Most analysts of the high-finance meltdown that ushered in the Great Recession have concluded that excessive compensation was a key causal factor. Outrageously high rewards gave executives an incentive to behave outrageously, to take the sorts of reckless risks that would eventually endanger our entire economy. Our nation’s leading political players have sought, sometimes with grand fanfare, to confront this reality. The financial reform package enacted this July, for instance, codifies several long-term goals of executive pay reformers, most notably a “say on pay” provision that hands shareholders the right to take nonbinding advisory votes on executive compensation.

This reform could become a valuable tool for shareholder activists, particularly if such votes are required on an annual basis. However, there is little evidence that “say on pay” has had an impact on overall compensation levels in nations where it has already been in practice.

To bring executive pay back down to mid-20th century levels, we need reforms that cut to the quick, which recognize the dangers banks and major corporations create when they dangle oversized rewards for executive “performance.” Some reforms that would move us in this direction are now pending in Congress.

One of the most promising would eliminate a perverse incentive for excessive pay in our tax code. Under current rules, there are no meaningful limits on how much a firm can deduct for the expense of executive comp. Thus, the more a firm pays its CEO, the more that firm can deduct from its taxes. The rest of us bear the brunt of this loophole, either through increased taxes needed to fill the revenue gaps or through cutbacks in public spending.

The Income Equity Act, introduced by Rep. Barbara Lee (D-Calif.), would deny all firms tax deductions on any executive pay (including stock options) that runs over 25 times the pay of a firm’s lowest-paid employee or $500,000, whichever is higher.

The Troubled Asset Relief Program (TARP) and the 2010 health care reform bill set important precedents for this reform by applying $500,000 deductibility caps on pay for bailout recipients and health insurance firms. Treasury Secretary Timothy Geithner has said he would consider extending the tax deductibility cap in TARP to U.S. companies generally.

Another practical proposal would use the power of the public purse to encourage more rational pay levels. Rep. Jan Schakowsky (D-Illin.) has introduced the Patriot Corporations Act to extend tax breaks and federal contracting preferences to companies that meet benchmarks for good corporate behavior. Among the benchmarks: not compensating any executive at more than 100 times the income of the company’s lowest-paid worker.

By law, the U.S. government denies contracts to companies that discriminate in their employment practices, by race or gender. This reflects clear public policy that our tax dollars should not subsidize racial or gender inequality. In a similar way, this reform would discourage extreme economic inequality.

Congress should also revisit the proposal that passed the Senate last year which would’ve capped total pay for employees of bailout companies at no more than $400,000, the salary of the U.S. President. Such a restriction could be enacted today for application in the event of future bailouts. Given a clear warning about the consequences for their own paychecks, executives might think twice about taking actions that endanger their future – and ours.

Congress should not shy away from bolder action on executive pay. Lawmakers mandate limits on other types of corporate behavior all the time. They limit how much pollution corporations can spew out. They limit the chemicals companies can sneak into their products. They limit the hours they can force employees to labor. They set these limits because they recognize that irresponsible corporate behaviors threaten our communities.

Excessive executive pay, the Wall Street meltdown has demonstrated ever so vividly, endangers our public well-being as surely as any other pollutants.

Sarah Anderson is a co-author of the new Institute for Policy Studies report, Executive Excess 2010: CEO Pay and the Great Recession.

About The Author: Sarah Anderson is the Institute for Policy Studies Global Economy Project Director. He work  includes research, writing, and networking on issues related to the impact of international trade, finance, and investment policies on inequality, sustainability, and human rights. Sarah is also a well-known expert on executive compensation, as the lead author of 16 annual “Executive Excess” reports that have received extensive media coverage.

Caregivers, nannies and housekeepers are celebrating across New York State today. Yesterday morning, New York Gov. David Paterson (D) signed into law the first-ever law in the nation that upholds domestic workers’ rights.  Domestic Workers United (DWU) estimates there are 200,000 domestic workers in New York City alone. Most are female immigrant workers.

The new law provides guaranteed sick days, overtime pay, a day of rest, protection from discrimination, and notice before termination. This groundbreaking victory is a result of a six-year campaign led by DWU and supported by a broad coalition of labor and community organizations, including Jobs with Justice.

“Today we correct an historic injustice by granting those who care for the elderly, raise our children and clean our homes the same essential rights to which all workers should be entitled,” Paterson said.

I am grateful to the sponsors for their extraordinary efforts to enact this landmark bill, and most of all to those domestic workers who dreamed, planned, organized and then fought for many years, until they were able to see an injustice undone.

Click here and here to read more about the domestic workers’ struggle for justice.

This article was originally posted on AFL-CIO NOW Blog.

About the Author: James Parks had his first encounter with unions at Gannett’s newspaper in Cincinnati when his colleagues in the newsroom tried to organize a unit of The Newspaper Guild. He is a journalist by trade, and worked for newspapers in five different states before joining the AFL-CIO staff in 1990. His proudest career moment, though, was when he served, along with other union members and staff, as an official observer for South Africa’s first multiracial elections. Author photo by Joe Kekeris

Credit: Joe Kekeris

Too often when economic times get tough, scapegoats are found in the wrong places. Wall Street greed and double-dealing sparked much of the nation’s recent near-financial collapse, yet many in the chattering classes instead are attacking public employees for this rolling recession.

Economist Dean Baker puts the situation in perspective:

Fifteen million people are not out of work because of generous public employee pensions. Nor is this the reason that millions of homeowners are underwater in their mortgages and facing the loss of their home. In fact, if we cut all public employee pensions in half tomorrow, it would not create a single job or save anyone’s house. The reason that millions of people are suffering is a combination of Wall Street greed and incredible economic mismanagement.

Even as a consensus is emerging among economists that the United States should put job growth ahead of deficit cuts, a new study focused on New England finds that the region no longer can afford to spend scarce resources on tax credits and other business giveaways. Instead, it needs to channel economic development efforts to rebuilding neglected infrastructure and improving education for people at all levels. “Prioritizing Approaches to Economic Development in New England” provides

ample evidence that infrastructure (roads, bridges, dams, energy transmission systems, drinking water, and the like) and education are effective approaches for creating jobs and generating economic growth.

The study, by the Political Economy Research Institute at the University of Massachusetts-Amherst, finds the New England states have too long viewed funding for public services and economic development as competing interests—and that’s a false dichotomy. Sounds like the study can apply to the rest of the country as well.

Demonizing the public sector harms the U.S. middle class, writes Drum Major Institute for Public Policy (DMI) Research Director Amy Traub, who reminds us how fundamental the jobs they do are to our everyday lives:

It’s easy to lose sight of the other ways that a strong public sector supports our economy. Middle-class Americans and the businesses they work for rely on good schools, clean and safe streets, and high quality public services and infrastructure. In so doing, they depend on the dedicated teachers, police, firefighters, librarians, sanitation workers, parks employees, and support staff that keep states and cities running.

States and cities face very real fiscal challenges, but the cause is falling tax revenue due to the deepest recession in decades—not excessive spending or lavish compensation for public workers.

Further, Traub has a recommendation for Congress, some Democrats included:

Trashing our middle class in an effort to cut costs is short sighted. Downgrading the middle-class pay and benefits of public workers only speeds their erosion in the private sector, undermining everyone who works for a living….Rather than attacking public pensions that afford retirees a middle-class standard of living, [lawmakers] should be thinking about how to increase retirement security for millions of private-sector employees with meager savings.

As Progressive States Network points out, extremist anti-worker organizations like the American Legislative Exchange Council have been trying to gut public employee pensions for years—and they are using the recession as a public relations platform.

There is no crisis in most state retirement systems, even according to the numbers of the researchers demanding state leaders take unneeded action to cut the incomes of retirees.  And despite the hype from a few carefully selected anecdotes of retirees gaming pension systems, the reality is that the overwhelming number of public employees receive pretty bare-bones benefits, in some cases not enough even to keep them out of poverty.

Corporate backed anti-worker groups are the winners when the public taps into public-employee blame game. Wall Street is another big winner. The CEOs of Big Banks and the financial industry are happy to see the finger pointed at public employees. It means America’s workers are fighting each other and not united in targeting the real culprit of our economic misfortunes.

This article was originally posted on AFL-CIO NOW Blog.

About the Author: Tula Connell got her first union card while she worked her way through college as a banquet bartender for the Pfister Hotel in Milwaukee (they were represented by a hotel and restaurant local union—the names of the national unions were different then than they are now). With a background in journalism—covering bull roping in Texas and school boards in Virginia—she started working in the labor movement in 1991. Beginning as a writer for SEIU (and OPEIU member), she now blogs under the title of AFL-CIO managing editor.

Sure, times are tough. One of the most interesting discussions I’ve ever read about surviving tough times comes from a book called, “The Lessons of Experience: How successful executives develop on the job” by McCall, Lombardo and Morrison (Lexington Books, 1988).

The book was a result of extensive interviews with executives on many topics. The most interesting section was on hardship. Five specific hardships were identified by the executives:

·      A personal trauma threatening the health and well-being of the executive or the executive’s family

·      A career setback involving demotions and missed promotions

·      Changing jobs, in which some executives risked their careers to get out of a dead end job

·      Business mistakes, in which bad judgment and poor decisions led to failure

·      A subordinate performance problem forcing the executive to confront people with issues of incompetence or with problems such as alcoholism

What did the researchers find after talking with the executives about hardship?

“As research has shown, the recognition and acceptance of limitations, followed by an effort to redirect oneself, are characteristic of successful people in general. It was how the executive responded, then, not the event itself, that is the key to understanding hardships.”

Duh! Could anything be more obvious?

Maybe, and maybe not.

Tough times have a funny way of eroding your foundation. Causing you to question yourself, lose confidence and get tentative. All of the things that make it harder to respond to challenges at work.

It’s important to remember that tests come with the turf. We’re all tested.

It’s not bad luck. Or a hassle. It’s part of the dance. Pardon another cliché, but this too shall pass.

About The Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.

Repeat something often enough and it becomes, if not true, at least a solid bit of conventional wisdom. Consider Ron Lieber’s column in Saturday’s New York Times, which neatly recycles an editorial the Wall Street Journal ran back in March. The issue: the pensions that guarantee public employees a middle-class standard of living in retirement have become more difficult for cities and states to afford. This, according to Lieber and the chorus of conservatives singing the same tune, means a “class war” pitting sanitation workers who deferred compensation so that they could retire with dignity against “have-not” taxpayers who would like some retirement security of their own. Lieber even knows the outcome: public workers should to get ready for many more states and municipalities to engage in “rare acts of courage” and break their promises to pensioners.

Jonathan Cohn at the New Republic asks the obvious question “to what extent is the problem that retirement benefits for everybody else have become too stingy?”

It’s a point I’ve been making as well:

One out of three working Americans has no retirement savings to rely on beyond Social Security, many others have saved very little, especially now that the value of their homes has been destroyed. When it’s public pensions that are falling short, it’s very visible. When it’s the private savings of millions of individual households, it’s easy to overlook. But when we start to hear that it has become “too expensive” to provide teachers and police officers with a decent retirement, we know no one else has a chance at retirement security either.

Former Colorado Governor Richard Lamm, quoted in Lieber’s article, takes the point to its logical conclusion, arguing that “the New Deal is demographically obsolete.” Translation: we’d all better get used to the new normal of low pay, few benefits, and no retirement, sooner rather than later. After all, demographics are inexorable. Resistance is futile.

Lately, there has been a fair amount of buzz in the economics blogosphere about the issue that I’ve been discussing here: Structural Unemployment.

Paul Krugman touches on it here. Brad DeLong says this. Mark Thoma has a post in a forum focusing on structural unemployment at The Economist.

If you read through these posts, however, you won’t see a lot of discussion about the case I’ve been making, which is that advancing technology is the primary culprit. I’ve been arguing that as machines and software become more capable, they are beginning to match the capabilities of the average worker. In other words, as technology advances, a larger and larger fraction of the population will essentially become unemployable. While I think advancing information technology is the primary force driving this, globalization is certainly also playing a major role. (But keep in mind that aspects of globalization such as service offshoring–moving a job electronically to a low wage country–are also technology driven).

The economists sometimes mention technology, but in general they find other “structural” issues to focus on. One that I have seen again and again is this idea that people can’t move to find work because their houses are underwater (the mortgage exceeds the equity). The emphasis given to this issue strikes me as almost silly. Are there any major population centers in the U.S. that have really low unemployment?

Even if people could sell their homes, would they really be motivated to load up the U-haul and move from a city with say 12% unemployment to one where it is only 9%? Have the economists lost sight of the fact that 9% unemployment is still basically a disaster? The few locales I’ve seen with unemployment significantly lower than that are rural or small cities (Bismark ND, for example)–places that are simply incapable of absorbing huge numbers of hopeful workers. Let’s get real: playing musical chairs in a generally miserable environment is not going to solve the unemployment problem.

Another thing the economists focus on is the idea of a skill mismatch. Structural unemployment, they say, occurs because workers don’t have the particular skills demanded by employers. While there’s little doubt that there’s some of this going on, again, I think this issue is given way too much emphasis. The idea that if we could simply re-train everyone, the problem would be solved is simply not credible. If you doubt that, ask any of the thousands of workers who have completed training programs, but still can’t find work.

Economists ought to realize that if a skill mismatch was really the fundamental issue, then employers would be far more willing to invest in training workers. In reality, this rarely happens even among the most highly regarded employers. Suppose Google, for example, is looking for an engineer with very specific skills. What are the chances that Google would hire and then re-train one of the many unemployed 40+ year-old engineers with a background in a slightly different technical area? Well, basically zero.

If employers were really suffering because of a skill mismatch, they could easily help fix the problem. They don’t because they have other, far more profitable options: they can hire offshore low wage workers, or they can invest in automation. Re-training millions of workers in the U.S. is likely to make a killing for the new for-profit schools that are quickly multiplying, but it won’t solve the unemployment problem.

Why are economists so reluctant to seriously consider the implications of advancing technology? I think a lot of it has to do with pure denial. If the problem is a skill mismatch, then there’s an easy conventional solution. If the problem’s a lack of labor mobility, then that will eventually work itself out. But what if the problem is relentlessly advancing technology? What if we are getting close to a “tipping point” where autonomous technology can do the typical jobs that are required by the economy as well as an average worker? Well, that is basically UNTHINKABLE. It’s unthinkable because there are NO conventional solutions.

In my book, The Lights in the Tunnel: Automation, Accelerating Technology, and the Economy of the Future, I do propose a (theoretical) solution, but I would be the first to admit that any viable solution to such a problem would have to be both radical and politically untenable in today’s environment. That’s why I don’t spend much time suggesting solutions here: what would be the point? (but please do read the book–it’s free). I think the first step is to get past denial and start to at least seriously think about the problem in a rational way.

The few economists that have visited my econfuture.wordpress blog and commented on my previous posts have generally barricaded themselves behind economic principles that were formulated more than a century ago (see the comments on my posts about these economic concepts: lump of labour fallacy and comparative advantage).

Most economists seem to be unwilling to really consider this issue–perhaps because it threatens nearly all the assumptions they hold dear. I wrote about this in my first blog post . We’ll see how long it takes for the economists to wake up to what is really happening.

About The Author: Martin Ford is the founder of a Silicon Valley-based software development firm.  He holds a computer engineering degree from the University of Michigan, Ann Arbor and a graduate business degree from the University of California, Los Angeles. He is the author of The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (available from Amazon or as a FREE PDF eBook) and has a blog at econfuture.wordpress.com.

At a friend’s urging, I recently bought a bike to commute to the new job. I can’t believe how having the wind in my face takes me back to being nine years old.

Okay, I can hear what many of the women reading this are thinking. Jeez, that’s the last thing we need, something to make guys even less mature.

That aside, my friend also gave me a great bit of sage advice. “Cars win.”

After a week of bike riding, I’ve been very safe because of those wise words. Which got me thinking, what else wins at work?

Clearly companies win today. With all the salary cuts, benefit reductions and layoffs, most workers are running scared. But even there, savvy employees can still negotiate with employers to get what they need. The best way to negotiate with your employer? Do it when you first get offered the job. That’s when you have maximum leverage. The next best way to negotiate, have a competing job offer in hand.

Bosses mostly win. Again, when I’ve had a boss, I usually have been able to get what I needed from them. Not because I’m a terrific negotiator, but because I always ask when they’re in a good mood. Trust me, this goes further than you realize.

Coworkers should win. I know the phrase is hackneyed, but doing random acts of kindness for coworkers is so darn wise. Doing favors before you need them in return. Most people take coworkers for granted, I always try to do the exact opposite.

Customers need to win. Really.

I guess I’m naïve enough to think that we don’t have to always have losers just so someone can win.

About The Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.

For the last few months I’ve been thinking about and writing about home care workers. In my work, I find that if folks haven’t had to hire a homecare worker for themselves or their family, it appears that most of these workers fall off the radar.

The problem here is somewhat circular. The demand for homecare services is exploding as the baby boomer generation ages and more seniors and people with disabilities choose to live at home rather than in a nursing home. Low wages, no federal minimum wage or overtime protections, and no benefits contribute to homecare workers leaving their profession (turnover is estimated to be as high as 60% per year). Consumers and patients have difficulty finding and keeping homecare services as a result. Which leads to – yes – increasing demand for homecare workers.

How did this happen?

Well, it goes all the way back to 1938 when the Fair Labor Standards Act (FLSA) was enacted to ensure a minimum standard of living for workers through the provision of minimum wage, overtime pay, and other protections – but domestic workers, for some reason, were excluded.

Then 36 years later, in 1974, the FLSA was amended to include domestic employees, such as housekeepers, full-time nannies, chauffeurs, and cleaners. However, people who were described as “companions to the elderly or infirm” were for some reason excluded from the law. They were compared to “babysitters.” Weird, huh?

The following year, in 1975, the Department of Labor (DOL) goes on to interpret this “companionship exemption” as including all direct-care workers in the home, even homecare workers employed by third parties, such as home care agencies.

So, in 2001, the Clinton DOL finds that “significant changes in the home care industry” have occurred and issues a “notice of proposed rulemaking” that would have made important changes to this weird exemption. They agreed that it made no sense to exclude this whole industry, as if they were just like “babysitters.”

Clinton’s findings were unfortunately short-lived because the incoming Bush Administration terminated the revision process. Thank you, Mr. Bush.

In 2007 something else happened worth noting: The US Supreme Court, in a case brought by New York home care attendant Evelyn Coke, upheld the DOL’s authority to define this exception to the FLSA. This means, this crazy archaic law can easily be reversed by the DOL.

Meanwhile more than 1.5 million homecare workers are currently living at near poverty level earning a median income of $17,000 a year. Most of these workers, who both love their work and are good at their work, must have two and three jobs to just make ends meet. Many of these workers need food stamps to put food on their tables. All this ultimately comes back to the consumer who often finds it difficult to find and retain high quality homecare services.

The injustice here is, as was said in a June 6 NY Times Op-Ed, ” …while nannies and caregivers make it possible for professional couples to balance the demands of family and work, they often cannot take time to be with their own families when sickness or injury strikes.”

Though I inherently know that we can fix this problem together, I am keen to know what you think is the best way to make this happen.

This article originally appeared on the SEIU Blog.

About the Author: Richard Negri is the founder of UnionReview.com and is the Online Manager for the International Brotherhood of Teamsters.