Business and Labor at Odds, Obama Tries for Togetherness
The centerpiece of the administration's response -- a stimulus package passed with much fanfare that hardly anyone credits with job creation -- is facing rising public ire. But President Obama now seems intent on heaping insult onto an already badly injured American workforce in the hopes of appeasing the already high-flying corporate sector.
"For a long time, we were trapped in a false political debate in this country, where business was on one side and labor was on the other," Obama said earlier this week. "What we now have an opportunity to do is to refocus our attention where we're all in it together."
But it's hard to think of a more substantive and consequential debate that needs to take place in the country right now than reconciling the conflicting interests of labor and business. And the data show that the fortunes of business and the workforce have scarcely been more different despite claims that everyone is in the same boat.
Corporate America's Pile of Cash
American corporations are sitting on a record $1.8 trillion in cash, and soaring earnings for the S&P 500 index companies are expected to reach new records in the coming year. With compensation of $9.5 million a year, the average CEO now earns 319 times what the average worker does. That's up from 42 times in 1980.
Worker salaries, meanwhile, actually dropped over the last decade even before the Great Recession hit. And income disparity is at an 80-year high in the U.S., the only advanced economy that fails to provide basic health-care coverage to the populace.
But the American business lobby understands astoundingly well that the best defense is a good offense. Companies flush with cash are increasingly returning it to shareholders. High-profile CEOs like GE's (GE) Jeff Immelt, meanwhile, are complaining about an over-regulated environment not favorable enough to business.
It's hard to find any evidence of the corporate hostility that bosses are talking about, though. If anything, toothless regulation and complacent lawmakers have created the most acquiescent conditions in the developed world.
Europe, for example, is swiftly passing tough new rules limiting bonuses in the financial sector. The U.S. firms that were at the epicenter of the last crisis, though, could hardly have it better. Shares rallied in June as the cosmetic nature of the changes became apparent. Despite concerns that real reform might be in the cards, "I don't think I could have watered down the provisions better than Congress did," one analyst said.
Of course, investors would have been wise to take their cue from how the health-care debate unfolded. Shares throughout the pharmaceutical sector rallied after it became clear that any legislation would be a handout for incumbents rather than meaningful reform.
Now, a frustrated Obama administration seems to be betting that bending over backwards even further to corporate interests might spur job creation. But there may simply be no more room left to go.