{"id":881,"date":"2005-10-19T11:19:39","date_gmt":"2005-10-19T11:19:39","guid":{"rendered":"0"},"modified":"2010-02-16T20:47:09","modified_gmt":"2010-02-16T20:47:09","slug":"the_elephant_in_4","status":"publish","type":"post","link":"http:\/\/marcdanziger.com\/?p=881","title":{"rendered":"The Elephant In The Room"},"content":{"rendered":"

From the L.A. Times<\/a>:<\/p>\n

\tWorkers at auto parts maker Delphi Corp. will be asked this week to take a two-thirds pay cut. It’s one of the most drastic wage concessions ever sought from unionized employees.<\/p>\n

Workers at General Motors Corp., meanwhile, tentatively agreed on Monday to absorb billions of dollars in healthcare costs. Ford Motor Co. and DaimlerChrysler employees are certain to face similar demands.<\/p>\n

The forces affecting Delphi and GM workers are extreme versions of what’s occurring across the American labor market, where such economic risks as unemployment and health costs once broadly shared by business and government are being shifted directly onto the backs of American working families.<\/i><\/p><\/blockquote>\n

This risk-shifting is only a small part of what is really a slow collapse of wages in the entire manufacturing sector.<\/p>\n

Grocery workers at the 71-store Farmer Jack chain in Michigan agreed to take a 10% wage cut to make their operation more palatable to a new owner. Hundreds of workers at a hose plant in Auburn, Ind., approved a $2 cut in their $18-an-hour pay to keep the plant open. Police officers in Wyandotte, Mich., agreed to a three-year wage freeze and to pay more for healthcare.<\/p>\n

Jerry Jasinowski, president of the Manufacturing Institute at the National Assn. of Manufacturers, said such givebacks would simply become a fact of life.<\/p>\n

“From airline pilots to auto assembly workers, employees need to help reduce their costs,” he said. “We can’t afford to live with the very generous benefits we provided 10, 15 years ago.”<\/p>\n

Workers’ reduced leverage has many origins, including a slack labor market and the offshoring of jobs to low-cost countries such as China and India.<\/p>\n

Some companies, challenged by low-cost rivals, say they can’t afford more than minimal raises. And even at firms doing well, high premiums for healthcare insurance take away from the pool of funds that could be used to provide raises.<\/i><\/p><\/blockquote>\n

The problem of course, is that part of those givebacks do pay for our modern Gilded Age<\/a>:<\/p>\n

This [2004] was a year of record-breaking real estate sales, with high-end properties pushing through price ceilings around the country. In fact, the average price of the homes on our list jumped from last year’s $25.9 million to $34.9 million, a dramatic increase of nearly 35%.<\/p>\n

Significantly, in 2004 the record for the most expensive house ever sold in the U.S. was broken when billionaire Ronald O. Perelman unloaded his Palm Beach estate for $70 million. Perelman, 61, whose holding company MacAndrew & Forbes owns cosmetics producer Revlon (nyse: REV – news – people ) and flavoring maker M&F Worldwide (nyse: MFW – news – people ), sold to Dwight C. Schar, 62, who has been chief executive of Virginia-based construction service company NVR for 18 years, and is a part owner of the Washington Redskins football team. The sale price shouldn’t be too much of a stretch for Schar, who had a paycheck last year of $58 million, making him the fifth best-paid CEO on our annual roundup of executive pay.<\/i><\/p><\/blockquote>\n

I’ve oft-quoted Neil Stephenson when he said (in Snow Crash<\/a>):<\/p>\n

When it gets down to it–talking trade balances here–once we’ve brain-drained all our technology to other countries, once things have evened out, they’re making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here, once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel, once the Invisible Hand has taken all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would call prosperity–y’know what? There’s only four things we do better than anybody else: music\/movies\/microcode (software)\/high-speed pizza delivery.<\/i><\/p><\/blockquote>\n

“once the Invisible Hand has taken all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would call prosperity<\/b><\/i>” – has a kind of accurate ring to it, doesn’t it?<\/p>\n

The rub, of course, is that a bunch of people in America are going to buy record-breaking numbers of record-breakingly expensive mansions while Jane and Joe America worry about paying the heating bill on their two-flat apartment.<\/p>\n

That’s not inherently evil, and I’m not someone who believes that those who get don’t deserve. <\/p>\n

But I do believe that if those who get don’t understand the social compact that allows them to keep getting and to enjoy what they’ve got, the consequences for our polity will be massively destructive.<\/p>\n

It’s simple; we’re in this together or we’re not.<\/p>\n

As my health plan, Pacificare, looks to consummate a sale to a larger health care organization, the CEO stands to make over $180 million<\/a> in the transaction. Good for him, bad for us.<\/p>\n

Cramming cutbacks down the throats of employees, while budget crises in local government limit their access to education for retraining, cutbacks in public health and local hospital networks limit their access to health care, and restrictive zoning and planning requirements limit their access to housing is a pretty clear signal that the answer to that question today is “not.”<\/p>\n

When the largest group of voters wake up and see this, and their answer becomes “not,” too, the kind of demagoguery masquerading as populism won’t be anything we want to hear.<\/p>\n

I’d like to forestall that, and I think we can.<\/p>\n

Directors of California’s giant public pension fund voted Monday to oppose $345 million in payments that top executives of PacifiCare Health Systems Inc. would reap from the sale of the health insurer to UnitedHealth Group Inc.<\/p>\n

The California Public Employees’ Retirement System, or CalPERS, holds a small fraction of PacifiCare shares, but it is the first institutional investor to take a position on the proposed $8.1-billion acquisition. Shareholders are scheduled to vote Nov. 17.<\/p>\n

The deal, proposed in July, would grant payments to 39 top PacifiCare executives, including about $180 million to Chief Executive Howard Phanstiel. The payments include accelerated vesting of options granted by Cypress-based PacifiCare and signing bonuses and other incentives to executives who stay with UnitedHealth, the nation’s second-largest health insurer, for several years.<\/i><\/p><\/blockquote>\n

Good for CALPERS.
\n–<\/p>\n","protected":false},"excerpt":{"rendered":"

From the L.A. Times: Workers at auto parts maker Delphi Corp. will be asked this week to take a two-thirds pay cut. It’s one of the most drastic wage concessions ever sought from unionized employees. Workers at General Motors Corp., meanwhile, tentatively agreed on Monday to absorb billions of dollars in healthcare costs. Ford Motor […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"_links":{"self":[{"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/posts\/881"}],"collection":[{"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=881"}],"version-history":[{"count":0,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/posts\/881\/revisions"}],"wp:attachment":[{"href":"http:\/\/marcdanziger.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=881"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}