Over half of America has already felt the Great Recession, personally and profoundly. Yet life at our economy’s summit remains ever so sweet. That’s a bitter reality we really ought to start confronting.
By Sam Pizzigati
The ranks of the hurting — in Great Recession America — may be far broader than almost any of us have up until now supposed.
News reports and mainstream commentators have, by and large, been defining the hurting by one simple stat, the number of Americans who get counted every month as officially unemployed, a figure now hovering around 10 percent.
But the Great Recession, notes a new study from the Pew Research Center, may be hurting five times more American families than that 10 percent suggests. Over half of America’s working-age adults — 55 percent — have either gone jobless or lost wages and full-time hours since the recession started.
We can see this lucrative to-and-fro even at distinctly second-tier corporations. The latest case in point: the hiring of a new CEO at Armstrong World Industries, the floor and ceiling tile maker based in Lancaster, Pennsylvania.
Back in February, a recession-battered Armstrong announced plans to lay off 440 workers. A few weeks later, Armstrong’s then CEO announced he would be stepping down. Last month, Armstrong unveiled the company’s new chief exec, Matthew Espe, a former General Electric hot body.
Armstrong may or may not prosper under Espe. Espe will most definitely prosper at Armstrong. His signing deal hands the 51-year-old a $4.55 million “replacement grant” — to offset incentives Espe stood to collect from his former employer — and a $3.5 million “inducement grant” to sweeten the pot, all on top of regular salary and assorted other bonuses.
The munificent care and feeding of executives has become, of course, standard operating procedure within Corporate America. This generous care and feeding, two perceptive economic analysts reminded us last week, also helps explain why good jobs for working Americans remain so scarce.
Over recent years, note global financial advisor Rob Parenteau and former Wall Street operative Yves Smith, U.S. corporations “have become obsessed” with the quarterly earnings that determine, in the short term, how share prices move.
To pump up these earnings, Parenteau and Smith observe, corporate executives routinely “avoid investing in future growth,” in the research and product development that create jobs. Instead of making these long-term commitments, they take the steps that can quickly inflate their share price. They lay off workers. They hand out special dividends. They plot mergers and acquisitions.
These sorts of short-term moves, Parenteau and Smith go to relate, rather speedily translate into “exorbitant bonuses” for the executives who make them. We have, in effect, an economy that is richly rewarding its most powerful players “for myopia and speculation.”
Exorbitant bonuses for executives don’t, in fact, just reward this myopia. They invite it. To end our Great Recession — and prevent another — we need to start fading out these executive pay excesses. And fast.
Sam Pizzigati edits Too Much, the online newsletter on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Too Much appears weekly. Read the current issue or sign up to receive Too Much in your email inbox.