The U.S. manufacturing giant Boeing, analyst
Harold Meyerson observed last week, has only one global
rival in the large-scale passenger-plane market, the European
conglomerate Airbus.
Workers at these two aerospace giants turn out to make about the same compensation. But executives at Boeing make more.
Question: Given these realities, what should Boeing do to compete more effectively? The answer from Boeing CEO Jim McNerney: Cut Boeing worker wages, benefits, and pensions!
Earlier this fall, McNerney gave his Seattle area workers an ultimatum: Either accept a contract "extension" that would leave them paying more for health care and getting less in retirement -- and force new hires to work 10 extra years at substandard wages -- or Boeing would go elsewhere to manufacture its new 777x passenger jetliner.
Boeing gave Washington State's political leaders a similar ultimatum: Either fork over new subsidies and tax breaks or see your state lose jobs by the thousands. Washington lawmakers caved almost instantly. They voted Boeing the largest subsidy deal in U.S. history, over half a billion annually for the next 16 years, over double the state's annual funding for the University of Washington.
Boeing's workers didn't cave. They rejected the Boeing ultimatum, and McNerney, who pulled in $27.5 million in take-home last year after $23 million the year before, is now parsing subsidy offers from half a dozen other states.
How does this story end? Maybe with the "Walmartization of aerospace."
"This," as Seattle author Timothy Egan puts it, "is how the middle class dies."
2/ David Novak: Fast-Food Glutton
At first glance, corporate CEO David Novak
doesn't need a subsidy from anybody. The fast-food empire Novak
oversees, Yum! Brands,amassed $1.59 billion in profits last
year.
And Yum -- think Pizza Hut, Taco Bell, and KFC -- is doing pretty well by Novak, too. He pocketed $94 million worth of "performance pay," notes an Institute for Policy Studies analysis, in just 2011 and 2012 alone.
But Novak and Yum are collecting subsidies anyway -- and plenty of them. One comes directly from the U.S. tax code. Current tax law lets corporations deduct executive "performance" pay off their taxable income. This sweet subsidy saved Yum $33 million the last two years on Novak's ample compensation.
Average Americans are actually subsidizing Novak and Yum at much higher levels than this single tax break suggests. In fact, taxpayers are subsidizing Yum's entire fast-food business.
Workers at fast food giants like Yum simply don't make enough to make ends meet for their families. So how do these workers get by? They depend on taxpayer-financed social safety net programs, from food stamps to Medicaid.
Overall, researchers noted in 2013, American taxpayers "are spending nearly $7 billion a year to supplement the wages of fast-food workers."
And how are fast-food executives like David Novak spending the profits this generous taxpayer support makes possible? They're having their companies, for starters, buy back shares of company stock off the open market, a strategy designed solely to bump up their share prices.
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