CEO Pay, Layoffs, and how they Affect the Election in CA

(Crossposted at Daily Kos)

Disclosure: I proudly work for the Yes on 24 campaign.

CEOs make a lot of money. This is not an original observation, nor is it a particularly surprising one. But during a difficult financial time, it does become a salient observation. Furthermore, inequality just keeps growing. CEOs of large companies are making hundreds of times what some of their workers do- and I haven’t even gotten to the people whom they no longer employ.

Because according to a recent piece in Newsweek, the inequality is worse than we thought. Not only do some CEOs make far too much money, but, as Newsweek notes:

“What’s striking is that the executives who are the most willing to ax workers also seem to be the least likely to tighten their own belts. Management guru Peter Drucker once noted that after CEO-to-worker pay ratios went above 25-1, major moral questions started to be raised. It will be hard to make employees believe that “we’re all in this together” when it becomes clear in public documents that company leaders have largely insulated themselves from any financial risk.”


There we have it. Large firms whose CEOs are firing workers are giving those same CEOs bloated pay packages. As I noted in an earlier diary on Calitics, these CEOs are putting that money to use. For instance, William Weldon of Johnson & Johnson spent millions buying beautiful lakefront properties in Florida in November 2009; at the same time his company announced the layoffs of thousands of workers. J&J may have cut their staff budget, but Weldon certainly hasn’t cut his.

Here in California, the recession has hit our budget particularly hard. Even before the worst of the economic troubles, we were being forced to make painful reductions to our budget; by now the term draconian is woefully inadequate to describe the cuts. In 2009, legislative Democrats were forced into backroom negotiations to get Republican votes to pass a budget, and the Republicans demanded a set of tax loopholes for their corporate allies. These giveaways are about to go into effect, and California’s budget hole will grow by over a billion dollars as a result. That’s despite utterly unproven claims by supporters that the loopholes will create jobs and then mitigate the revenue loss to the state. We haven’t seen a single job created by the giveaways so far, nor can we expect to.

We can’t afford that here in California. But we do have a rather famous voter initiative system, and in November we’ll vote on Proposition 24, an effort to eliminate the giveaways and make sure corporations pay their fair share. In a sad but predictable turn of events, we have a well-funded opposition, with the funding coming solely from major corporations and their CEOs. William Weldon’s company has donated $100,000 (there is no contribution limit for initiative campaigns). Weldon and his compadres stake their opposition on the bogus claim that Proposition 24 will hurt small business.

We know better. Proposition 24 is solely intended to make sure that big corporations pay their fair share, and that California gets revenue it desperately needs to save schools and vital social services. Those who can least help themselves in California are already the greatest victims of this economy. We cannot let greedy CEOs make their struggle even harder.

Learn more: Yes on Prop 24: The Tax Fairness Act

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