On April 24, 2019, Cory Booker writes on The Guardian:
Every day Carol Ruiz wakes up at 3.30am and goes to an airline catering service at Newark airport, where she helps prepare the food carts that flight attendants push up and down the aisle. She organizes the napkins, creamers, sugar and cups that go on the beverage cart, cleans the glasses and silverware, and diligently tracks the champagne that goes on the carts for first class passengers. At the end of her 40-hour week she takes home $345. The average airline CEO makes that amount in about 20 minutes.Last year, while Carol was undergoing treatment for cancer, her kids and husband went without health insurance so the family could afford her medical bills.“I don’t wanna be rich,” Carol said, “but I wanna be able to take my family out to dinner at a decent restaurant every once in a while and not worry that the money I’m spending means I won’t be able to afford one of my bills.”Carol’s experience is all too familiar for workers in today’s economy and a direct result of structural shifts in power that have fundamentally reshaped the relationship between workers and employers. Workers are increasingly stuck in an “I win, you lose” economy, a zero-sum game in which those in power relentlessly pull out the rungs of the ladder behind them, ensuring that opportunity is limited solely to those who already have it.While corporate profits are at 80-plus year highs, and the S&P 500 has broken previous records nearly 30 times in the last five years alone, real wages for the lowest-income workers have barely risen in four decades. And today,nearly half of all workers make less than $15 per hour – roughly $30,000 annually for a full-time job.
The very nature of the employer-employee relationship has changed to maximize value for one at the expense of the other. Years ago, the person who cleaned your office or fixed your computer was an employee of the same company – participating in workplace benefits and theoretically able to rise in the ranks.
No longer.
Today, companies – like the airlines that Carol provides catering services for – contract out much of their workforce, setting off a race to the bottom as a constellation of intermediaries compete for the lowest bid. A recent study estimated that non-traditional work arrangements like temp agencies, contract workers and freelancers comprised virtually all of the net job growth between 2005 and 2015.
n the airline industry alone, the share of workers employed by contractors and subcontractors nearly doubled between 1991 and 2015. Outsourced workers earn much less than their non-contracted peers – 15% less for contracted janitors, for example, compared with those working in-house, and 17% less for contracted security guards relative to comparable direct-hire guards. Even worse, these workers have virtually no opportunity to maximize their value and ascend the corporate ladder; like spectators, they are confined to the sidelines, viewing their employers’ success from afar.
Troubling trends in corporate decision-making further underscore this power imbalance. A culture of short-termism pervades corporate boardrooms and C-suites, as companies increasingly fixate on delivering immediate value for shareholders at the expense of longer-term investments in wages and training for workers. A 2016 report by FCLT Global found that 87% of executives and directors are pressured to deliver a strong financial performance within less than two years. An earlier study by McKinsey found that nearly 80% of surveyed chief financial officers at America’s largest public companies said that they would sacrifice longer-term economic value in order to meet quarterly earnings expectations.
Illustrative of this trend is the massive wave of stock buy-backs, in which companies, desperate to please shareholders, purchase their own shares in order to reduce supply in the market and drive up their prices. Before 1982, buy-backs were generally considered to be a form of market manipulation, but in the decades since, as a result of a change in federal policy, they have become a staple of corporate decision-making. According to the economist William Lazonick, between 2007 and 2016 companies on the S&P 500 dedicated 96% of their earnings to stock buy-backs and corporate dividends. That left just 4% for investments in the workforce, like raises for workers.
And, in the wake of the Trump tax bill of 2017, a nearly $2tn giveaway to the largest corporations and wealthiest households, buy-backs surged to record heights, with over $1tn in share repurchases in the last year alone.Meanwhile, workers like Carol can expect no such boost in their wages.
Firms further exercise their power by embracing anticompetitive practices that keep workers stuck and wages down. Take the proliferation of non-compete agreements, covenants between employer and employee that restrict where the employee can work next. Historically, these agreements have been limited to workers with highly specialized training or possessing trade secrets; today one in seven workers earning less than $40,000 a year reports having signed one – including, until recently, sandwich-makers at Jimmy Johns and line cooks at Burger King. Employers do it because they can. A recent report found that of all workers asked to sign a non-compete clause, two-thirds reported doing so because they had no other job offers.
We must address these ways in which corporations hoard power and extract value from workers, without letting those workers share in the massive wealth they help create. There’s no silver bullet, but we can start by making it easier to join a union, giving workers the ability to fight corporate power with power of their own. Second, we must reinvigorate our tepid antitrust agencies, which have long-served corporate interests at the expense of workers. We should also restrict anticompetitive practices like non-compete agreements and “no-poach” clauses and maintain strong rules that hold parent companies more accountable for outsourced employees. And we should crack down on the proliferation of corporate stock buy-backs, or, at the very least ensure that if a corporation buys back stock to increase shareholder value, workers are cut in on the action.
There is no reason that a country as rich and as powerful as ours should have to choose between great wealth for the few, like airline CEOs, and great opportunity for all of its citizens, like Carol. Our economy works best when no one is left on the sidelines, and when American workers are able to fully participate in the economy they help drive. With these commonsense reforms, we can begin to restore this promise of the American economy.
Gary Reber Comments:
While Senator Cory Booker recognizes that workers help drive the economy, what he and others who are presidential candidates fail to recognize is that earning vis-à-vis as an owner of the non-human means of production is how people become affluent — not through a job (except for those individuals in the highest-paid positions in society such as CEOs of Fortune 500 corporations, sports figures, boxoffice-draw actors, media anchors, to name a few positions who are paid in the multi-millions of dollars).
The solutions necessary to significantly reduce economic inequality all must be measured in terms of how many people are made productive or more productive through owning wealth-creating, income-producing capital assets employed in the building of a future economy that can support general affluence for EVERY citizen.
Senator Booker and the other presidential candidates fail to even raise this as a core issue, yet who owns the corporations growing the economy, both established and viable start-ups, determines who is affluent and who controls our society.
Senator Booker suggests the following solutions in his article, which deserve comment:
1.. Making it easier for people to join a union.
The only union that can help to achieve affluence for its worker-representatives is a producer’s ownership union. Unions should play the part that they have always aspired to — that is, a better and easier life through participation in the nation’s economic growth and progress, while at the same time broaden their functions, revitalize their constituency, and reverse their decline.
Unions must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods, products, and services are produced by (non-human) capital input, then 90 percent of the earnings of working people must flow to them as dividends due them as “capital workers” (owners) and the remainder as wages due them as labor workers. If there are in reality two ways for people to participate in production and earn income, then tomorrow’s producers’ union must take cognizance of both. The question is only whether the labor union movement will help lead a “Own The Future” movement or, refusing to learn, to change, and to innovate, become irrelevant.
The unions should reassess their role of bargaining for more and more income for the same work or less and less work as “automation” in all its forms replaces the necessity for masses of workers, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today — wages, hours, and working conditions — and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.
The union movement should also expand beyond representing corporate employees and represent capital ownership empowerment for all propertyless citizens.
2. Reinvigorate our tepid antitrust agencies, which have long-served corporate interests at the expense of workers.
Yes, we need to break up monopolies for competition sake. Today’s conglomerations enable the wealthy capital asset ownership class to hoard more ownership and monopolize the economy.
3. Restrict anticompetitive practices like non-compete agreements and “no-poach” clauses.
No disagreement with this part of the greater solutions necessary to reform the system. All government contracts must be competitively bid and most importantly, any corporation submitting a contract bid must be fully, 100 percent employee-owned. Nothing needs to be invented here; we already have laws that favor employee-owned corporations, such as those that structure themselves using an Employee Stock Ownership Plan (ESOP).
Corporate tax attorney, investment banker, author and binary economist Louis O. Kelso was the architect and pioneer of the ESOP, which Kelso invented to enable working people without savings to buy stock in their employer company and pay for it solely out of its future dividend yield — on the promise of the capital investment’s future income.
Kelso created the ESOP as a credit mechanism, which, with the support of Senator Russell Long (Democrat, Louisiana), was included in the employee benefits sections of the Internal Revenue Code (Employee Retirement Income Security Act of 1974 [ERISA], also known as the Pension Reform Act) as legislation not to look like something new and different.
Unions are the only group of people in the whole world who can demand a real, Kelso-envisioned justice-managed ESOP, who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to capital credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the earnings generated by the new assets that under lie that stock, and after this stock is paid for earn and collect the capital earnings income from it, and accumulate it in a tax haven until they retire, whereby they continue to be productive capital earners receiving income from their capital asset ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.
4. Hold parent corporations more accountable for outsourcing.
Presently, as a result of decades of allowing free instead of “fair trade,” American corporations are widely outsourcing their supply chain parts and finished products manufacturing, as well as increasingly off-shoring their manufacturing to low-wage, non-worker and non-environmentally regulated, and often non-democratic, authoritarian if not as well embracing elements of communist State ownership of the means of production, countries. These same American corporations have not had to pay tariffs on what they produce in foreign countries and import back into the United States. Or if corporations were subject to tariffs, the tax was far too low to effectively deincentivize their leaving in the first place to produce in such foreign countries and import back into the United States. As a result, our manufactory capabilities have and are being gutted. These outsourcing/off-shoring corporations have and are destroying the employment of Americans in jobs at home, as well as significantly lessening the opportunity to create employee-owners.
5. Crack down on the proliferation of corporate stock buy-backs.
Stock buy-backs mean that the people with the greatest stock ownership and control of a corporation are able to further concentrate their ownership stakes and effectively achieve monopoly control of a corporation.
For-profit public corporations are a legal entity created and sanctioned by state and federal government and judicial law. We need to reform the statutes regarding the operation of a for-profit public corporation. We need a corporate tax policy that will incentivize corporations to create new owners as they have needs to grow — both their employees and other citizens. Not only should the corporate tax rate be substantially raised but at the same time allow the full payout of corporate earnings to the people who own the corporation, to be tax deductible to the corporation — thus effectively eliminating the earnings tax on corporations, with their owners paying taxes subject to their personal tax rate. Right now, 98 percent of all corporate growth is financed either through retain earnings (reinvesting the corporate earnings already earned) or debt financing, neither of which creates any new owners.
Own The Future
If Senator Booker, and I presume all of the other presidential candidates, truly want opportunity for all of our citizens with no one left on the sidelines, then the most important economic right Americans need and should demand is the effective right to acquire productive capital with the earnings of the capital.
We need to reform the monetary and financial system to free economic growth from artificial barriers that are restricting us from breaking free of anemic growth to create responsible, environmentally protective and enhanced growth and empower our building a future economy that can support general affluence for EVERY citizen, not limited by the 1 percent who own today’s America.
The solution is to empower EVERY citizen to be productive and earn to consume. So, if everybody who consumes, produces, and everybody who produces, consumes, things would work a lot better in the world. When people cannot produce, something must be done to meet their consumption needs, or what was a simple economic problem (how people can consume) turns into a major political problem (how to keep order in society when people are deprived and starving). Thus, what should be the major, if not sole focus of government — how to assist people in becoming and remaining productive is ignored. Instead, government implements policies seeking to guarantee that most if not all people have sufficient effective demand to enable them to consume when they do not or cannot produce. This in turn requires ever-increasing levels of government interference not only in the economy, but in every aspect of life.
Thus, logically, if productive capital is increasingly the source of economic growth, it should become the source of added property ownership incomes for all Americans. If both labor and non-human capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to EVERY American citizen — all children, women, and men. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive and couch all policy directions in the name of job creation, job retention, and minimum wage increases. Americans ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy.
Tectonic shifts in the technologies of production have, are and will continue to eliminate the necessity for masses of labor workers as workers are replaced by “machines” of all description. Significantly though, no matter how much labor is necessary or unnecessary, it is imperative that the issue of concentrated capital ownership is addressed, and policies are enacted to simultaneously create new capital owners of the corporations growing the economy, both established and viable start-ups.
How to accomplish this goal and create a plan should be our national focus. The solution entails monetary reform of the Federal Reserve and banking system, and the creation of financial mechanisms that do not require past savings to finance future growth. That means empowering EVERY child, woman, and man to acquire productive capital with the self-financing earnings of capital, and without the requirement of past savings (or reductions in consumption).
Given financially feasible investments, i.e., investments that pay for themselves out of future profits and thereafter provide consumption income for the investor, there should never be a question of whether there’s enough savings accumulated in the economy to finance all the necessary new growth of building a future economy that can support general affluence for EVERY citizen. Using “future savings,” there can always be enough money in the economy — and past savings can effectively be spent on consumption, which is their purpose, as they represent unconsumed production from the past.
Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital. “Capital Homesteading” provides such a means.
Support the enactment of the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
Support the Agenda of The JUST Third WAY Movement (also known as “Economic Personalism”) at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/ and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
For an overview of this new paradigm, see “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://www.foreconomicjustice.org/?p=11
