industry. Prices plummeted. Mine owners slashed wages from $3 a day to $2.50. By 1896, about one-third of the miners were still only earning that reduced rate. Those were poverty wages for a very dangerous job.

Miners organized with the Western Federation of Miners. The WFM, formed out of the bitter 1892 Coeur d’Alene strike, sought the industrial organization of hard rock miners. Local 33, also known as Cloud City Miners Union, formed in Leadville. From its formation in 1893, the WFM had demanded the 8-hour day. Yet in Leadville, many miners were working 12-hour days. The CCMU, as its first demand, wanted the restoration of the $3 day for all miners at a time when the mine owners were building luxury homes for themselves, even if the economy had not fully recovered by 1896. They presented this demand to the mine owners on May 26, 1896. All the owners rejected the demand. On June 19, the WFM tried again. Again, the owners rejected it. That night, the union decided that all workers making $2.50 should strike. Several mines shut down the next day when their workforce walked off the job.

The mine owners responded by seeking to crush the WFM in Leadville entirely. On June 22, it responded to the strike by locking out all miners. The owners quickly imported strikebreakers to run their mines. They also hired Pinkertons and Thiel agents to infiltrate the union and spy on the strikers. Both sides refused to compromise with the other. The union was unaware of how closely the mine owners were working together and believed if they could just get one to cave, the others would follow. One minority owner of a mine did cave and reopened with a higher wage. When his partners took him to court, the court ruled it had to pay the $3 wage. So when the state deputy labor commissioner offered to arbitrate the case, the union refused, thinking victory was right around the corner. The WFM’s aggressive action disturbed the American Federation of Labor. The AFL did not call other unions out in support, which often happened in strikes of this time, even if the supportive unions might settle themselves for small raises. The Leadville WFM local was largely on its own, although other WFM locals did contribute financial help.

On August 13, the owners tried to cut a deal, saying they would raise the wage to $3 when the price of silver rose to 75 cents an ounce. It was not at that time 75 cents. But given that the majority of the striking miners were making the $3 wage already, there was some effort to end the strike. However, the WFM leadership wanted to hold out for victory. Before you think such demands were unrealistic or that the union should have compromised, understand that in 1894, the WFM had won probably the single greatest union victory of the decade in the Cripple Creek strike. Believing the union’s credibility was at stake and hoping to organize throughout the West, another victory at Leadville would have really solidified the union’s position and power.

Some of the mines began to build fortifications around them, preparing to reopen and crush the strike with force if necessary. This led the WFM to take the offensive. On September 21, fifty armed miners attacked the Coronado and Emmett mines. They set the Coronado mine on fire by dropping dynamite into it, causing $50,000 worth of damage. A gun battle ensued with the twenty armed strikebreakers at the mines. Four union members were killed. In response, Colorado governor Albert McIntire, who had previously refused mine owners’ requests to use the state militia as a private police force, promptly changed his mind. The mines reopened under military guard. Eugene Debs came to Leadville to try and negotiate a solution, but could not. Low-level violence continued through the winter. Strikebreakers surrounded one striker outside his house and murdered him while a policeman shot another. Given that the Leadville police chief hated the strikers, it’s surprising there were not more deaths. The WFM caved on March 9, 1897 after half the workers had already given up and returned to work. Those workers not on the blacklist went back under the old wage system.

The Leadville experience left the WFM deeply bitter. The union disaffiliated with the AFL after the federation refused to support it. The Leadville strike’s failure contributed significantly to that union’s radical phase that included its central role in forming the Industrial Workers of the World in 1905, with WFM leader Big Bill Haywood eventually leading the new union. And while the WFM largely withdrew from the IWW after 1908 as more moderate leadership took over in the miners’ union, it retained it’s radical edge. The WFM eventually turned into the International Union of Mine, Mill, and Smelter Workers in 1916. More popularly known as Mine, Mill, it retained its radical edge and was one of the unions evicted from the CIO for its communist leadership in the late 1940s. It also led the famous Salt of the Earth strike in southern New Mexico.

Today, Leadville is one of the most fascinating and kind of scary places in the nation, with the mining legacy all over the landscape and the culture.

This is the 181st post in this series. Previous posts are archived here.

Western Water

[ 69 ] June 21, 2016 |

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I know the law job market is horrible, but I always felt that going into water law in the West was a pretty much limitless market, given the brutal battles between states and between the U.S. and Mexico, over scarce water supplies in a vastly overdeveloped region. With the rapid growth of Phoenix, Las Vegas, Denver, Albuquerque, and of course southern California, on top of preexisting agricultural commitment and of course that little problem called climate change, the future of the Southwest is very much in doubt. The more we can know about water, the better we can manage it responsibly. Or just keep on keeping on but know why we are destroying everything. Whatever. Anyway, this is interesting:

Scientists have known for a long time that flow in rivers is sustained by contributions from both snowmelt runoff and groundwater. The groundwater is composed of rivulets of water hidden below ground —some thousands of years old — that are particularly important for sustaining a river’s flow after the spring snowmelt has subsided. Less clear, however, was exactly how much of the flow in rivers came from groundwater, a critical source of much of the West’s water supply. Now, a new study, released last month by the U.S. Geological Survey (USGS), helps quantify just how much: more than half the flow of rivers in the upper part of the Colorado River Basin is sustained by groundwater. That finding, say experts, highlights the need to better protect a resource threatened by overuse and climate change.

“Because we now have numbers on this connection, we have a better understanding of the importance of groundwater as a contributor to our surface water supply, and anything impacting the groundwater system will also impact flow in rivers.” says Matthew Miller, a USGS scientist and the lead author of the study.

Managing groundwater more sustainably has become a much greater emphasis of western water managers in recent years, with some level of success in not depleting it. But the law around these issues in byzantine with lots and lots of stakeholders all aggressively pushing their claims.

Lieberman

[ 167 ] June 21, 2016 |

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Do you care what Joe Lieberman thinks about the 2016 elections? No, of course not. But since he was interviewed about it and refused to endorse either Trump or Clinton, go ahead and make fun of him anyway.

Stein’s History

[ 14 ] June 21, 2016 |

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Judith Stein is one of the finest historians working today. Her book, Pivotal Decade, is a superb discussion of the 1970s and the economic shift away from manufacturing to financialization. Critical work. You should read it.

Stein has a long interview with Jacobin that is also worth your time. I don’t agree with her on every point–she does underplay the central role of racism in southern politics to make the case that there were alternatives for the region, both during the Populist years and after the civil rights movement. And some of the questions are a bit eyerolling as they make cheap attempts to connect the “Democratic Party elites” of the 1890s killing Populists in the South and “Democratic Party elites” today, as if they were remotely the same people. But as a whole, this is good stuff. One excerpt:

First of all, both the labor movement and the Civil Rights Movement were diverse. But I can make some generalizations. Let’s start with the AFL-CIO and its leader, George Meany.

Unlike Walter Reuther of the United Auto Workers, Meany did not support the March on Washington in 1963. Nevertheless, he was the muscle behind the passage of the Civil Rights Act of 1964, including the very important Title 7, banning employment discrimination.

The Civil Rights Movement, and blacks in general, did not have much weight in Congress, so labor played a crucial role in getting legislation passed. And where labor was weak, the churches stepped in.

One of the reasons that Meany was so insistent on Title 7 was that the law had evolved so that unions, but not employers, were liable for employment discrimination. Making employment discrimination illegal would place the blame on employers, whom labor leaders believed were the cause of discrimination.

In addition, it wasn’t just Reuther who gave money to Martin Luther King Jr. In 1963, the United Steelworkers in Birmingham gave $40,000 so that jailed demonstrators could be released. Claude Ramsay, head of the Mississippi AFL-CIO, worked very closely with Medgar Evers, the main civil rights leader in the state.

Having said that, it is also true that the hurricane of racism that enveloped the South in the late 1950s and early 1960s included many unionized white workers. This period halted some of the postwar progress that had been made and replaced the populists, who stressed economic issues, with the racists in state and local government.

Nonetheless, most union leaders in the South tried the best they could to promote black rights because they saw black voting as crucial to union success, as well as to their own liberalism.

There is no doubt that there were conflicts, generally over methods and the speed of black advancement. The conflicts escalated when the number of jobs was falling.

And some unions were better than others. The craft unions were less willing to change than the CIO industrial unions, which especially in the North had eliminated many of the discriminations of the pre-union era.

Even so, the unionized construction companies [strongholds of craft unionism] had better records on training blacks for skilled work than the nonunionized companies.

Superdelegates and Open Primaries

[ 121 ] June 21, 2016 |

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Bernie Sanders and the Congressional Black Caucus are at odds over the former’s demands for changes in the primary process.

In a letter sent to both the Sanders and Hillary Clinton campaigns, the CBC is expressing its resolute opposition to two key reforms demanded by Sanders in the run-up to the Democratic convention: abolishing the party’s superdelegate system and opening Democratic primaries up to independents and Republicans.

“The Democratic Members of the Congressional Black Caucus recently voted unanimously to oppose any suggestion or idea to eliminate the category of Unpledged Delegate to the Democratic National Convention (aka Super Delegates) and the creation of uniform open primaries in all states,” says the letter, which was obtained by POLITICO. “The Democratic Party benefits from the current system of unpledged delegates to the National Convention by virtue of rules that allow members of the House and Senate to be seated as a delegate without the burdensome necessity of competing against constituents for the honor of representing the state during the nominating process.”

Each side is right about one issue. Sanders is right that the superdelegates need to go. They serve no useful purpose and feed into conspiracy theories. Some look at the Republican nomination this year and say “this is what superdelegates can prevent.” But if superdelegates prevented any winner of a democratic process from being the nominee, total chaos would take place. They serve no real purpose other than giving party elites a slightly more than ceremonial vote in reality, but that’s not enough to keep them given the controversies over them this year.

On the other hand, I believe Democrats should pick the Democratic nominee. I’m fine with same day registration for voting. But declared Democrats should pick the Democratic nominee. If you don’t want to soil your leftist purity by registering as a Democrat, that’s a choice you make.

The caucuses should also be eliminated in favor of primaries in every state, but that’s not at play in this current conflict.

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