A Livable, Minimum Wage
By all accounts, M. Douglas Ivester did not perform well at his job. During his stint as chairman and chief executive of Coca Cola, the company's growth stagnated and earnings fell. The biggest product recall in Coke history occurred on his watch. Not good, Doug! And so, at the age of 52, he chose "voluntary retirement," a phrase, according to those in the know, loosely translated as "get out or get fired."
Don't worry about Douglas Ivester's future, however. He won't be showing up at the local food bank. As a departing gesture, Coke's Board of Directors did better than the customary watch fob. Instead, they gave him a retirement package worth $17.8 million plus two million shares of stock worth almost $100 million. Their bye-bye present includes:
* $795,600 a year till the year 2002, and then $675,600 a year for the duration of his or his wife's life. Plus
* $704,000 in annual pension payments.
* $1.5 million a year for three years.
* $675,000 a year from 2002 through 2007 for consultation fees. Say he consults for 100 hours. That's $6750 an hour.
To sweeten the package Coke's Board also threw in a laptop computer and a cellular phone, covered his dues to executive clubs, and, in a sentimental gesture, gave him title to the Mercury Marquis that was his company car. I'm in tears.
Oh yes, Coke has also announced plans to lay-off 6,000 workers world-wide, the first-step in a plan to cut 20 percent of its workforce.
In Congress, meanwhile, the House of Representative is scheduled to vote on raising the minimum wage $1 over a three year period. (President Clinton wants to spread the raise over two-years). That would give ten million full-time workers a $2000 annual wage increase after three years. Not enough to keep up with the Ivesters or to live on, perhaps, but money-in-the pocket nonetheless. Or to put it in Coke terms, 8900 workers could get the $2000 raise out of the money the Coke Board is paying to rid themselves of their CEO.
Conservatives in Congress, most of them Republican, are against any hike in the minimum wage. It's a matter of balance, yin-yang if you wish. The free market makes some people rich and it keeps some people poor. In the interest of balance, the Republican leadership wants to attach a $120 billion tax-cut to the minimum wage bill. The tax cut will have little effect on the small service industry business owners who now pay minimum wage. The principle cut the GOP demands is in the estate tax which only estates worth about $1 million now have to pay. According to Citizens for Tax Justice, 73 percent of the tax cut will go to those earning more than $319,000 a year. There are small businesses that will have a difficult time paying out higher wages. I would offer a tax credit to businesses making a marginal profit that pay their workers a liveable (not minimum) wage. The Republican plan talks about protecting business but, in its details, gives the tax break to the very rich.
Conservatives oppose any raise in the minimum wage. It's inflationary, bad for the economy, business can't afford it, they say. The productivity of American workers increased significantly from 1973 to 1997 and is still growing at a record pace. Corporate profits also continue to grow and CEO salaries have gone through the roof. Yet, during this same period, wages fell by 16 percent when adjusted for inflation.
Recall that President Hoover, for whom the Hoover Institute is named, refused to intervene in the economy to lift the country out of the Great Depression. President Franklin Delano Roosevelt, who did intervene and who passed the first minimum wage legislation, defined minimum wage as a livable wage. "By living wages I mean more than a bare subsistence level," he said. "I mean the wages of decent living."
The reason why a rise in the minimum wage is difficult to pass and a liveable wage is still a pipe-dream for millions of working Americans is not because of economic theory. It's because of campaign contributions and that good old-fashioned conservative value of greed. Minimum wage workers don't give political contributions. Millionaire executives do and policies favoring low-wages and huge tax cuts are their reward. That's why when working people have more money to spend it's considered inflationary, but when rich people have more money to spend it's called prosperity.
Conservatives love the hard-working American people. They just don't like giving them raises in pay.