In the 19th Century, Horace Greeley’s sage advice to an aspiring youth was “Go West Young Man”. In the 20th Century, in The Graduate, Duffin Hoffman’s character, Benjamin Braddock, is given the supreme duosyllabic career advice, “Plastics”. In the waning days of the Bush Administration, United Steel Workers International, President, Leo W. Gerard, offered up this nugget of wisdom to 21st Century youth, “Those who shower before work get bailed out; those that shower after work get thrown out”.
During the automotive bail-out hearings, Bob Corker, the junior Senator from Tennessee, insisted that any bail-out money be tied to the United Autoworkers (UAW) agreeing to cut wages at domestic auto plants to the level of the foreign transplants. Though the auto bail-out did not pass the Senate, this requirement became enshrined in the TARP rescue plan that President Bush approved at the end of December. The difference has been characterized as $60 per hour versus $30 per hour – or a requirement that the UAW agree to cut the compensation of its members by 50% or the US government will force GM and Chrysler into bankruptcy. Pretty tough medicine.
This morning in the Financial Times, it is reported the AIG paid its staff, in December during the automotive bail-out hearings, $619 million in ‘stay bonuses’. These bonuses were needed to make sure that 2,231 employees did not quit AIG operations that were slated for divestiture. That is a cool $277,454 per person; by point of reference, the average US household of 2.5 persons makes $115,000 per annum. If a trisyllabic phrase “WTF” doesn’t immediately come to mind, you must be the only unemployment counselor in America [Lost in America, 1985] who has more six-figure jobs in your index file than you can fill. It appears that Mr. Corker’s Republican constituency is more concerned with a smelly Union guy who showers after a hard day of repetitive, boring work getting $60 bucks an hour than a ‘suit’ sitting at a conference table sipping lattes getting $138 per hour ($277,454 divided by 250 working days times 8 hours) on top of his or her regular compensation to stick around in an economy that is losing jobs at the rate of 500,000 per month. Monsieur Corker, your righteous indignation at the UAW is so well placed!
All this gets one to thinking that Representative Barney Frank should add a new condition to the next $350 billion tranche of TARP bail-out funds – he’s our last chance because it already passed the Senate with no debate. He should insist that the employees of the domestic financial services companies have to cut their compensation to the level of their foreign competitors to qualify for bail-out funds. I wonder what a Japanese salaryman makes versus a money center banker in Manhattan? Based on comparative per capita income, at least 25% less. Cutting compensation in the financial services industry across the board by 25% as a pre-condition to getting more TARP money would be poetic justice and it would smoke out those banks that are tapping into TARP to make acquisitions and maintain dividends.
Hourly Rate Annual Compensation
$30 $75,000 (Transplant)
$60 $150,000 (UAW)
$120 $300,000 (Wall Street Associate, Bank Director, AIG Stay Bonus)
$240 $600,000 (Bank Vice President, Wall Street Senior Associate)
$480 $1,200,000 (Bank C-Level, Wall Street Vice President)
$960 $2,400,000 (Bank President, Wall Street Managing Director)
It is time to give some dignity to the people who shower after work and actually make things.