The $hit End of the Stick

by Fred Dungan

“Never give a sucker an even break.” – W.C. Fields

    Normally I would deem a title such as the above inappropriate for an article like this.  It is not so much that the reader would be shocked or offended, but that vulgarity tends to  subtract from the quality of one's argument, while adding nothing of importance to the gist.  I came very close to titling this article The Short End of the Stick.  Please allow me to explain why I didn't.
    Prior to the 20th century, the majority of Americans lived on small farms.  When a cow or a horse got sick, the most common way of administering treatment was by means of suppositories.  Often, this required the use of a stick.  As you can imagine, many jokes circulated about farmers, who, due to some unanticipated twist of fate, ended up holding the “shit end of the stick.”  Today, these jokes have largely lost their relevance.  The few that do survive have been sanitized into the “short end of the stick.”
    This article proposes to examine what type of deal those of us at the bottom of the corporate ladder feel we are getting from thecorporations that employ us.  As you probably already suspect, there is nothing clean about it.  There is no mechanism by which I can convey the degree of filth without making reference to fecal matter.
    Entry level positions in corporations are all pretty much the same.  They start with a probationary period of somewhere between 90 and 180 days during which the worker can be terminated without giving any reason whatsoever.  This is one hell of a way to start a new job.  What crime did the new worker commit that resulted in him/her being sentenced to probation?  Is this punishment without cause meted fairly to all or are newly hired management employees exempted?  Why isn't this sort of discrimination illegal?
    Things could be worse.  Part-time and temporary workers don't really have a job.  They get shuffled from company to company and have absolutely no rights.  Keeping a few of them around helps to remind workers how easily they can be replaced.
    Newly hired workers are normally not permitted to participate in the company's medical plan until they have finished probation. If they or their dependents become ill or suffer an injury in the interim, it's their own tough luck.  And, to add an insult to the injury, a probationary employee who misses work can almost always expect to be fired.

    In his autobiography, Faith of My Fathers, former Navy pilot, POW, and Republican presidential candidate John McCain describes how, after sustaining injuries when shot down by a missile over Hanoi, he pleaded for a doctor but was refused medical treatment for four days because of his “bad attitude.”  Not having signed the Geneva Convention, The North Vietnamese maintained that they had no responsibility to treat downed fliers as prisoners-of-war—a legal technicality that McCain vehemently protested.  Like McCain's captors, employers love to wallow in legal technicalities.  Their justification for withholding medical care from new hires and their dependents is that these workers are not yet full fledged employees.  Corporations who are supposedly our allies refuse medical care for 90 to 180 days whereas the evil Communist enemy relents after four days.  It makes you wonder who is guilty of crimes against humanity, doesn't it?
    There are those who would argue that care is always available at county hospitals.  I know better.  The county hospital near me is being demolished to make way for a building supplies retailer. As employers increasingly abrogate their responsibilities towards their employees, government is expected to pick up the tab.  When it refuses, as happens all too often, sickness goes untreated and disease gains the potential to spread and infect the rest of us.     Failing to provide new hires with health coverage is a sin of omission that might be forgivable if American businesses were not making a profit.  According to Forbes magazine, however, business could hardly be better.  In 1999 profits increased 26 percent for America's 895 largest corporations.  The Federal Reserve says the current economic expansion is the longest on record.  There seems to be no reason for being stingy other than greed.
    But to be fair, we need to look at whether the people who run these companies are acting out of dedication to principles.  It's possible that they ask no more of others than they are willing to give themselves.  Maybe it was hard work and self-denial that got them where they are today.
    The numbers say otherwise.  Michael D. Eisner, head honcho of Walt Disney, received a compensation package (salary plus stocks) of $589,101,000 in 1998.  The following year, earnings of the top 800 heads of corporations jumped 12.8 percent to a combined total of $5.8 billion.  Clearly, these men are in it for the money.

    In 1981, America's 10 most highly paid chief executive officers were paid an average of $3.5 million each.  By 1988, the average had climbed more than 450 percent to an unconscionable $19.3 million.  A dozen years later, in 2000, the aveage annual pay of the Top Ten had soared to $154 million.  Does anyone really believe that the services rendered by these men were 43 times more valuable in the year 2000 than they were in 1981?
    Gilbert Amelio, the former CEO of Apple Computer, serves as a good example of how corporate greed is out of control.  According to an executive pay report in the Wall Street Journal, Apple lost about $2 billion during Amelio's brief tenure of 17 months.  Some 3,600 employees lost their jobs.  Yet Amelio's “golden parachute” exit clause garnered him $6.7 million in severance pay plus other compensation.  Amelio had the nerve to say that the Apple package “didn't protect my downside as well as I had hoped it would.”
    Most corporate leaders would say any government regulation of CEO pay would be a terrible interference in the free market.  But the federal government is already deeply involved in CEO salaries through the tax code.  The tax code allows businesses to deduct a “reasonable allowance for salaries or other compensation.”  Since the code doesn't define the term “reasonable,” corporations can—and do—routinely deduct 100 percent of exorbitant executive pay packages.  The corporation pays less in taxes than it should, and the ordinary taxpayer—you and I&mdashpicks up the slack.
    Chief executive officers also benefit tremendously from a cut in the long-term capital gains tax from 28 percent to 20 percent.  For every $1 million in long-term capital gains they get from the sale of stock, they now pay $80,000 less in taxes.  They purportedly receive large salaries and perks because they have enormous responsibilities.  However, under current Security and Exchange Commission regulations, neither chief executive officers nor chief financial officers can be held responsible for the information in quarterly and annual reports.  Enron's chief executive officer, Kenneth Lay, hid more than a billion dollars in debt from investors without going to jail.
    Yes, the rich are getting richer.  And, to make things worse, they are doing it at the expense of taxpayers like ourselves.  You probably already suspected as much.  What you really want to know is how everyone on the other end—the end of the stick that fate stuck you with—are faring.
    A study funded by the Russell Sage Foundation, as reported in the July 10, 2000 issue of Business Week, concludes that “despite America's record-breaking economic boom, poverty among full-time workers has increased.”  According to Dr. Linda Barrington, the author of the study, “the number of full-time workers classified as poor increased between 1997 and 1998.  Over the last quarter century, the poverty rate among full-time workers has been higher only twice—1982 and 1983—years in which the economy was coming off a recession.”
    “Simply working full-time year-round, even in a booming economy, is not enough to lift everyone out of poverty,” says Barrington.  “The benefit to the lowest paid workers from being fully engaged in the workforce, as measured by the poverty rate, is not improving.  This time trend provides an important economic backdrop to the recent movement of people off government welfare rolls and into the workforce, as well as cautionary context for these otherwise prosperous times.”
    The study further determined that since 1973, poverty has increased in both overall number and as a percentage of people employed full-time and year-round.  Nearly three percent of all full-time workers were living under the poverty line (defined as $13,003 for a family of three) in 1998, the latest year for which data was available.  Including dependents, this could be upwards of five million people.
    The Boston-based organization United for a Fair Economy (UFE) discovered that if the 555 foot Washington Monument reflected the average 1997 CEO pay, then a replica depicting average worker pay would be just 21 inches tall.  Back in 1970, when the wage gap was 41 to one, the Workers Monument measured 13 feet, 6 inches.
    The UFE unveiled the Workers Washington Monument at a Capitol Hill press conference.  Chuck Collins, UFE co-director, said, "In 1970, it would have required a pickup truck to transport the Workers Washington Monument.  By 1996, you could carry it on an airplane and put it in the overhead luggage bin.  The 1997 model fits easily in the little space under the seat."  Nowadays, the Workers Monument would fit in your pocket.
     In their 1992 book, Putting People First, Bill Clinton and Al Gore remonstrated, “It's time to honor and reward people who work hard and play by the rules...No one who works full time and has children should be poor any more.”  Now, eight years later and at the end of their second term in office, I think it appropriate to ask where is the fulfillment of that promise?  Clearly, those who play by the rules are losing the game.
    The disparity between the top and the bottom of the corporate ladder has become, in the words of management guru Peter Drucker, “unconscionable.”  In the top echelons of the corporate world animal cunning too often masquerades as intelligence.  Indeed, it would appear that the average employee has gotten stuck with the shit end of the stick.  The end result can only be increased social tension and class consciousness.
This article was taken from Chapter 5 of Bushwhacked by Fred Dungan.  For the complete story click here.
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This page last modified on December 5, 2006.