Wednesday, March 15, 2017

You make HOW MUCH??

When I look at the issues that have our country tied in knots today, it seems to me that every single one can be traced straight back to income inequality.  Its beginning predates Citizens United (the court ruling allowing unlimited political contributions by corporations), it didn't get this way overnight, and we won't get out of it with just a few new Executive Orders.  It's WAY more complicated than that.

Without doubt my all-time favorite corporate CEO was Herb Kelleher, the (now retired) Chairman of Southwest Airlines.  His business model was simple:  "Take care of your people first, your customers second, and your stockholders last."  If you take care of your people first, they will be happy and give impeccable, smiling service to your customers.  Happy customers will come back time and again, ultimately giving your stockholders a handsome return.  Win-win-win.  While the airline industry has been in constant turmoil for years, with bankruptcies, mergers, and layoffs common, Southwest has had an unbroken string of profitable years with no layoffs, ever.

That's Herb in the red shirt with some of his ramp employees, and the photo was not staged.  He would on a daily basis walk around and greet his people, swap a quick joke, do some back-slapping (the ladies got a kiss on the cheek....times were different then!), and just in general tell them how much he appreciated them....and they worked their asses off for him!

In 1965 the average CEO made 20-times as much as his average employee.  By 2015 the average CEO made 303-times as much as his average employee.  (source:  Fortune magazine) 

Here's where I'm going with this:  While most airline CEO's of the day were making handsome 7-figure salaries, Herb kept his salary at around $350K (?) per year.  He was seen by his people as well paid, but still with his feet on the ground.  He made sure that ALL Southwest employees received yearly profit sharing, real health insurance, a generous 401K, and stock options.  (That's where Herb made his very sizeable fortune.)  If the company made money, so did he, and his model worked....there was never an unprofitable year.

This is critical....right after 9/11, when planes were flying virtually empty and other airlines were laying off as fast as they could, top executives at SWA said they would work without pay until the crisis was over, while their employees were never asked for any wage concessions.  THAT'S how you show solidarity with your people!  (As I recall, American Airlines was at the time cutting employee pay, all while they were quietly giving generous bonuses to upper management.  The rank-and-file found out about it and the s__t hit the fan!)

Today we have a dangerous divide between workers and the "One Percent".  The upper class has never had it so good, while the middle class is actually shrinking.  Their inflation-adjusted income has been stagnant for 25 years.  Too many don't have health insurance, or if they do, they can't afford the deductibles.  Large companies are generally not expanding here, and many are moving operations overseas.  Employees are scared.  Small companies are where new jobs are being created today, but many of those have modest or even no benefits.

Too many of our new jobs that we use to pump up our high employment figures are low-paying positions.  Part-time or contract workers are popular because they allow companies to skirt offering benefits, among other things.  Workers feel estranged from their bosses, and bosses can't empathize with their workers.  Distrust and hostility is the norm.  This income inequality/attitude now permeates how our country operates from top to bottom, and it's unhealthy.

I'm not looking for some sort of instant Robin Hood "rob from the rich/give to the poor" income redistribution scheme, for that, too, would cause resentment.  But our rigged tax laws and subsidies and sweetheart breaks for the rich need to be reversed.  We all need to be on a level playing field, where everyone feels like they're getting a fair shake.  

All I'm hearing from our leaders is promises.  The "haves" are trying to get even more for themselves by taking away what little the working class has left.  This is not good.  We should look to Herb Kelleher as an example of how we can ALL thrive if we pull in the same direction.



  1. History is replete with examples of what happens when a society's wealth is concentrated in only a few hands. Can you say Revolution?

  2. Wow. You've been slipping those dustbound tomes off the shelves...haven't you? "Das Kapital" "The Jungle", Upton Sinclair and even maybe anything by Bertrand Russell, etc. I think you're absolutely right.

  3. Das Kapital? Really? I doubt there's a Marxist bone in Herb Kelleher's body. He just figured out, as have I, that in the long term if you treat your people right they'll make you MORE money than if you were constantly beating them up. And isn't that was capitalism is all about....making a fair profit? Nowadays showing any employee and ounce of compassion or respect is considered a weakness. I'll stand with Herb any day!

  4. There are sadly too few CEOs like that these days and far more who think they're the kind/queen of the realm and treat their employees like lowly serfs. One of those memes that went around was how Papa John, the CEO of the pizza company, lives in a castle-like mansion and complains about having to give health insurance to his employees.

    The saddest thing though is when a company is bankrupt and the executives still say they need enormous salaries and benefits while they're laying people off. Because if they don't get those huge salaries the people who bankrupted the company will just have to quit. To which I always say, Good riddance to bad rubbish. You me or any other of the serfs could run a company into the ground just as effectively.

  5. Right on! And regarding Pat Dilloway's comment about Papa John...when we heard about his opinion on health insurance, we quit getting Papa John's pizza. Haven't bought it in years.

  6. Reminds me of a conversation I had with a very smart and rich man.( loose quote as I remember it) " If the SEC does not un-list all companys that pay their CEOs more than 20 times the pay of the lowest employee, America will fall." That was profound to me back in the 1970's, but now I see how it might have kept America Great.

    1. Ouch! Shame the SEC wasn't taking notes. It could have saved us from a big f__kin' mess today!

  7. This Congress and this administration are on the way to widening the income equality gap. Step one: appoint all millionaires (qualified or not) to cabinet positions. Step two: Eviscerate Dodd-Frank. Step three: Eliminate the the Department of Labor’s fiduciary rule.

  8. I agree with you on Kelleher. He was one of a kind, unfortunately.