The Hightower Report
Redistribution of Wealth to the Few; and Soaking Shareholders for Perks
Redistribution of Wealth to the Few
America's unemployed and downsized workers are furious that corporate profits, stock prices, and CEO pay are up – while hiring and wages are held down. But wait – U.S. corporations actually are increasing their payrolls – just not in America.
In a two-year period, these corporate giants hiked hiring in foreign countries by 729,000 jobs, even as they cut 500,000 jobs here. Hilton hotels, for example, moved a U.S. call center to the Philippines, calling it a move for "maximizing efficiencies" – which is cold corporate jargon for "chasing cheap labor."
Likewise, the Philippines will be the new home of the Troy, Mich.-based telephone banking business belonging to JPMorgan Chase, which hauled in $25 billion from the Wall Street bailout. Computer peddler Dell has closed its last PC factory here, while creating tens of thousands of PC jobs in China. And get this: Hewlett-Packard has dumped its human resources staff in 10 states, moving the work to Panama. Hello, human resources is the corporate division that ostensibly helps resolve worker complaints and boost employee morale. So the message here is: "Hey, bud, got a problem? Take it to Panama."
Yet, a clueless Harvard business professor recently pooh-poohed any concerns about this outflow of American jobs: "When companies succeed abroad," he said, "people at home succeed." Golly, professor, I can hardly wait for you to enjoy the success of seeing your job offshored to some orangutans in Malaysia.
Bear in mind that replacing American employees with low-wage foreigners does nothing to improve products or even make them cheaper. The savings on wage costs are simply pocketed by corporate executives and Wall Street financiers. It's a massive redistribution of wealth from the many to the few. And the moneyed elites wonder why workaday Americans are furious.
Soaking Shareholders for Perks
You think you've got financial problems, bucko? It's time you considered the squeeze that others are feeling. For example, CEOs.
Yeah, they're paid a bundle, but that comes with its own problems, such as tax bills to pay, country club dues to cover, and security costs to protect CEOs from riffraff like you. Who do you think shells out for these expenses?
Well, a group named 24/7 Wall St. has probed that question. Sure enough, even the most fabulously paid CEOs treat these personal expenses as perks to be paid – not from their own but from shareholders' wallets.
For example, Occidental Petroleum chieftain Ray Irani's paycheck was more than $30 million last year. To dodge all the taxes he owed on that, Ray incurred $391,000 in accounting and legal fees. No problem, though – he just passed the bill to Oxy's shareholders.
Transportations is another pricey problem for corporate highfliers. You might have trouble getting your employer even to pay for the gas you use on company business, but you're not Michael Jeffries, boss of Abercrombie & Fitch. He was paid a handsome $38 million last year, but he still billed the tony haberdasher $639,000 for his personal use of the corporate airplane.
How about executive bodyguards? Oracle's top dog, Larry Ellison, is a high-techer who keeps downsizing and offshoring his work force even as he upsizes his own take. Last year, he upsized to an eye-popping $84 million in pay, the highest of any CEO. Perhaps feeling a bit vulnerable, Larry got Oracle to pay $1.4 million for a security detail to protect him.
Even if you're not a shareholder, you get to help pay for such executive perks, since the corporations pass along these expenses to us taxpayers. To see more of what you're paying for, go to www.247wallst.com.