Although I disapprove of some of his demands and I’m uncomfortable with some of the company he keeps, I’ve come to respect UAW president Shawn Fain. I mistakenly perceived Fain as being a pawn of Sen. Bernie Sanders’ “Tax the Rich” agitator brigade, but after watching what I regard as Fain’s historic speech on Facebook Live last Friday, I admire his passion and sincerity. While many supposed experts doubted Fain’s tactics, it’s obvious that the electrician from Indiana has outwitted three CEOs who in 2022 collectively received more than $80 million in compensation for their presumed superior judgment and wisdom.
Fain had planned to call at strike at GM’s truck plant in Arlington, TX, which manufacturers vehicles that account for a giant chunk of the automaker’s profits. GM CEO Mary Barra, who just days earlier publicly accused Fain of engaging in “theatrics” and charging “it’s clear that there is no real intent to get an agreement,” was obviously taken in by Fain’s performance. After GM repeatedly saying the demand was unreasonable, Fain announced the company had agreed to place the company’s battery plants under the union’s master agreement.
I was particularly moved by this portion of Fain’s speech, which can be found at the 11:20 mark:
I’ll tell it to you straight: The billionaires and company executives think U.S. autoworkers are just dumb. They think we don’t get it. They think we only understand the power of a supervisor coming at us. They look at me and see some redneck from Indiana. They look at you and see somebody they would never have over dinner or let ride on their yacht or fly on their private jet.
They think they know us. But as autoworkers (we) know better. We maybe foul mouth, but we are strategic. We may get riled up, but we are disciplined. We may get rowdy, but we are organized. Not everything is about pulling out the bazooka. We have been very careful about how we escalate this strike and we have designed this strategy to put pressure on the companies, not to hurt them for their own sake but to move them. To get them to say yes, when they want to say no and today is a perfect example we know their pain points.
Fain’s self-awareness is spot on. I’m an avid reader of UAW coverage, particularly in the Detroit papers. Readers who oppose unions in general and UAW in particular overwhelming disparage the union’s members as being dumb and stupid and not even deserving of their dwindling wages.
In the video Fain is wearing a jersey emblazoned with “Eat the Rich” and he’s framed his battle with the automakers as a “class war,” which it very much is. In the four years since UAW last struck GM, Barra has pocketed $164 million for herself, while her U.S. factory workers saw their real wages after inflation decline. Barra also moved countless jobs to Mexico, where her top wage for factory workers is $34 a day.
What’s bothersome about Fain’s attacks on the rich, which echo those of Senator Bernie Sanders and Rep. Alexandria Ocasio-Cortez, is their blanket maligning of everyone who attains great wealth, as if there is some sin in achieving great success. A distinction must be made on how the billionaire and mega millionaire class achieved their wealth.
I don’t begrudge billionaire Michael Bloomberg his great fortune, which has greatly benefitted the people who helped him achieve it. Bloomberg parlayed a $10 million severance he received from Salomon Brothers after getting fired and built an impressive global media empire. As best I can tell, Bloomberg didn’t demand or receive tax breaks for his well-paying job creation. I don’t know whether it’s still the case, but when I worked in journalism Bloomberg paid better wages than its journalism rivals, and it was expanding its newsroom operations while the industry was downsizing.
Bloomberg has used his wealth to support some great causes, like Johns Hopkins Bloomberg School of Public Health. That’s who employs Ge Bai, the leading authority and critic of the U.S. hospital industry’s “nonprofit” farce. Dr. Marty Makary, a prominent surgeon with the courage to speak out against the Biden Administration’s vaccine policies and decisions, is a professor at Johns Hopkins Medical School, which also has benefitted from the $2.3 billion or more that Bloomberg donated to his alma mater.
Frankly, I’d support a measure freeing Bloomberg of paying taxes because it would mean even more money would go to worthy causes than squandered by the government.
Elon Musk is a mega moocher off U.S. and various state taxpayers, but I don’t begrudge him his wealth. In Tesla’s early years, Musk was paying some of the company’s expenses from his personal bank account and he famously slept under his desk at Tesla’s Freemont factory when the company was experiencing formidable production problems. Musk’s great wealth comes from his Tesla stock options and grants, which have soared by dint of his determination and genius.
Fain and Bernie Sanders have both called Musk “greedy,” despite the fact he doesn’t draw a Tesla salary. A better example of greed is GM’s Barra, who demands a $2.1 million base salary in addition to tens of millions in payments to incentivize her to do the job she’s paid to do. Barra is chair and CEO of GM, so she has an outsize influence on board decisions.
Amazon founder Jeff Bezos achieved his wealth on the backs of U.S., state, and local taxpayers. The company’s rapid growth stemmed from its skills demanding lucrative tax breaks to build its giant warehouse networks in exchange for promised low-paying jobs, some of which never materialized. Within a few years, most of those jobs will be gone and performed by robots. Bezos will still have his billions, traveling the world and enjoying the good life.
Still, Bezos’ divorce from MacKenzie Scott has resulted in some of his great wealth finding its way to hopefully worthy causes. In the past three years, Scott has given away an estimated $14.1 billion to at least 1,621 charities. Notably, Scott researched and identified many unknown nonprofits rather than choosing to support prestigious institutions that would have gladly plastered her name on their buildings and programs.
The billionaires of leading private equity firms and hedge funds aren’t deserving of any of their wealth. In my mind, they should be put on trial for economic and corporate crimes against humanity. The private equity model is to rape and pillage corporations by taking control of them using borrowed money and saddling them with debt, achieving “efficiencies” by firing employees and other cost cutting measures while extracting “management” fees, and then foisting the slaughtered corporate carcass on dimwitted investors in a public stock offering. The number of companies that have truly benefited by private equity ownership are few and far between.
Hedge funds do a masterful job shaking down corporate managements to take measures that in the short term will boost their share prices such as demanding stock buybacks, which in the short term makes the shares more valuable because there are fewer outstanding. CEOs are happy to comply because their compensations are typically linked to stock performance and higher share prices increases the value of their options.
Few, if any, American CEOs are deserving of their obscene compensations, which they are awarded even when they fail miserably. According to the Economic Policy Institute, from 1978–2022, top CEO compensation soared 1,209.2% compared with a 15.3% increase in a typical worker’s compensation. In 2022, CEOs were paid 344 times as much as a typical worker; in 1965, they were paid 21 times as much as a typical worker.
CEOs made out like bandits during the pandemic. While millions were out of work, CEOs’ realized compensation jumped 18.9%. Typical worker compensation, of those who remained employed, rose 3.9% but the increase was overstated because high job losses among low-wage workers skewed the average wage higher.
Corporate boards, most of which are comprised of top executives from other companies, use consultants to justify the outsized CEO pay they award and give them a patina of legitimacy. That’s how Stellantis CEO Carlos Tavares ended up with $25 million in pay.
Stellantis’ European shareholders took issue with Tavares’ compensation, but the Amsterdam-based company defended the payout on the grounds that it has extensive U.S. operations and must pay prevailing U.S. wages to attract and retain talent. Given that Stellantis is bigger and outperforms GM, Tavares is working on the cheap for $25 million, considering Barra has received $41 million on average in the past four years.
Among my issues with Fain is his demand for 40% more pay and his seeming unwillingness to address issues that would make it possible for the automakers to grant the increase. I’ve yet to read one article about Fain promising to address chronic absenteeism that harms production and ultimately corporate profits. At Stellantis’ truck plant in Metro Detroit, absenteeism sometimes runs as high as 25%.
Fain is demanding a “just transition” as GM, Ford, and Stellantis move to electrify their vehicles, but he hasn’t offered any ideas or solutions on how the UAW could help the automakers achieve their goals.
Therein is the tragedy of what Fain has accomplished. He’s done an excellent job highlighting wealth disparity in America but rest assured whatever pay increases and benefits he extracts from the Detroit 3 will be short lived. The latest strike invariably assures the automakers will be moving their EV manufacturing operations to Mexico, which the Inflation Reduction Act incentivizes them to do. EVs made in Mexico can qualify for lucrative tax breaks when sold in the U.S.
The sad truth is that Fain would best serve his members if he came up with ideas and solutions that would convince the Big 3’s obscenely paid CEOs the UAW could help them become even richer.