First, both confront companies whose chief executives’ salaries have gone wild. The Detroit News reports: “Ford CEO Jim Farley received nearly $21 million in total compensation last year,” while the Detroit Free Press finds that Carlos Tavares — CEO of Chrysler parent company Stellantis — “had total compensation of $24.8 million.” And at the top of the heap, according to Automotive News, General Motors’ Mary Barra earned almost $29 million in 2022.
CBS News put that in perspective: “Overall CEO pay at the Big Three companies rose 40% from 2013 to 2022, according to [the Economic Policy Institute].” Barra makes “362 times more than the typical GM worker, while Tavares makes 365 times more, according to company filings with the Securities and Exchange Commission. Farley at Ford makes 281 times more, filings show.”
Put differently, between 1978 and 2021, “executive compensation at large American companies increased by more than 1,400 percent,” Politico recently noted, citing the left-leaning EPI. “It climbed 37 percent faster than stock market growth and 18 percent faster than average full-time worker pay over the same period, the EPI analysis found.” It’s hard to tell workers they’re asking too much or don’t appreciate the fraught economic picture when CEOs are gorging themselves at the salary trough.
It’s a similar story in the entertainment industry. “When the writers and actors struck in 1960, top executives made a mere fraction of what they do today and only about 20 times the pay of the typical worker,” according to the Hollywood Reporter. Bottom line: “CEO pay increased 1,460 percent from 1978 to 2021,” while “as of May 2022” — forget about the multimillion-dollar salaries of the small group of hugely successful actors — the Bureau of Labor Statistics “estimated the median actor pay was $17.94 per hour.”
You can make all the arguments you want about the labor market for chief executives and their responsibility for billions in earnings. But major companies cannot expect average workers to accept that this is simply the way things are. Management and shareholders need to understand that the gross imbalance between CEOs and average workers is going to result in labor unrest. And if the chief executives’ companies are losing tens of millions because of strikes, perhaps that should be taken into account during their next salary negotiation.
The second concern shared by autoworkers and Hollywood strikers: Both of their industries are undergoing mammoth changes. For the latter, the collapse of movie-theater-going, the cut-the-cable phenomenon and the explosion (and then retrenchment) in streaming have left the companies’ economic projections and expectations in shambles.
Erin Hill, an associate professor of media and popular culture at the University of California at San Diego, tells NPR: “Many, many, if not every strike, is in some way … trying to catch up to a technology that has already kind of emerged and/or the content and the kind of growing popularity of certain content that has come out of that technology.”
Naturally, when uncertainty prevails, management reaches for the “easy” fix: Cut labor costs! Meanwhile, talent legitimately fears that artificial intelligence will replace human actors and writers. (Hollywood CEOs personally joined the Writers Guild of America negotiations last week, which offered the promise of real progress. Once CEO’s valuable time was consumed, the talks appeared to move forward.)
In the auto industry, the conversion to electric vehicles, the rise of non-union plants in the South, international competition and uncertainty about the popularity of car ownership have spooked management and investors.
Former Obama administration auto industry czar Steven Rattner explains in the New York Times: “Financial markets are acutely aware of the large-scale challenges facing the Detroit companies. General Motors’ stock price has been essentially flat since the company went public nearly 13 years ago, while the overall equity market has appreciated by 276 percent.” (In that case, one wonders what in the world justifies the huge increase in CEO pay.) Again, if automakers’ CEOs cannot control foreign competition, they reach for something they think they can do: Hold the line on labor costs.
Finally, both autoworkers and Hollywood strikers share a common feeling that they are clawing back concessions made in past years. CBS News reports: “Adjusting for inflation, autoworkers have seen their average wages fall 19.3% since 2008.” Autoworkers made concessions in 2008, including suspending cost-of-living increases; they say they have never recovered those givebacks.
Meanwhile, Hollywood talent claims they have fallen far behind increases in the cost of living in pricey places such as Los Angeles, where much entertainment work still is based. Writers argued they have let slide the shrinking schedules and reduced employment for writers. The change in distribution for years has gradually strangled residual earnings, the lifeblood for union members who work only occasionally. Now is the time, they say, to catch up.
There are no easy solutions to the strikes, but several conclusions are unavoidable. Most important: The pay gap between CEOs and average workers is unsustainable. Moreover, labor must have access to financial information (to satisfy themselves about profits and costs), share in the gains during good economic times and not bear the brunt of corporate financial insecurity when management cannot accurately gauge industry shifts.
A possible resolution of the writers’ strike may bode well for the actors to reach a deal. Labor — whether in Detroit or Hollywood — won’t get everything it wants, but management will give more than it expected to solve a crisis largely of its own making.
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