Business postsTuesday August 13, 2013
Why the Want Ads Suck
“The reason [the minimum wage] has become a big political issue is not that the jobs have changed; it’s that the people doing the jobs have. Historically, low-wage work tended to be done either by the young or by women looking for part-time jobs to supplement family income. ... Now, though, plenty of family breadwinners are stuck in these jobs. That’s because, over the past three decades, the U.S. economy has done a poor job of creating good middle-class jobs; five of the six fastest-growing job categories today pay less than the median wage. ...
”The situation is the result of a tectonic shift in the American economy. In 1960, the country’s biggest employer, General Motors, was also its most profitable company and one of its best-paying. It had high profit margins and real pricing power, even as it was paying its workers union wages. And it was not alone: firms like Ford, Standard Oil, and Bethlehem Steel employed huge numbers of well-paid workers while earning big profits. Today, the country’s biggest employers are retailers and fast-food chains, almost all of which have built their businesses on low pay—they’ve striven to keep wages down and unions out—and low prices.
“This complicates things, in part because of the nature of these businesses. They make plenty of money, but most have slim profit margins ... The combined profits of all the major retailers, restaurant chains, and supermarkets in the Fortune 500 are smaller than the profits of Apple alone. Yet Apple employs just seventy-six thousand people, while the retailers, supermarkets, and restaurant chains employ 5.6 million.”
-- James Surowiecki, “The Financial Page: The Pay is Too Damn Low,” on the New Yorker site. Read the whole thing.
Merit Pay in a Meritocracy
From Ken Auletta's profile of Henry Blodget in the April 8, 2013 issue of The New Yorker:
Not long after the 2000 merger of AOL and Time Warner, Blodget predicted that within two years the resulting enterprise would become the world's most valuable company. It turned out to be the most disastrous merger in corporate history. Meanwhile, Blodget's compensation at Merrill Lynch rose from three million dollars, in 1999, to twelve million, in 2001.
Why Job Creators Is Such a Lie
We've been hearing that phrase a lot from the usual folks in the Republican party. They use it as a euphemism for the wealthiest people in the country, whom Republicans don't want to tax further, even though their current tax rate is half of what it was when I was growing up: 35% rather than 70%.
The right can't say “Don't tax the rich.” That won't play. So in a time of double-digit unemployment, someone dreamed up the term “Job creators.” The top 1% are wealthy, sure, but they're also the people who create jobs (Bill Gates, etc.), and taxing them at a higher level (at, say, 39%) will create such uncertainty that they won't expand their operations, and this will keep the economy from expanding as well. Taxing “job creators” is thus counterproductive to creating jobs.
It's a lie, of course.
The wealthiest people in this country (Bill Gates, etc.) are not job creators but profit creators. That's their job. If they have to add jobs in order to create profit, they'll do it. If they have to cut jobs in order to create profit, they'll do that, too. And if they can get you, their employee, to do more for less, they'll do that every day and twice on Sunday.
That's why the term “job creators” is such a lie. It ignores what a CEO does, what a corporation is. It ignores what capitalism is.
I've been feeling this all year. I've been waiting for someone in the mainstream media to say this all year. Nothing.
It's not the mainstream media, but recently, on his site, journalist Peter Lewis wrote about former Gannet CEO Craig Dubow, who resigned recently after six years at the helm. During his tenure, Gannett went from employing 52,000 to 32,000. Its stock went from $72 a share to $10 a share. Admittedly the last six years were particularly rough for newspapers, but—and here's the point—they weren't rough for Craig Dubow, whose salary was raised several million in 2010 to $7.9 million. Meanwhile, the pay of Bob Dickey, the head of Gannett’s U.S. newspapers division, was nearly doubled, from $1.9 million to $3.4 million, in 2010. This past summer he laid off 700 people. “While we have sought many ways to reduce costs,“ he told the workers, ”I regret to tell you that we will not be able to avoid layoffs.”
Dubow insists that his top priority as CEO was to serve the consumer: “We have always maintained an unwavering focus on the consumer,“ he wrote in his resignation letter. ”As a result, we have evolved into a digitally led media and marketing solutions company committed to delivering trusted news and information anywhere, anytime.”
Marjorie Magner, non-executive chairman of Gannett’s board of directors, echoed this thought. So did new CEO Gracia Martore.
Here's Peter Lewis:
These people are lying. The corporate goal is not to serve the consumer; it’s to maximize profits and pay packages for top executives. Can anyone argue that Gannett newspapers and journalism are better today, and that news consumers are better served?
How did Mr. Dubow and Gannett serve the consumer? They laid off journalists. They cut the pay of those who remained, while demanding that they work longer hours. They closed news bureaus. They slashed newsroom budgets. As revenue fell, and stock prices tanked, and product quality deteriorated, they rewarded themselves huge pay raises and bonuses.
Next time you hear someone use that term, feel free to punch them in the face.
One of the worst offenders.
Why is The Seattle Times Linking to Exxon PR Blogs?
Doing some research on The Seattle Times website the other day I came across the following link (right-hand column, third down):
I noticed the headline certainly. The NY Times reporting poorly. Didn't have their facts. According to who? Exxon Mobile Perspectives? You're effin' kidding me. Why is this even on a legitimate news website? Or is The Seattle Times no longer a legitimate news website? Or have we created a culture where legitimate news organizations are so desperate for money they'll do what they need to do to survive. Like linking to Exxon Mobile Perspectives.
I clicked through but didn't even bother to read the article by Ken Cohen, vice president of public and government affairs for Exxon Mobil Corporation. But I did see his latest post: HIGHER TAXES ON OIL COMPANIES WON'T CREATE JOBS. Really? Hard hitting.
How does that guy sleep? How do I?
Location! Location! Location!: Photos from the Death of a Mall
Last week I happened to be in the Southdale Shopping Center, near Edina, Minn., in the middle of a weekday afternoon, and the place was a ghost town. Seven miles east, on the site of old Met Stadium, you have the Mall of America, which still brings in (and takes away) the crowds. The recession, and the digitalization of business and culture, hasn't helped Southdale, either. Even its movie theater was pretty empty.
Twitter: @ErikLundegaardTweets by @ErikLundegaard