I haven’t said much about the Occupy Wall Street movement so far. I’m in general sympathy with them but I have doubts as to their ultimate effectiveness, so I’ve been reluctant say anything that would either 1) discourage people who are taking risks to confront real problems, or 2) create false hopes that change will be anything other than difficult, imperfect, and slow. But now I think it’s time to say something.
I’m going to start with my own personal situation: I’m tired of being grateful for leftovers.
I have a pretty good life. I’m not rich and I’ll never be rich, but I have enough. Part of that is due to my own efforts but much of it isn’t. My family gave me a good start. I’ve worked hard and I haven’t made many costly mistakes. I live in a place and time with many opportunities and I’ve done my best to take advantage of them. I recognize that things could be very different. That makes me reluctant to complain when the breaks don’t go my way – I know I still have it better than most.
But I’m tired of being thankful I didn’t get laid off today.
I work for a large corporation that will remain nameless. As corporations go it’s not bad – we always fulfill the letter of the law if not always its spirit. We make good products and sell them at competitive prices. My job is stressful at times but usually manageable and it pays for all the things I need to do and want to do. Things could be much worse. But…
Earlier this year the corporation implemented a 6% across the board pay cut (executive cuts were larger). That’s not pleasant but it isn’t going to kill me – I don’t live that tightly. My first thought was “I’m thankful I still have a job, even at 6% less.” What bothers me is why this pay cut was done.
Pay cuts are a legitimate and necessary tool for companies that are losing money and companies that need to conserve cash. The company I work for has been hit by the recession, but we’ve remained profitable the whole time. The money saved by cutting everyone’s pay isn’t going to pay other expenses, to pay down debt, or even to maintain dividends to shareholders. The money is going to repurchase company stock. Stock repurchases have one goal – to make the short-term price of the stock go up.
From a macroeconomic standpoint this is a horrible decision. It has taken money out of employees’ pockets – where it can be spent, which stimulates the economy – and stuck it in the company treasury, where it sits, doing nothing.
I find it hard to be grateful I still have a job when I’ve taken a pay cut for no better reason than to support the stock price.
Last week a significant number of people were laid off. I’ve worked in the corporate world for 27 years – I know very well that the workforce has to be “right-sized” for the level of business. If we sell less, we need fewer people making the products, fewer people selling them, and fewer people moving them. If revenues are down, that’s less money available to invest in new products and systems. But there’s a difference in right-sizing the business and making random cuts to hit an arbitrary target. With few exceptions, the people who were laid off were doing work that needed to be done – letting them go hampers the long-term business plans of the company, to say nothing of the impact on them as people.
We’re in the annual enrollment period for health insurance. I’m used to the realities of health insurance – costs are going up and no one wants to make the structural changes necessary to control them. Last year my premiums actually went down a bit – but my deductible went up 9x. This year the premiums stayed the same, but the deductible went up 50%. What this means is that beyond a limited amount of “preventive care” I pay for everything out of my pocket – I’ll never reach the deductible in a normal year. The good news is that if I get cancer or have a heart attack I won’t lose my house. I’ll just lose all my savings. Our health care payment system needs to be overhauled but all this does is shift cost and risk from the company to the employees.
I find it hard to be grateful I still have health insurance when costs and risks keep getting shifted to me to improve the company’s bottom line.
I’ve always been a big believer in accepting reality – in seeing how things really are whether you like it or not. But these changes didn’t have to happen. Some people have lost their livelihood, others have had their incomes cut and expenses and risks increased, all to make the price of the company stock go up this year. And the macroeconomic effect (small but real) is to reduce overall economic activity, meaning this contributes to extending the recession.
All these changes were command decisions – the CEO decided and they were implemented. My choices were to accept them or find some place else to work. I don’t expect democracy in the workplace but I do expect the needs of all the stakeholders to be considered and I expect the long term success of the company to be put ahead of short term desires for a higher stock price.
I’ve got a pretty good life. I’ve worked hard, I’ve made careful decisions, and I’ve been lucky. I’ve built on the structures that those who came before me put in place. I’m thankful for all that. I’m uncomfortable complaining about “first world problems” when so many have so little.
But when I hear the Occupy Wall Street movement ranting against “greed” I know exactly what they’re talking about.
Tomorrow: Individualism vs. Collectivism