Corporate greed, the U.S. economy and the United Auto Workers
From the Massachusetts Nurse Newsletter
March 2009 Edition
By Joe Twarog
Associate Director, Labor Education & Training
Given the dismal state of the economy and the recession that we are in, it may be useful to look at some of the contributing factors that got us to this point. Let’s then review an abbreviated history of recent U.S. corporate mismanagement, failure, bailouts, corruption, crime, fraud and malfeasance.
Tyco. In January of 2002 Business Week magazine lists Tyco CEO Dennis Kozlowski as one of the top 25 corporate managers of 2001. In June of 2005 a jury finds Kozlowski guilty of stealing more than $150 million from Tyco. His extravagances included a $6,000 shower curtain, $2,900 on coat hangers and a $2 million birthday party on Sardinia.
Enron. In 2001 Forbes Magazine names Enron the “most innovative company in America” for the sixth consecutive year. Huge scandal soon follows comprised of off-thebooks partnerships, hiding losses and inflating profits. Enron also contributed to the California electricity crisis of 2001 by manipulating supply for profits. The company liquidates and 21,000 staff loses their jobs, investments, savings, children’s college funds and pensions.
Halliburton. Houston and Dubai-based oil company formerly headed by Dick Cheney. Halliburton supplied contaminated water to troops in Iraq and then overbilled the government for work not performed.
AIG. The world’s largest insurer faced a “liquidity crisis” in early fall of 2008. The government lends AIG $85 billion in September of 2008 to prevent its collapse. A week later AIG executives participated in a lavish California retreat which cost $444,000 followed by an $86,000 luxurious English hunting trip.
Arthur Andersen LLP. One of the nation’s “Big Five” accounting firms—and the accounting firm of Enron—was convicted of obstruction of justice by destroying documents relating to the investigation. The firm is on the verge of total dissolution and approximately 28,000 employees have lost their jobs.
World Com. CEO Bernard Ebbers was found guilty of and convicted of securities fraud, conspiracy and filing false documents with regulators, and a series of crimes that resulted in an $11 billion accounting scandal.
John Thain. The former CEO of Merrill Lynch, who was described as “Mr. Fix-It,” gave out $4 billion in bonuses in November 2008 to Merrill employees (even as the brokerage firm was losing massive amounts of money) out of the $15 billion bailout of taxpayer money. He also redecorated his corporate office to the tune of $1.22 million.
Wall Street Executives. Reward themselves for running the economy into the ground by Corporate greed, the U.S. economy and the United Auto Workers giving themselves year-end bonuses of $18.4 billion from the tax-payer bailout money. President Obama termed these bonuses as “shameful” even as Rudy Giuliani defended them.
Then there is Wachovia; Bear Stearns; Fannie Mae; Freddie Mac; Washington Mutual; Lehman Bros.; and Bernie Madoff, who was praised as having “impeccable” market timing by a major European bank just weeks before his arrest for stealing $50 billion. And of course there are the golden parachutes for executives; the sub-prime mortgages; the record number of home foreclosures; the massive job losses; and a $700 billion plus government bail-out with no strings attached and virtually no accountability.
Auto industry Yet one of the most recent examples of gross corporate short-sightedness and mismanagement involves the auto industry—which also happens to be the one area where there is a strong labor union.
While the auto industry’s CEOs flew their private corporate jets to Washington to testify, the right-wing TV and radio pontificators, members of congress and the newspaper of record (The New York Times) adopted the position that a key reason for the collapse of the industry was the United Auto Workers union (UAW), with its supposedly over-generous wage and benefits package.
The average amount of labor costs that goes into building a car is approximately 10 percent, and not the $8.000-$10,000 figure that gets endlessly repeated.
Auto workers do not get paid $70-$80 per hour- as reported by The New York Times and forever after repeated as gospel truth. In fact the average UAW wage is about $28/hour (or about $58,240/yr for a full time worker). The Times misled the public by including as a “wage” the cost of health insurance—as if health care and retiree pension costs are excessive benefits. Even then, health insurance and retiree pensions do not account for the balance of the mythical $70-$80 per hour. The UAW along with its former charismatic and visionary leader, Walter Reuther, has historically been on the cutting edge of advocating for its membership and for social activism/responsibility, including:
- Advocating for a national, tax-funded health insurance plan (in 1935).
- Encouraging the rapid conversion of auto plants into aircraft production plants during WWII.
- Supporting women and blacks entering the workforce and formally opposing the racist, wildcat “hate strikes” that were aimed at black workers.
- Advocating in 1947 for the auto makers to build more fuel efficient cars—a call to action that is still being ignored.
- Supporting the civil rights movement.
- Opposing the Vietnam War and temporarily splitting from the AFL-CIO over the issue.
The UAW is a union that is a true example of the labor movement’s activism, and one that should be emulated. Reuther often said the UAW wanted “to make progress with the community and not at the expense of the community.” Did those vocal senators (Richard Shelby of Alabama, Mitch McConnell of Kentucky and Bob Corker of Tennessee), so prominent now in pounding the UAW, ever question Kozloski’s $6,000 shower curtain? Or the sixfigure salaries of the Enron employees? Or the extravagances of AIG executives? When these same senators want to impose wage and benefit limits on workers, did they even consider caps on the extravagant and outrageous executive compensation packages? When they demanded concessions from the UAW do they also ask for concessions from corporate executives?
The answer is no, because they have a very specific agenda: to defeat the Employee Free Choice Act and to bust labor unions. To that point: within days of receiving $25 billion in taxpayers’ money, Bank of America hosted a conference call with key corporate leaders to strategize about how to fight the Employee Free Choice Act.
It is time to put things into perspective and to set the record straight. Because let’s face it: nurses could be next.