Today is Labor Day and many Americans are grilling and making homemade ice cream, just chillin’ for the day. We need an extra day off now and then, but Monday holidays really crimp my style. I wish all holidays were on Friday.
Why do we celebrate Labor Day? Everyone probably knows this is the day set aside to honor working men and women. Actually, the holiday was intended to honor workers who make their living by the sweat of their brow, but us air conditioning-spoiled service workers celebrate it too.
The plight of laborers has changed mightily since the Industrial Revolution signaled a new era in the way people earned their keep. People left the small family farms and businesses in pursuit of a bigger and steadier paycheck at the mill. What had been a highly personal society gave way to the depersonalized atmosphere of the factory. For the first time, ownership and management were not the same people. Professional managers concentrated on production statistics and sometimes treated the workers like machines rather than people.
The natural outcome of this depersonalization of employees was unrest, and eventually, violence. Workers organized themselves into unions to protect and promote their interests. Through collective bargaining, management was forced to address the workers’ concerns. Unions became strong in America during the mid-1900s and then began to lose power in recent years. Today, unions only represent about 13% of the nation’s workforce.
Over the decade of the 1990s an interesting, and somewhat troubling, trend developed. Perhaps due, in part, to the diminished clout of labor unions, ordinary workers have lost economic ground. Researchers tell us that, on the average, workers were better off in the 1960s than they are today when compared to management. In the 60s, CEO compensation was about eight to 15 times that of the average worker. Today, that number is much larger and consequently the disparity between the lowest paid and highest paid employee is wider and getting wider all the time.
Probably no one objects to compensating management at a level substantially higher than the average employee. I doubt that the issue would be worthy of discussion if CEOs were earning 15 or even 20 times as much as the line workers. However, the financial news is full of instances where CEO annual compensation not only exceeds a million dollars or even tens of millions of dollars, but even reaches hundreds of millions of dollars. That’s a big pill to swallow.
Is there some indication of greed here? Is it a good idea to create a super class of professional managers whose wealth puts them out of touch with ordinary people? Let’s face it, a person making $50 million a year doesn’t understand the concerns of the middle class. Creation of such enormous, almost incomprehensible, wealth breeds a highly divided society.
So what? A divided society results in an “us vs. them” mentality which is bad for everyone. America’s greatness occurred, in part, because of a feeling of unity across the land. Loss of that unity opens the door for each segment to see the other as an enemy. Enemies are nameless and faceless, easy to stereotype as bad and worthy of whatever evil befalls them. Corporate boards of directors need to consider the impact on society of encouraging division through their compensation policies.
At the risk of being accused of jealousy and purveying gloom and doom, I would point out that there is more than a vague similarity between this trend and the conditions of French society at the time of the French Revolution. French peasants finally had enough of the extravagance of the monarchy and took the matter in their own hands. For thousands of the ruling class, the end result was a date with madam guillotine.
Could anything like that ever happen in America? We are a proud and independent people who once dumped a load of tea in the Boston harbor to protest unfair taxation. Further, in pursuit of liberty, we declared war on arguably the most powerful nation on earth at that time when our military prowess wouldn’t challenge the average Boy Scout troop. What do you think?
Thought for the Moment — I am convinced that life is 10% what happens to me and 90% how I react to it.
— Clergyman and writer Charles Swindoll
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at firstname.lastname@example.org.