The Average CEO today makes 347 Times the Salary of the Average American Worker

Is there any excuse for the obscene amount of money we pay the heads of our businesses and our money industry in this country? Is their value to our economy equivalent to what they receive in compensation? And  if it is, why are they so eager to hide it, as revealed in this article from last Sunday’s New York Times? Why not vaunt it as befits leading members of our supposed “meritocracy?”

Is it not, rather, indicative of that mentality that makes them wish to wall themselves off as a separate class from the rest of us in sequestered enclaves of privilege?

   

By MATTHEW GOLDSTEIN, Sunday,  May 28, 2017 for The New York Times

The Pay Gap Widens

. . . No matter how you look at it, the pay gap between corporate executives and most everyone else in America keeps getting bigger.

Some 50 years ago, the typical chief executive made just 20 times what an employee did, according to the A.F.L.-C.I.O. By comparison, it calculated that the average C.E.O. today made 347 times the average salary of an American laborer, as defined by the Bureau of Labor Statistics: $37,632. 

Reversing this ever-widening pay gap is a union rallying cry, especially at companies that have been shedding jobs in the United States. . . .

   

Amid populist anger over income inequality, the S.E.C. in 2015 required publicly traded corporations to begin providing standard information in 2018 on the disparities between pay for chief executives and rank-and-file workers. That so-called pay-ratio rule would give investors and employees another metric for evaluating C.E.O. pay.

Unions strongly supported the measure, which the S.E.C. was directed to formulate under the 2010 Dodd-Frank financial overhaul rules. Most corporations bitterly opposed it. And in February, with Mr. Trump in the White House, corporations won a victory; the S.E.C. said it would seek a new round of public comments, and might reconsider the measure. The acting chairman, Michael S. Piwowar, who had voted against the pay rule in 2015, announced the change.

Jay Clayton, the newly sworn-in chairman, has not taken a position on the pay-ratio rule. When asked during his confirmation hearing whether he agreed with Mr. Piwowar’s decision, Mr. Clayton said, “I do not know enough about the issue.” But Republicans in Congress have generally voiced support for rolling back much of Dodd-Frank, and Mr. Trump has said he intends to “do a big number” on the law.

 

 

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Business Roundtable, an association of chief executives of leading United States companies, sent a letter to the S.E.C. on March 23 saying it “has significant concerns” with the pay-ratio rule and recommended that it be “reformulated in a more constructive and less burdensome manner.” The association went on to say the rule “will cause internal discord among employees” [as it very well should] and “serves no material, valid or helpful purpose for investors.”

The chairman of Business Roundtable is Jamie Dimon, the C.E.O. of JPMorgan Chase and the 25th-best-compensated chief executive in the Equilar survey. His pay package rose 49 percent last year, to $27.2 million. Mr. Dimon, a member of Mr. Trump’s C.E.O. advisory group, visited the White House on Feb. 3 and has praised the president for awakening “animal spirits” in the economy. [Mr Dimon is identified in an adjoining article in the Sunday Times as “the highest paid finance executive” whose “total compensation was $27.2 million, nearly a 50 percent increase from the $18.2 million he received in 2015. . .” No wonder he didn’t want it advertised.] 

Alan Johnson, managing director of the pay consulting firm Johnson Associates, said he supports the opposition to the pay-ratio rule because it “is a cooked-up thing to embarrass firms with a lot of part-time workers.” He added that focusing on compensation leads to “pay envy” and does not do anything to address a fundamental problem, which is that average workers need better job training and job assistance programs. [Of course they do. Why don’t he and others of the managerial class do something about this instead of inventing a new syndrome, “pay envy”?  As far as part-time workers are concerned, the firms that hire them deserve to be embarrassed since the recent proliferation of part-time employees serves as an excuse for not providing them with medical and other benefits.]

But Susan R. Holmberg, a fellow with the Roosevelt Institute, a liberal public policy group, said that if the pay-ratio rule encourages employees to join unions, it is a good thing for workers, since it could lead to future wage gains.

“It magnifies the unequal pay practices,” Holmberg said. “It shows what a company’s priority is, and it triggers people’s sense of fairness.”

Mr. Trump “ran on this populist message,” she said, and it is odd that the administration would be taking another look at the pay-ratio rule, because “C.E.O. pay is the No. 1 populist issue.”

Investing in Human Capital

Still, there is some progress on the pay inequality front.

This year, the A.F.L.-C.I.O. Equity Index Fund and the New York State Common Retirement Fund reached an agreement with Regeneron Pharmaceuticals, a biotech company, to include new language on executive and employee compensation in its proxy statement. It says the company is taking a “non-elitist” approach by awarding stock options to all of its 5,500 employees, not just to executives. The change has helped lead the union and the New York pension system to withdraw a proposed shareholder amendment on the issue of pay.

Alexandra Bowie, a Regeneron spokeswoman, said the revised language in the company’s filings did not reflect a change in policy but a “broader effort to include more detailed and accessible language.”

As for Leonard S. Schleifer, the chief executive of Regeneron, his total compensation for 2016 was $28.2 million, almost 40 percent less than the year before, and nearly matching the 32 percent slide in the company’s share price.

Anne Sheehan, director of corporate governance at the California State Teachers’ Retirement System, said company boards need to be sensitive to issues of income inequality. “I have no problem with someone doing well, who creates value,” she said, “but I do think a company and a board as they look at compensation need to make sure everyone down the chain is also benefiting from the performance of the company.”

Boards need to consider not only how much top executives are getting paid, she said, but also whether rank-and-file workers are being compensated fairly too. The crucial question is this, Ms. Sheehan said: “Are they investing enough in the human capital in the company?”

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Biltmore, Asheville N.C., once the home of  George Vanderbilt, is the largest privately-owned house in America. Mr Vanderbilt bankrupted himself in the course of its construction. 

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Does His Home in the Hamptons Come at the Cost of Your Airpassenger Discomfort?

Do you realize that the reason you are sitting on an airplane just inches from the person in front of you is so that the CEO of the company that owns the plane you’re on can have a fatter bonus—own a larger home? Must everything in this country that touches on our health, our happiness and our livelihood be tied to the prosperity of a few fat cats who want to live in obscene luxury, beyond one’s wildest dreams?

United Airlines Boeing 787-8 Dreamliner

By NELSON D. SCHWARTZ, May 28, 2017, for The New York Times

When an unlucky passenger was violently dragged off a full United Airlines flight in Chicago in April, setting off a public-relations nightmare for the company, the blame naturally fell on the cabin crew, the police and eventually airline executives.

But ultimately, the episode was set in motion elsewhere — on Wall Street.

Relentless pressure on corporate America is creating an increasingly Dickensian experience for many consumers as companies focus on maximizing profit. And nowhere is the trend as stark as in the airline industry, whose service is delivered in an aluminum tube packed with up to four different classes, cheek by jowl, 35,000 feet in the air.

“There’s always been pressure from Wall Street,” said Robert L. Dilenschneider, a veteran public relations executive who advises companies and chief executives on strategic communications. “But I’ve been watching this for 30 years, and it’s never been as intense as it is today.”

article-0-1CE8758A00000578-24_964x721A billionaire’s home in the Hamptons

Rich bonus packages for top executives are now largely tied to short-term income targets and fatter profit margins instead of customer service. Of course, bolstering profits — and in turn, stock prices — has always been a big part of management’s responsibility to shareholders, but making it virtually the only criterion for executive pay is new.

Five years ago, American Airlines factored in on-time arrivals, lost baggage and consumer complaints to help calculate annual incentive payments for top management. Today, these bonuses are based exclusively on the company’s pretax income and cost savings.

United has also scaled back bonuses linked to reliability and customer satisfaction for senior executives in recent years. But in the wake of what happened in April, bonuses “will be made more comprehensively subject to progress in 2017 on significant improvement in the customer experience,” the company said in a financial filing.

“Fifteen years ago, airlines competed with each other over who could buy the most planes or have the most routes,” said Jamie Baker, a top airline industry analyst at JPMorgan Chase. “Executives are just as competitive today, but it’s about who can achieve an investment-grade rating first, who can be a component in the S. & P. 500, and who has better returns for investors.”

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These new incentives also partly explain why airlines are packing seats more densely and squeezing more passengers into the back of the plane. “Densification is driven by the desire to sweat the assets and generate revenues without having to commit capital to building new planes,” Mr. Baker said.

Such a shift isn’t unique to the airline industry.

“As in other industries, like manufacturing or consumer goods, the focus is on more traditional financial metrics like pretax income, margins, return on capital and total shareholder return,” said Andrew Goldstein, head of the executive compensation practice in North America for Willis Towers Watson. “Airlines haven’t abandoned operational and customer-service metrics, but they are putting less emphasis on those factors.”

United’s stock has surged to more than $80 per share from $25 per share five years ago, with profit margins rising to 13.6 percent from 3.7 percent over the same period. Overall industry margins hit 16.3 percent, up from 5.2 percent in 2012.

Spirit’s operating margins are among the highest in the industry, topping 20 percent in 2015 and 2016. But Paul Berry, a company spokesman, said Spirit had pivoted to focus more on customer service in the last year, even as some larger rivals keep cutting costs to compete.

Despite rewarding top executives strictly according to financial targets, American said it, too, was committed to improving the passenger experience.

“Every single person at American knows we succeed or fail based on how well we serve customers,” said Joshua Freed, a company spokesman. “We will only meet those financial goals if we keep our customers happy.”

Still, the promise of steady profit growth has prompted even Warren E. Buffett to take a fresh look at airline stocks. He once famously called the industry a money-losing “death trap,” but reversed course late last year, with his company, Berkshire Hathaway, acquiring stakes in several airlines.

“In the past, airline stocks were seen as hazardous to one’s wealth,” said Mr. Baker, the JPMorgan analyst. “They were trading vehicles, and potential destroyers of capital.”

The pressure on United, American and other giants is only going to increase with the rise of so-called ultra-low-cost carriers like Spirit, Frontier and Allegiant. In fact, American and United are rolling out a stripped-down new class called Basic Economy.

Here, in exchange for the cheapest tickets, fliers can’t choose their seats before checking in and are more likely to be stuck in the middle of the row. They board last and are less likely to be able to sit with companions. No carry-on luggage is permitted, forcing anyone without elite frequent-flier status to check anything larger than a backpack — for a fee.

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“That’s the experience on a ultra-low-cost carrier,” said Rajeev Lalwani, an airline industry analyst with Morgan Stanley. As the legacy airlines introduce similar no-frills offerings to hold off upstarts like Spirit, he said, “part of the idea is to get folks to upgrade to premium economy and collect fees.”

It’s also the wave of the future, at least for budget-conscious travelers.

“For the lowest price comes the most basic product,” said Alan Wise, a senior partner with the Boston Consulting Group, who leads the firm’s travel and tourism practice for North America. “Spirit has been a growth story in the space, and it’s forced the legacy carriers to adapt and innovate.”

To be sure, some industry veterans insist it is a mistake to simply blame investors or hedge-fund managers for fostering a race to the bottom in customer service.

“The response isn’t to Wall Street. It’s to customer behavior,” said Alex Dichter, a senior partner at McKinsey who works with major airlines. “About 35 percent of customers are choosing on price, and price alone, and another 35 percent choose mostly on price.”

Mr. Dichter noted that when American added two to four inches of legroom in coach in the early 2000s, “as far as I know, the airline didn’t see one bit of improvement in market share or pricing.”

“The great irony is that most C.E.O.s would love to compete on product and experience,” he added. “It’s much more fun. The problem is that customers aren’t paying attention to that.”

This last suggests that we do have an alternative—be prepared to pay a bit more and reverse this race to the bottom.

How the Rich Misunderstand the Plight of the Poor

This is a continuation of the theme of the previous blog—that the very rich have no real understanding of the problems of the poor and consequently usually come up with the wrong solution for them.

               Sam Walton and Charles and David Koch

By HAROLD MEYERSON,  Friday, May 26, 2017 for The Los Angeles Times

The billionaires, apparently, we shall always have with us — even when we decide how to run the state-funded schools where they rarely send their own kids.

In the Los Angeles school board elections earlier this month, a number of billionaires, including Eli Broad, Netflix founder Reed Hastings and two Walton family siblings, poured millions into the campaigns of two charter-school advocates. These billionaire-sponsored candidates defeated two badly outspent opponents who took a more cautionary stance on expanding charters, lest they decimate the school district’s budget. In total, pro-charter groups outspent teacher unions, $9.7 million to $5.2 million. (In the 2016 state legislative campaigns, the charterizers outspent the unions by a far larger margin, $20.5 million to $1.2 million.)

Though a number of the billionaires who’ve involved themselves in the charter cause are conservatives and Republicans, the actual election battles they join almost always pit Democrat against Democrat — in part because nearly all big cities are now overwhelmingly Democratic. In California, where Republicans’ numbers have ebbed past the point of power, the lion’s share of billionaires’ legislative campaign contributions have gone to more centrist Democrats, who not only are reliable votes on charter issues but also often oppose environmental and other measures advanced by their more progressive colleagues.

Charter billionaires have settled on a diagnosis, and a cure, that focuses on the deficiencies of the system’s victims, not the system itself.

   Eli Broad and Reed Hastings

Of all the issues billionaires could choose, why charters, and why now? One reason commonly adduced is that they’ve noticed something troubling: Public school graduates lack the skills necessary for employment. Many of those needed skills, however, are the kind that students acquire in vocational educational programs, not at charter schools.

That there are huge problems in the education of low-income students is beyond dispute — but this is hardly a recent development. The real recent development is the rising share of such students as the middle class has waned.

If the Waltons, say, decided to redirect more of their fortune to raising Wal-Mart workers’ wages, that in turn might enable hundreds of thousands of families to have more economically secure and stable lives, which could have a greater effect on student performance than charterization.

It’s hardly fair, of course, to tar all billionaire charterizers with that kind of brush. But the fact is that they have emerged as a force at a time when our staggering levels of economic inequality have become a widely acknowledged problem. That’s not just a coincidence.

 Andrew Carnegie

Indeed, we have to go back to the economic polarization of pre-New Deal America to find a time when the super-rich felt so compelled to better the lot of the poor, as they understood it. Andrew Carnegie, who grew mightily rich by building the American steel industry, famously established libraries in thousands of cities and towns. Though, unlike today’s charter backers, he wasn’t draining off funds that could go to public libraries in the process.

What Carnegie and today’s pro-charter rich have in common is a belief in individual betterment — but not only that. They also share a fierce opposition to collective betterment, manifested in their respective battles against unions and, in many cases, against governmentally established standards and services.

Living in separate eras when the middle class was — and is — embattled and the gap between rich and poor was — and is — immense, billionaires have largely shunned the fights that might truly narrow that gap: raising the minimum wage, making public colleges and universities free, funding sufficient public investment to create genuine full employment, reviving collective bargaining and raising progressive taxes to pay for all of that.

As the billionaires see it, it’s the lack of skills, not the dysfunctions of the larger economic system that they (or their parents) mastered, that is the cause of our national woes. Pure of heart though some of them may be, the charter billionaires have settled on a diagnosis, and a cure, that focuses on the deficiencies of the system’s victims, not the system itself. How very comforting for them.

Harold Meyerson is executive editor of the American Prospect. He is a contributing writer to Opinion

Poverty Is the Issue, Not Food Stamps

This column has been absent for the past few weeks as we have been tied up with other concerns. So that this editorial from today’s New York Times, along with the column that follows on charter schools from yesterday’s Los Angeles Times, seem a very good place to pick up again our preoccupation with income inequality in this country. Together they state  in simple, easily comprehensible language the radically differing points of view between the right and the left on both the causes of and the solutions to poverty in the U.S.

EDITORIAL, May 27, 2017 from The New York Times

Food stamps work. Each month they help feed 43 million poor and low-income Americans, most in families with children and working parents. Food stamps, officially the Supplemental Nutrition Assistance Program, keep millions of people from falling into poverty each year and prevent millions of poor people, many disabled or elderly, from falling deeper into poverty.

They also improve the future prospects of poor children by fostering better health and graduation rates.

Benefits average only $1.40 per person per meal, ineligible recipients are rare and incorrect payments are few. Into the bargain, food stamps support the farm economy and the broader economy by creating a bigger market for food and supplying cash that is quickly spent.

President Trump’s budget plan would destroy the food stamp program, on the pretense that it discourages work. That’s nonsense, because most adult recipients either work or are unable to do so because of age or disability. A more plausible explanation is that cutting food stamps would help to offset the cost of huge tax cuts for the rich.

The damage would likely be permanent. Food stamps would be reduced by 25 percent — $193 billion over 10 years — much of which would be achieved by shifting costs to the states, which could not afford to make the payment, leading them to cut food aid.

Disparities in hunger and poverty across the states, typical before the modern food stamp program began in the 1970s, would return, as would more hunger over all, especially in recessions, when states are forced to cut spending.

The budget would also reduce the food stamp program by making its strict requirements even stricter. For example, it would all but prohibit states from waiving a federal rule that generally cuts off unemployed childless adults after three months. The cutoff is supposed to prevent freeloading, but it mainly affects people who have low skills, arrest records, substance abuse problems or other impediments to employment. The budget would also make it harder for states to adjust the eligibility formula where rents or child care costs are high. And no matter how large a family is, the benefit calculation would be capped at six people.

The proposed cuts have little chance of enactment, but they are still dangerous. Extreme proposals are a way to make less extreme proposals seem acceptable. To avoid that trap, members of Congress from both parties need to do more than simply declare the Trump budget dead on arrival. They need to make specific objections and draw clear lines in the sand. Otherwise, the objectionable provisions will return, slightly altered, but hardly less awful. They also need to resist accepting federal spending cuts as inevitable.

That so many working households are eligible for food stamps reflects the prevalence of low wage jobs. In 2016, six of the 20 biggest occupations — mainly in retail, restaurants and home care — had median wages around poverty level for a family of three. Eight of the 10 jobs that are expected to add the most positions in the next decade pay poorly.

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So the problem is not the number of people on food stamps; it’s that companies pay wages so low that their employees qualify for them. It is a problem that Congress and the White House can rectify, not by cutting spending, but by raising the minimum wage, updating the overtime-pay rules and instituting paid sick leave — for starters.

The President Battles It out with United Technologies CEO over Globalization

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This article from today’s Wall Street Journal gives the reader an unparalleled opportunity to see how issues of globalization get played out at the highest levels of government and industry. We see what issues of national and international importance CEOs wrestle with and how labor responds (or doesn’t) to their decisions.

By JOSEPH RAGO, May 6, 2017 for The Wall Street Journal

United Technologies Corp. is a multinational manufacturing conglomerate, with subsidiaries like Pratt & Whitney and Otis Elevator that were founded 90 and even 160 years ago, that makes everything from escalators to jet engines. Last November UTC’s Carrier unit, which makes heating, ventilation and air conditioning equipment, became a symbol of how Mr. Trump claimed trade and globalization had undermined American workers. . . .

Gregory-Hayes-CardCEO Gregory Hayes

Mr. Hayes played football at Cornell, transferred to Purdue, and then joined Sundstrand, which was acquired by United Technologies in 1999. He rose through management and took over in late 2014. He had a rough first year, with shares slipping 18%. In 2015 UTC rolled out a restructuring plan to shed $1.5 billion in costs over three years.

The plan included closing two high-cost campuses in Indiana. One, outside Indianapolis, made gas furnaces. The other, in small-town Huntington, made electronic circuit boards. About 2,100 jobs would be lost in total, while furnace production would shift to Monterrey, Mexico.

Most of the furnace industry—both UTC’s competition and suppliers—has already moved to low-cost Mexico. The Indianapolis plant is an old-fashioned production line, where a component moves every couple of seconds and an operator performs a rote task, like installing fasteners in a handle. The jobs are relatively low wage and low skilled

.Pratt & Whitney jet engines

Mr. Hayes and his board concluded that closing the plants “was the right thing to do for the business long-term” to remain competitive in the market. If the larger business wasn’t profitable, then nobody would have job security. He thought UTC “could tell a story” about the higher-wage, higher-skilled domestic jobs it was creating in aerospace.

United Technologies also offered workers a yearslong lead time to plan their next steps, generous severance, and its 20-year-old Employee Scholar program, which pays full freight for two or four years of college education or vocational technical training for all employees, even after a plant shuts down.

“Look, we know there’s a dislocation associated with trade,” Mr. Hayes says. “There will be people left behind, and it’s the measure of how we treat those people and how we deal with those people that’ll determine whether or not we are ultimately successful.” Combined with globalization’s benefits—such as reducing the share of the world’s population that lives in poverty to 10% from 42% in 1981—he thought all this would be enough to gut out the politics.

“My political prognostication skills are about zip,” Mr. Hayes concedes. A familiar business terror struck in February 2016: a cellphone video that outraged the internet and then hit cable news. The 3½-minute recording, now viewed 3.9 million times on YouTube, showed a Carrier executive informing workers on the shop floor that their jobs would be moving to Mexico. “I want to be clear, this is strictly a business decision,” the executive said, amid jeers.

Botsford161201TrumpIN9161President Trump visits the Carrier Air-conditioning plant

History records hardly a campaign stop where Mr. Trump failed to assail Carrier. . . .

The candidate [Trump] promised to call the CEO [Gregory Hayes]: . . .  “OK? We will have a real border, the illegals will not be able to carry those air conditioners in.” Goods that crossed the border, “every single one, you’re going to pay a 35% tax on, OK?”

Nine months later, when Mr. Hayes received Mr. Trump’s postelection call, “He said, ‘Greg, you’ve got to help me.’ I’m like, ‘Sir, you know, we have looked at this, this is a cost—there is just no way. We got the plant already built down in Mexico.’ He goes, ‘No, Greg, you don’t understand. You got to help me. You got me elected. . . . I didn’t have a great campaign, a great focus on the campaign early on, but once I got this Carrier thing I used it everywhere.’ I said, ‘Yeah, I noticed.’ ”

carrier-bigpic-600x392Inside the plant of Carrier Air-conditioning

Mr. Hayes agreed to “take a hard look.” His “biggest fear,” he says, wasn’t tariffs but reputational damage. Carrier air conditioners are among UTC’s few consumer-facing products, and “having Mr. Trump tarnish the brand—there was a huge cost to that.” Then again, the president also didn’t have to make the same 35% threat personally that he’d made in public hundreds of times.

UTC stayed, and also left. Indiana gave the company $7 million in tax incentives over a decade, and Carrier will invest $16 million to modernize the gas-furnace factory. The decision saved about 800 factory jobs in Indianapolis, as well as 300 HQ and engineering jobs, but the Huntington facility closed. . . .

“The rhetoric on trade is not helpful,” Mr. Hayes says, but he thinks Mr. Trump is “trying to move in the right direction” on deregulation and tax reform, plus he’s a better listener than his predecessor.

The drawback of the tumultuous Trump presidency so far, Mr. Hayes says, is uncertainty: “It’s bad for business, and there’s certainly a lot of uncertainty being created on a daily basis that is not helpful for us. For my people, they’re looking and say, ‘What do we do?’ I say, ‘Well, just relax, they’ll all be fine, right?’ You need to take everything with a bit of a grain of salt that comes out of Washington these days, and understand that there is a process, things will work themselves out.”

elevatorOtis Elevators

A populist might say that a company expecting sales of between $57.5 billion and $59 billion in 2017—more than Goldman Sachs or Coca-Cola —can afford to pay more for American labor. The Carrier deal cost UTC about $25 million a year over the original plan, or about two cents a share. “We’re a big company,” Mr. Hayes says. “We can certainly deal with that kind of financial headwind.”

Still, there’s a cost. “I truly believe that if you have open markets, and you have the ability to let capital flow to most efficient uses, you are going to get better results than if you try to direct capital,” he says. But he admits: “I got it completely wrong, in terms of the political sentiment in the U.S., and I—you know, frankly I should’ve known better, because there is a large portion of the population that has been disenfranchised by globalization.”

Mr. Hayes’s solution is to improve education, specifically with a national apprenticeship program that would guide local public-private partnerships to train and prepare the workforce better. He knows the problem firsthand: “I’ve got thousands of job openings.”

Do you really?

“Thousands,” he replies. “A lot of this is because we’ve got growth in business on the aerospace side, but we’ll be adding thousands of jobs in the next three years, and right now I cannot hire mechanics who know how to put together jet engines. But it’s not just jet engines. We also make fan blades, other products, very sophisticated things. These are the high-value manufacturing jobs that America can actually support.”

Pratt & Whitney  machinist at work

A Pratt machinist earns $34 to $38 an hour, which with overtime works out to more than $100,000 a year—“pretty good money,” Mr. Hayes says. The positions can be filled by high-school graduates with “basic competencies in math and English” sufficient to, say, read a blueprint.

Mr. Hayes’s apprenticeship idea is about teaching such candidates the technical skills they need for the manufacturing jobs of the future—the kind that aren’t becoming obsolete due to automation and artificial intelligence. Labor arbitrage, like moving to Mexico, can only work so long, as rising wages in China show. But humans can’t compete with robots, which, as he says one of his Chinese managers put it, “never get sick, never ask for a raise, and they work 24/7.”

Labor mobility is another concern. People are less willing to move to where jobs are. UTC recently built a factory in Lansing, Mich., to make engine housings for a new type of titanium-aluminum fan blade and needs to bring on about 1,000 new people. The work pays $23 an hour on average, yet some workers in Huntington, who earned $15 on average, “won’t move two hours north to Lansing.”

Mortgages, kids in school and cultural attachments can lead to such mismatches, but Mr. Hayes worries because labor mobility used to be “just a given.” His own career took him from Rockford, Ill., to San Diego to Valparaiso, Ind., to Hartford, Conn., over the years.

Whatever the obstacles, “we have to migrate from these very low-skill manufacturing jobs to the middle-skill and the higher-skill jobs,” Mr. Hayes says. His model is the 19th-century transition to an industrial economy from a rural one, in which 97% of American workers were farmers.

The irony is that for someone cast in 2016 as a villain, and despite U.S. law instructing executives to maximize shareholder value, Mr. Hayes believes companies are also accountable to other parties, including employees, consumers and the communities where they’re based—an obligation that extends to financial support for academic research and the arts. “You try and balance these things without saying, ‘Hey look, it’s just business, we are just going to do what’s right for us,’ ” he says. “You have to at least understand and have some empathy for the other stakeholders in this.”

Over the long run, the danger is that the Carrier ruction won’t be an isolated incident but part of a populist trend. “I think that we have to as a society face the reality that the jobs that we have today aren’t going to be here 20 years from now,” Mr. Hayes says, “and if we don’t do something fundamentally different soon, we are going to have class warfare, and that’s a scary thing.”

For business leaders, Mr. Hayes has a suggestion: “We have to defend what we think is right, what we think is the better course for the country, and I think it’s OK to speak up—you know, you’re going to get smacked down—and will the president and I be friends?” He lets the thought trail off.

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What is the Morality of Fining Children for Overdue Books They Cannot Afford?

Another of the indignities heaped upon the poor by our system of government. Can you believe it? Andrew Carnegie, who initiated the tradition of free libraries in our republic, must be turning in his grave. Wasn’t it precisely to those poor children to whom books are denied because their parents are too poor to pay their fines that he dedicated his libraries? He wanted to see every child in the country have the same equal opportunity of education, not denied him/her in order to fund the library for those lucky enough to afford their fines.

 By JIM DWYER, May 5, 2017, for The New York Times

         

Library fines are the first serious penalties that most children run into outside the home, and for generations, they have been education and vexation.

At age 10, Geoffrey Canada could not find a book he had borrowed from the library branch near Boston Road in the South Bronx.

There, he regularly plowed through adventure books by Robert Louis Stevenson, science fiction, the works of Poe and Kipling. He and his three brothers each got a weekly allowance of a quarter, which would have given him a shot at paying off the 2-cent-a-day fine had it not climbed to about $1.80. His mother, raising the boys on her own, lived paycheck to paycheck.

“There was no way I was ever going to find that money,” Mr. Canada, the founder of the Harlem Children’s Zone program, said this week. “I never went to that library again.”

That was more than a half-century ago. In February, Maria, the mother of a 4-year-old boy, returned a batch of DVDs to the branch of the New York Public Library in the Washington Heights section of Manhattan. They were late. The fines were more than $100. Her card was automatically blocked.

Her son, a late talker with special needs, had become an early, unstoppable reader who bloomed in the library. “I couldn’t bring him there and not let him borrow books,” she said. “When he asked about going, I told him it was closed or some other thing. Without exaggeration, it broke my heart.” After a meeting with the branch manager, her privileges were restored.

In their 2015 public tax returns, the city’s three independent library systems, the New York Public Library, the Queens Library and the Brooklyn Public Library, reported collecting a total of $5.5 million in fines.

Just as adults discover they cannot renew their driving licenses if they have too many unpaid tickets, children discover that they lose library privileges if they rack up more than $15 in late fees. The library is the Department of Motor Vehicles on training wheels.

A recent tally found that library cards were blocked for more than 225,000 young people in the city.

That means around one in five city children with library cards cannot use them.

The social cost has become too steep, says Anthony W. Marx, president of the New York Public Library, the largest system.

“We see the blockage of fines concentrated in the poorer neighborhoods where we want kids to be reading,” Mr. Marx said. “If fines are getting in the way, we need to find solutions.”

Among a number of approaches, Mr. Marx has sought private funding for a $10 million endowment that would create fine-free borrowing in perpetuity. The other leaders of city libraries, Dennis M. Walcott (Queens) and Linda E. Johnson (Brooklyn), say they, too, would rather be handing books to children than collecting fines from them, but have not joined Mr. Marx’s quest for an endowment.

“It’s a balancing act,” Mr. Walcott said, making the obvious point that when people hold books and DVDs too long, others are stopped from using them.

Ms. Johnson said: “You don’t want to reward bad behavior, and on the other hand, we want to make sure the people who need them the most are not blocked out.”

In Queens, young scofflaws can “read down” their fines by committing to reading a certain number of books. “We waived $160,000 in fees this year,” Nick H. Buron, the borough’s chief librarian, said.

Branch managers can waive fees case by case — “That happens more often that we would like,” Ms. Johnson said — and in 2011, there was a citywide book-fine amnesty, instigated by Mr. Marx.

The libraries rely on the fine revenue, and many users can afford the fees.

No one is suggesting that people — including children — should not be held responsible for bringing books back.

“People talk about the moral hazard,” Mr. Marx said. “But there’s also a moral hazard in teaching poor kids that they will lose privileges to read, and that kids who can afford fines will not.”

Moreover, he said, there’s a “moral upside” of sharing, pointing out that laptops are widely available in branches in the poorest neighborhoods and that very few are stolen.