As I See It: Corporate Tithing
August 28, 2006 Victor Rozek
In 1973, Wilt Chamberlain published the first of two autobiographies, titled Just Like Any Other 7-Foot Black Millionaire Who Lives Next Door. It was a masterful title, seeking to normalize three things that were rare in the early 1970s–being simultaneously tall, black, and wealthy. But “normal” is a relative concept and, like a small number of athletic phenoms of his generation, Wilt was one of those “average” guys who skewed all the averages.
Lacking a context, words like “normal” or “average” become meaningless modifiers that aim for precision but offer none. “Normal temperature,” for example, is ambiguous without citing location and time of year. Or take the phrase I came across in the Wall Street Journal, “average CEO,” as contrasted with another phrase not often found there: “average worker.” An average worker conjures up images of the guy next door, struggling but getting by, bogged down with debt, desperate to keep his good-paying job, anxious about retirement, and worried about his kid’s future. The average CEO, on the other hand, probably doesn’t live next door and certainly isn’t likely to be black; but what he lacks in proximity he more than makes up for in wealth.
Two short years ago, the “average” CEO was paid 185 times what the average worker made. Today, that average has been skewed to Chamberlainesque proportions. CEOs now rake in 279 times the average worker’s wage. And it’s not because corporate earnings have risen by a factor of 94. No. It’s because the average worker is generously–albeit unwittingly–tithing them. Consider that the compensation paid to the top five executives of U.S. public companies represents 10.3 percent of their entire company’s profits–money no longer available to compensate the average or even above-average employee. Then consider what kind of money that percentage actually represents as you realize that oil companies alone siphoned off $113 billion from American drivers last year.
If ever there was an oxymoron, it’s “average CEO.”
Traditionally, tithing is an act of generosity performed by individuals in support of an organization. In business, that form of tithing is called externalizing costs, although individuals who pay for such things as subsidies and cleanups have little choice in the matter. But corporate tithing also works in reverse: the organization tithes the individual–the one at the top (or a small group to be precise)–at the expense of employees and investors.
Corporate tithing is particularly insidious because it is nurtured by policy, not charity. No one is ever directly asked to contribute, but the policies which corporations support guarantee that less is available to the average worker and more flows to the average CEO, thus skewing the averages for both.
Tax policy is a form of involuntary tithing. Every year since 2001, taxes have been cut in a fashion assured to shift the tax burden from those who invest for a living to those who work. The initial cuts, for example, provided an IT worker earning $40,000 about $500 in tax relief; a sum which equates to 1/80 of that worker’s total annual income. On the other hand, a person earning $1,000,000 received a tax cut of $100,000 or 1/10 of his total income. Thus, the person earning $40K must pay taxes on a much greater percentage of his remaining income.
The investment class further benefited from tax reductions on dividends and capital gains. As a result, the average wage earner with few investments got to keep a whopping $16 of his money, while the millionaire could look forward to keeping an extra $42,000.
The pattern was repeated in the House approval of the reduction in the estate tax, which would cost $726 billion over ten years and benefit only the top 1 percent of taxpayers.
Such favoritism in tax policy contributes mightily to the budget deficit and, since the debt will eventually have to be repaid primarily by the middle class, the policies that create the budget deficit are instruments of tithing. As recently as 2001, the projected ten-year budget surplus was $5.6 trillion–an amount hugely beneficial to middle-class-friendly programs which have been cut, like financial aid to students and health care for the elderly. But the surplus has been fully squandered. The ten-year budget projection now forecasts a $3.3 trillion deficit, the worst such reversal in history. The relevance to the IT professional is this: When responsibility for the debt is divided among the citizenry, the average worker will actually pay more in interest on the ballooning debt than he or she will receive in tax relief.
For the average worker the deficit guarantees a future of higher taxes and fewer services. As my congressman Peter DeFazio, whose office provided statistical data for this article, notes: Under present polices “the former CEO of ExxonMobil with his $400 million compensation package would save tens of millions in taxes while middle class workers shoulder the entire burden of financing the government.” That’s tithing.
Tithing also shows up in the suppression of wages. For an entire decade, Congress unfailingly raised its own pay while freezing the minimum wage at a beggarly $5.15 per hour. The survival of small business is always cited as an excuse for keeping wages low, but small businesses have survived previous hikes in the minimum wage, and a national increase would keep them all on an equal footing. But corporations oppose any increase because a low minimum wage puts downward pressure on all other salaries. Since 2002, annual productivity has grown at slightly more than 3 percent (about 15 percent over five years), but real wages have been held below 0.5 percent, (or less than 2.5 percent over the same period). When employees do not benefit from being productive, that’s tithing.
If a rising tide lifts all boats, then a minus tide keeps them grounded, and CEOs are compensated for ebbing salaries. They even have a virtuous-sounding name for it: cutting expenses. Each job cut, each function moved overseas, each frozen salary is a form of corporate tithing: the gains lost by average workers become rewards for average CEOs.
Possibly the most contemptuous and mean-spirited denunciation of the working poor was made by Neil Boortz, a radio talk show host out of Georgia, who was so apoplectic about the possibility of poor people earning a living wage that he dismissed any adult forced to toil so cheaply as “incompetent,” “worthless,” “ignorant,” “stupid,” and “pathetic,” and therefore deserving of impoverishment. Harsh words for a man who makes his living doing nothing more strenuous than pushing air across his vocal chords. I suspect that if minimum wage earners could vote their own salary increases like Congress can, they would soon rise in Boortz’s esteem.
So who really benefits by keeping the poor poor? Companies like Wal-Mart, which keep wages artificially low, and pass on their employees’ health care costs to Medicaid or local communities which are, in effect, forced to tithe Wal-Mart’s ownership.
It is both the dream and the aim of clever corporate management: the privatization of profits and the socialization of costs. The cruise ship dumping its garbage in the ocean; the pulp mill pumping its effluent into the river; the refinery polluting the commons; the sweat-shop owner paying a sub-living wage that ensures that society will bear the cost of basic human services that his employees can’t afford. We tithe them all and then pay again to clean up their messes.
I don’t know exactly when employees became an annoyance to corporations; probably when they discovered there was cheap and abundant labor overseas. Ever since, in policy and in practice, they began mandating kickbacks for the privilege of remaining employed. The elimination of health care benefits is a form of corporate tithing, as is the looting and voiding of pension plans; as was the policy deregulating the energy sector, which led to Enron and a $30 billion tithe from California’s energy consumers.
What portion of an IT professional’s salary goes to tithe his or her employer? The amount will vary according to circumstance, but one way to calculate the sum is to consider how much of your compensation is missing. Have raises been delayed, or are they a fraction of what they should be? Have benefits been cut? As a salaried employee, are you being asked to do more and work longer hours? Is your company doing wildly better financially than you are? And is all of that just standard operating procedure? If so, than the notion of what is “normal” and what is “average” has changed, and what was once abnormal has become normal. And one day soon, no one will quite remember the way it once was, or what choices led us here, or how the skewed average became the new average. We will just know that life got harder for some and easier for others.
Of course it’s not all bad. The average life span in increasing, the average computer does more for less than machines did just a few years ago; and there are many more tall, black, millionaires today than there were in Wilt’s time. As a person who reset the averages all of his life, I think he would be pleased. Among Wilt’s game-changing accomplishments were: scoring 100 points in a single basketball game; averaging 50 points per game for an entire season; snagging 55 rebounds in a single game; and never once fouling out in 14 years of play.
If you think that’s exhausting, in his second autobiography, Wilt Chamberlain claimed he had slept with 20,000 women. He skewed the averages there, too.