As we move into celebrating (hopefully) an end to the United Auto Workers (UAW) strike against the Big 3 American automobile manufacturers, let us not be too quick to turn our attention away from the issues it raised. Among the things that the union's new president Shawn Fain labored mightily to bring to the nation's attention is the fact that there really is such a thing as an ongoing class struggle. It's not new, it wasn't invented by Karl Marx - or anyone else, and we're all involved in it - bottle washers to billionaires - whether we like it or not. Yet it can take something like a nation-wide strike to bring it to the fore.
The union's been offered a 25 percent wage increase over four and a half years. It's not the 40 percent they asked for, but you know you're never going to get all that you ask for, and it's a lot better than what they've been getting lately. And even if they had gotten the whole 40, no one contract negotiation could fix the inequities in this industry - or any other. One of the many ways in which Fain quickly distinguished himself from his decadent, corrupt predecessors - whom he was recently elected to replace - was with statements like "Billionaires in my opinion don't have a right to exist." While such talk may set some Fortune 500 CEOs to squirming with visions of peasants with pitchforks and falling guillotine blades, Fain - like Bernie Sanders who's been saying this for some years now - means no harm to their necks, only to their net worth.
Although it can often be difficult to know for sure who is a billionaire and who isn't, since some go to great lengths to see to it that no one knows their true worth, William Clay Ford Jr is widely believed to be one of their number. Ford - better known as Bill - currently serves as executive chairman of the family motor company. In that capacity, he recently took the somewhat unusual step of calling a press conference about the ongoing contract negotiations to declare that the company's offer, then on the table, of a 23% wage hike through early 2028 was "at the limit" of what it could devote to the wages and benefits of its striking (UAW) members. While everyone knows that such limits don't apply to certain corporate employees - like Ford and his peers - it can always be a bit shocking to see just how radically they don't apply.
The opening words of a Detroit Free Press headline from earlier this year actually seem to back up Ford's exhortation to frugality: "Ford CEO gets lowest compensation of Detroit Three" - but then the last three words: "at nearly $21M." The article tells us that "Ford CEO Jim Farley received total compensation of $20,996,146 in 2022," and that "The ratio of the CEO's total compensation to the median of all employees' total compensation is 281-to-1 - a disclosure required in the annual executive compensation report to the U.S. Securities and Exchange Commission." The company's top five executives netted nearly $71 million in 2022 (including Bill Ford's $17,302,266).
Those ahead of Farley were General Motors CEO Mary Barra, whose total 2022 compensation of $28.98 million was 362 times that of the median GM worker, and Carlos Tavares, CEO of Stellantis - the successor company to Chrysler - where the median employee would have to work 298 years to match the 23.46 million euros his company gave him. (In 2021, 52.1% of the company's shareholders voted against giving him an additional 25 million euros on top of his 19.56 million "regular" compensation package as a reward for seeing the company through its merger. Stellantis opted not to take the advice and gave Tavares the money.)
In an interview with the New York Times, Bill Ford, rather than citing the relative parsimoniousness of his own company's executive-pay policies, chose instead to come to the defense of his industry peers: "Everyone's going to have their own viewpoint on executive compensation, and I totally get that. But I also know what the market is for top talent. You have entertainers and athletes who are making more than Jim Farley and Mary Barra. But that's what the market is, and the company with the best talent wins, period."
Apart from suggesting the possibility that GM or Stellantis might be able to lure him away from the family business for, say, $20 million, Ford's statement does raise some question about a major argument raised in his press conference. At that time he said, "This should not be Ford vs. the UAW. It should be Ford and the UAW vs. Toyota, Honda, Tesla, and all the Chinese companies that want to enter our home market." But Toyota, it seems, only paid its CEO the equivalent of $6.9 million in its last fiscal year, while the head of Honda apparently had to make ends meet with a mere $2.4 million. Seems like with what the Big 3 are paying for the top talent, they should have no trouble winning out over the foreign competition - doesn't it? But when it comes to Tesla, there may be trouble. Tesla CEO Elon Musk has a deal that could ultimately net him as much as $56 billion (not a typo), so how's the Big 3 ever going to compete with talent that valuable?
Of course this executive babble about high priced "talent" is entirely confined to the corporate board room and never extends to anyone who ever lays hand on chassis in earnest, on the shop floor where the cars are actually made. And it turns out that these great automotive talents don't come cheap even by Fortune 500 standards, where an Associated Press survey found the average CEO-to-Worker pay ratio to be only 186-1. But for a really sobering measure of the American economy's direction over the past half century there's the fact that when the Economic Policy Institute (EPI) looked at the 350 largest publicly traded U.S. firms in 1965, they found a CEO-to-Worker pay ratio of 20-1. As our last president might say, compared to what goes today, those CEOs were losers.
But, okay, outrageous as those salaries may sound to those of us who don't have that kind of "talent," the fact is that a million here and a million there do not a billion make. And billions are what these companies are dealing in. EPI reports that from 2013 to 2022 the profits of the Big 3 grew 92%, totaling $250 billion over that period with forecasts for another $32 billion this year. So how important then are the $903,857 expended for Jim Farley's personal use of aircraft or Bill Ford's $1,113,703 personal security bill in this larger picture?
Well, there's two things to think about, anyhow. The numbers cited here are clear evidence of a corporate leadership class so entirely out of touch with the workforce whose labor produces their wealth as to not even be embarrassed to talk like Bill Ford does. No exhortation from above to tighten our belts, pull together, and so forth, is going to be taken seriously from people who claim that the competitive nature of their industry requires them to make hundreds of times what their employees make. If one of the Big 3 would announce that henceforth its execs will make no more than, say, fifty times what their average worker does, perhaps someone might think of actually taking them somewhat seriously. But there seems little chance of that.
Much more important, however, is EPI's observation that "the Big 3's $250 billion in profits since 2013 amounts to nearly $1.7 million for each of the roughly 150,000 workers covered by UAW collective bargaining agreements." The UAW has made a splendid effort in this strike. Let's hope it's just a beginning.
