But professional sports leagues are an outlier in terms of American labor strikes. Professional athletes are able to come to the table with assets that individuals employed at other large corporations often don’t. Three of the most obvious factors in preventing wide-scale labor action are the gutting of organized labor, fear of retaliation and lack of any leverage over management, all of which do not apply to professional athletes. So, given the myriad factors systemically preventing organized labor action in America, it says that workers are getting increasingly desperate, fearless and unwilling to believe what management promises them. Labor strikes for normal workers, as those who participate in them often say, are not enjoyable but a move of last resort when relations with management become completely untenable. There is a lot of pain associated with labor strikes for workers, so it is a profound indictment of the current economy that we are seeing them pop up at a rate thought inconceivable in recent decades. It’s also worth noting that a low unemployment rate gives workers more freedom to strike as well, as there is not as much fear that one will not be able to find employment when losing a job, particularly a low-wage one. These simultaneous labor strikes indicate that the American economy is being stretched to its outer limits based on its current structure. As the “Bidenomics” pitch from the White House indicates, traditional top-line indicators such as unemployment, the stock market, year-to-year inflation, GDP and consumer spending are looking strong. However, President Biden’s own comments and support for the striking autoworkers indicate that even he understands that something is amiss despite the strong top-line numbers. Biden, in his comments regarding the commencement of the UAW strike, indicated that the record profits auto manufacturers have seen in recent years must be adequately shared with the workforce. He even marched on the picket line with the autoworkers and spoke to them, encouraging them in their fight. This is a sign that, even in the upper echelons of D.C., where worker power is typically scoffed at, there is an understanding that public sentiment is largely with the striking workers right now. We’re at a tipping point in American history where corporate power has become so overwhelming that even some of its past loyal custodians are looking for ways to rein it in. When looking at all of the recent labor actions as a whole, common threads emerge. Wildly successful companies have seemingly created a separate cottage industry in the form of stock buybacks and, crucially, have increasingly wedded executive compensation to the stock price. A stock buyback is one of the principal ways a company can use its cash, including investing in its operations, paying off debt or paying out dividends to investors. Crucially, with a buyback, the company can increase earnings per share, all else being equal. When pursued enough over time, buybacks can elevate investors’ returns significantly. They’re also a more tax-efficient way to return the earnings of the business to shareholders, as opposed to dividends, which are taxable. While stock buybacks can juice returns for shareholders, they can also starve a company of money needed in other areas, such as research and development or investment in new products and facilities. Notably, in the past 12 months, the Big Three automakers (General Motors, Ford and Stellantis) have authorized $5 billion in stock buybacks and reported $21 billion in profits in the first six months of 2023. In the negotiations with the automakers, the UAW specifically targeted stock buybacks as providing a major obstacle in companies spending more on their workers. “Our union has also proposed an enhanced profit-sharing formula that would provide workers $2 for every $1 million spent by Ford on stock buybacks, special dividends and increases to normal dividends,” said UAW President Shawn Fain. “Ford has responded with a concessionary proposal that would change the profit-sharing formula so that workers would actually earn less.” Aside from stock buybacks, another component that has contributed to the current corporate environment is tying CEO pay to stock performance. According to a 2021 research report by the Economic Policy Institute, “Exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with. CEOs are getting more because of their power to set pay and because so much of their pay (more than 80%) is stock-related, not because they are increasing their productivity or possess specific, high-demand skills. This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of the top 13
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