See a Pattern: Mayor Bloomberg and Governor Schwarzenegger Attack Working People and Their Pensions

by Andrew H. Dral

I take my hat off to Transportation Workers Union (TWU) Local 100 and its President Roger Toussaint.  If any union members had a right to strike, it was them.  Working people have to unite, use their right to associate, and fight defensively to hold onto what little they have.  The mantra of Mayor Michael R. Bloomberg and Governor Arnold Schwarzenegger are cheap labor, eradicate defined benefit pension plans for the working class, and shift wealth to the rich through tax cuts.  What happened in New York City is very likely to happen in California.  The Manhattan Transportation Authority’s (MTA) wage proposal for two out of three years from management doesn’t cover the current 3.5% rate of inflation, so MTA workers essentially take a pay cut, if they accept the current agreement.  Union workers were looking for a reasonable 6% raise, but have been offered 3%, 4%, and 3.5% each of the next three years, up through 2008, this is a travesty and an affront to all working people, especially when considering the MTA’s $1 billion (B) surplus.  This proposal is shameful when considering the absurd 2004 30.2% rise in CEO salaries.

The MTA’s proposal is a far cry from the raises Chief Executive Officers (CEOs) at 2,000 of the largest U.S. companies have registered over the last three years, according to the The Corporate Library/Board Analyst:

                                                                                Median Total

Fiscal Year           Median Increase                  Compensation $Million (MM)           S&P 500 Return

2004                               30.2%                                     $2.4 Million (MM)                                     10.9%

2003                               15.0%                                     $1,9MM                                                       28.7%

2002                                9.6%                                      $1.6MM                                                       -22.1%

There is no justification for a 30.2% 2004 wage rise, when the S&P 500 returned only 10.9% or the 9.6% rise in 2002 when return plunged to -22.1%.  This is a negative leverage situation, the CEOs are taking away more value than they put in.  It’s ridiculous to say this is pay for performance or that they deserve it.  We can only surmise what CEOs received in 2005 when the S&P 500 rose only 3%, no doubt another no value added year.

The funds for workers’ salaries and benefits are there, but they’re being transferred to the rich and executive ranks.  Workers must fight to stop the wealth transfer.  Note the following examples of corporate greed and gluttony.  War profiteer David H. Brooks Chief Executive Officer (CEO) of the bullet-proof vest manufacturer DHB Industries Inc. witnessed a 13.7 fold rise in total compensation to $72.7MM in 2004.  Exxon Mobil Corp.’s Chairman and CEO Lee R. Raymond received an 82.4% raise in 2004, by receiving $81.7MM in total compensation.  Goldman Sach’s CEO Henry Paulson was just provided with $37MM for 2005, a 26% raise over 2004.  The CEOs continue to make outrageous salaries at the expense of our democracy and economic fairness.  The total compensation of the 5 best paid officers of publicly held companies, from 2000 to 2003, amounted to 10% of corporate earnings.  The following lists the top-5 S&P 500 CEOs by total compensation in 2004:

Company                               Chief Executive Officer      Total Compensation

Yahoo, Inc.                            Terry S. Semel                       $230.6MM

United Health Group, Inc.   William W. McGuire            $124.8MM

Waters Corp.                        Douglas A Berthiaume        $109.7MM

Forest Laboratories, Inc.     Howard Solomon                 $92.1MM

Coach, Inc.                            Lou Frankfort                        $89.4MM.

In 2004, the ratio of average CEO pay to the average pay of a production worker was 431-to-1, up from 301-to-1 in 2003, according to United for a Fair Economy and the Institute of Policy Studies.  CEO of Risk Metrics, Ethan Berman, recently wrote, “the banker John Pierpoint Morgan once said that he would never lend money to a company where the highest-paid employee was paid more than 20 times the lowest-paid, as it was in his view unstable.”  This ratio hasn’t been touched since the late 1950’s.  From the 1960’s to the 1970’s executives’ pay, compared to the average worker’s pay, rose from about 25 to 40 to 1, respectively.  In 2001 average CEO pay to the average worker recorded a high of 525-to-1.

It’s time to cap CEO salaries at 20-to-1 of the average worker.

From the final quarter of 2001 through last year’s third quarter, total compensation paid to employees by corporations, rose at a 3.4% annual rate in the 16 quarter period, the slowest of any post-war expansion lasting that long.  During the 1990s CEO salaries rose 535%, while the wages of the average worker rose only 32%, barely surpassing a 27.5% inflation rate.  If the wages of workers had kept pace with CEO pay, workers would be making a minimum wage of $23.03, instead of $5.15.  In 2005 hourly wages fell 0.5%.

The demonization of TWU Local 100 during the strike was truly amazing.  On our local left leaning radio station CBS national news stated, an MTA bus driver can make over $100,000 a year, with over time.  More realistically,  the average bus driver makes $62,551 a year, with over time.  The average MTA workers salary is only $55,000 a year, with over time.  A new hire starts at a paltry $35,000.  It takes $85,000 annually to live a middle class life-style in New York City. 

Mayor Bloomberg called the strike “selfish and illegal” and the workers “greedy.”  He said the workers “thuggishly turned their backs on New York City.”  The workers “have no respect for the law.”  Bloomberg said the strike was “robbing people of their opportunities to earn a living and provide for their families.”  Calling these workers “greedy” was disingenuous and an insult to all workers.  The billionaire mayor asserts constituents were telling him they don’t make that kind of money, they don’t have those pensions, why should the strikers?  Frankly, the mayors’ constituents deserve better.  All workers deserve better.

The New York Post, bastion of workers’ right to strike, wrote “The union is not only greedy, arrogant, short sided, egotistical, but is also incredibly stupid … I hope Pataki goes Reagan on their butts and fires them all …  Roger Toussaint stabbed millions of New Yorkers in the back yesterday.  That makes him a thug.  And a coward … Now it’s time to do some damage to the TWU … They know Toussaint is out of control.”  I hope unions learn to generate a high impact quick response to the plentiful vitriolic anti-union rhetoric pouring down upon them.

Workers in the U.S. have been beaten down since the anti-union policies of the Reagan administration, fighting just to hold onto what they have.  It’s time for workers to go on the offensive.  The mayor -- heavy handedly through the Taylor Law -- threatened jail time for the strikers, contempt charges even though it was his demand, which stunned the union negotiators.  That last minute demand, initiated at 12:01AM, mandated that new hires contribute 6% gross pay to their pensions, instead of 2% that prompted the strike.  Toussaint said the MTA asked the union to sell out its unborn.  The pension proposal would only save the city $20MM over the next three years, not even covering the police over time during two days of the strike.

The mayor wanted to make a statement by attacking the pension.  The kind mayor ordered “coercive fines” of 25,000 per day per striker and $22MM dollars a day – added to a previous $1MM a day -- against the union, like our Governor Schwarzenegger a true prince of darkness.  The union has only $3.6MM in assets, plus a $60MM headquarters building.  What convinced Mayor Bloomberg to drop the demand for a 6% pension contribution?  It was when more than a dozen public sector union leaders said that it was reasonable for the MTA to drop its pension demand.  This is why it’s essential to increase the union membership ranks – to get that solidarity – for that threat of sympathy job actions.

The anti-strike Taylor Law legislation is an attack on organized labor.  One author described the Taylor Law as “another dagger in the heart of organized labor and their basic right for a fair share of corporate profits.”  Taking away a worker’s right to strike gives management extreme power.  Through the Taylor Law union members lose two days pay for every day on strike, may lose their jobs, pay a $25,000 fine per day, face contempt charges, and may be burdened with millions of dollars in fines.  The objective is to bankrupt the union and abrogate its right to collect dues.

The right wing “think tanks” are trying to perpetrate the big lie through the “echo chamber” that defined benefit pension plans are in economic dire straights.  A representative from the Manhattan Institute states, “if nothing is done to bring pensions under control, all other headaches that state governments will be facing in the next 20 years on needs like education and health will be enormously worse.”  In addition to the 6% pension contribution the MTA wants to raise the retirement age from 55 to 62.  Management demands that workers contribute more or retire later.  But is this take-away necessary?

The problem with pensions isn’t one of cost, its one of priority.  Corporations made an explicit decision to underfund pensions, while ratcheting up dividends and stock buy-backs, which hit all time highs in 2005, $202 billion (B) and $315B, rising 11% and 60% from 2004, respectively, no wonder there’s no money for pension plan contributions.

CEOs and congress are certainly taking advantage of defined benefit plans.  The following executives have the largest defined benefit retirement plans for life:

                                                                                                                Annual Defined Benefit

Chief Executive Officer      Organization                                        Pension Plan $Million (MM)

Lee R. Raymond                   Exxon Mobil Corp.                               $10.2MM

Dick Grasso                           New York Stock Exchange                 $8.4MM

Henry McKinnell                 Pfizer, Inc.                                              $6.5MM

Edward Whitacre                 SBC Communications                          $5.5MM

William McGuire                  United Health Group                           $5.1MM

Jack Welch                            General Electric                                     $4.3MM

Robert Nardelli                     Home Depot                                          $3.9MM

Charles Gifford                     FleetBoston                                          $3.1MM

Franklin Raines                     Fanni Mae                                             $1.4MM

John Breen                            Tyco                                                       $1.1MM

Richard McGinn                   Lucent                                                    $870,000

Pat Russo                              Lucent                                                    $740,000

Harry Stonecipher                Boeing                                                   $631,000

Phil Purcell                            Morgan Stanley                                   $500,000

Congress after 6-years of service                                                      ~$16,503

After Mayor Bloomberg’s anti-worker and anti-union remarks I don’t understand why any union members would support Mayor Bloomberg, but they do.  Mike Fishman of the local Service Employees International Union Local 32BJ should be removed for his support of the mayor’s re-election bid.

The problem in this country is greed, not a lack of money for wages or pensions.  It’s a wealth transfer to executive management and the rich through tax cuts.  The unremitting and unwarranted greed of executive management in collusion with anti-worker politicians are destroying the middle class and facilitating the working poor, along with perpetuating an utter disrespect for workers.  The TWU Local 100 workers complained about “the disrespect from passengers and abuse from bosses … treated like we’re the garbage of the city.”  The TWU Local 100 strike cost the city’s economy $1B.  Workers must hit’em where it hurts, in the pocketbook, anything less is futile.  If anyone is selfish, it’s Mayor Bloomberg and Governor Schwarzenegger, for proliferating the Republican agenda of cheap labor, eradicating defined benefit pension plans for workers, and shifting wealth to the rich through tax cuts.  Thank God for the TWU Local 100 heroes.

Andrew H. Dral “The Rabble”