Shareholder vs. Employee

As I’ve mentioned before, today’s CEO looks at employees (and their benefit packages) as liabilities. Ask Bill Ford (or now, Alan Mulally), or Jerry Grinstein, or Paul Otellini, or Jonathan Schwarz, or Rick Wagoner, what their view of employees (and their benefit packages) is.

Their whole job involves cutting the workforce. How can they get away with it?

Well, this turns out also to be true at companies that are doing well and growing. Ask their CEOs; any honest answer will include how they are reducing headcount where employee costs are high, and increasing headcount in countries where costs are low and there is no benefits package.

In the U.S., the result is a vanishing middle class, and an economic landscape in which corporations prosper, even as their employees do not – or, worse, become ex-employees. Even as earnings and productivity continue to rise, benefits packages are cut to the bone. In fact, so many companies have offloaded their pension liabilities that the federal Pension Benefit Guaranty Corporation is now itself technically bankrupt (i.e., its liabilities are greater than its assets).

Shareholders are doing great, but should be doing even better; and employees are living in constant fear of being made what the British so charmingly call “redundant.” That’s exactly where we are now. No more free money for employees (and ex-employees), even as living costs continue to rise.

If you are a vendor to business and government, are you immune to employee devastation (or, more succinctly, to drastic reduction in employee net present value)? Despite Mr. Bush’s inability to connect dots, one cannot run increasing budget debt forever.

In the 1960s, many essayists thought that technology would bring employees of the future additional leisure time, as their tasks were done more quickly. Do you remember those goofy thoughts? Today’s American employee works longer hours than his grandparents, has no time for his family, much less leisure, and generally hasn’t had a vacation in years.

In the United States, you really have to be an owner to win. We have let the system run free, as pioneering capitalists, without knowing where it would lead. If it continues to elevate shareholders and punish employees, with technology its primary toolset, then the system will break. While the rest of the world may be glad we went into that dark room first, it won’t protect them from the aftermath of this struggle.

In the long term, shareholders cannot do well unless employees also do well. Those who who create value should also experience reward. That, and that only, has always been, and ought to remain, the driver behind the capitalist state, regardless of technology’s contributions.