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Corporation Pushes Six-Year Pay Freeze On Workers While Making Record Profits, Paying CEO $17 Million

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Image: Pat GarofaloBack in June, ThinkProgress noted that the manufacturing giant Caterpillar was seeking major concessions during contract negotiations with striking workers, even as it was making billions in profits and giving its CEO a 60 percent pay boost. The New York Times’ Steven Greenhouse added more details today, noting that the company wants to implement a six-year pay freeze and a pension freeze, at a time when it is making record profits:

Despite earning a record $4.9 billion profit last year and projecting even better results for 2012, the company is insisting on a six-year wage freeze and a pension freeze for most of the 780 production workers at its factory here. Caterpillar says it needs to keep its labor costs down to ensure its future competitiveness. […]

Caterpillar, which has significantly raised its executives’ compensation because of its strong profits, defended its demands, saying many unionized workers were paid well above market rates.

“A company that earned a record $4.9 billion in 2011 and $1.586 billion in the first quarter of this year should be willing to help the workers who made those profits for them,” said Timothy O’Brien, president of Machinists Local Lodge 851. “Caterpillar believes in helping the very rich, but what they’re doing would help eliminate the middle class.” Several labor experts told the Times that Caterpillar is a pioneer in tough labor negotiations meant to drive down workers’ wages.

Last year, Caterpillar’s CEO made nearly $17 million in total compensation. At the moment in the U.S., the typical worker would have to work 244 years in order to earn what the average CEO makes in one year.

This blog originally appeared in Think Progress on July 23, 2012. Reprinted with permission.

About the Author: Pat Garofalo is Economic Policy Editor for ThinkProgress.org at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.

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Controversial DC Education Reform Has Raised Teacher Salaries Substantially

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yglesias_matthew_bioVia Dana Goldstein, a Democrats For Education Reform analysis (PDF) of the controversial IMPACT evaluation system in DC raises a couple of interesting issues about the real Michelle Rhee legacy.IMPACT

For starters, as you can see the way the evaluation system (which combines in-person evaluations with test scores) works the number of people who get a negative evaluation is the same as the number of people getting a positive evaluation. There’s a lot of fairly sensationalized talk about firing “bad” teachers, but the actual system we’ve implement here in DC is equally about identifying which are the most effective teachers. And concurrently with that, the net upshot of the change has been to increase teacher salaries:

— Last year, over 660 (out of a total of just over 4,000) Washington Teachers’ Union (WTU) members were eligible for bonuses ranging from $3,000 to $25,000.
— 290 WTU members (7%) were eligible to have a base salary increase of up to $27,000 for being rated Highly Effective two years in a row.
— The maximum teacher salary under IMPACT is $131,540, compared with $87,584 under the previous contract.
— 65 WTU members (2%) were rated Ineffective and were terminated.
— 141 WTU members (4%) were rated Minimally Effective for two years in a row, and were terminated.

In other words, an approximately even number of people are getting IMPACT raises as are getting impact terminations. Another larger set of people are getting one-off IMPACT bonuses. And the compensation ceiling is going up.

The national political legacy of this is quite clear. The American Federation of Teachers decided that it had nothing better to do in the 2010 election cycle than spend $1 million on a primary challenge to Adrian Fenty who lost. New mayor Vince Gray got rid of Chancellor Rhee, and replaced her with Rhee’s deputy while keeping the evaluation system AFT objected to in place. At the same time, a bumper crop of new Republican governors and state legislators were elected who’ve gone about enacting various kinds of education cuts. Rhee has frequently been collaborating with these new governors on their education agenda, and both Rhee and Fenty seem pretty bitter about getting fired and are making various kinds of anti-union statements. In turn, union folks are constantly pointing to Rhee’s post-DC career as evidence that education reform has “really” been all about union busting and budget cuts from day one.

This is all unfortunate in my view, but it has relatively little to do with what actually happened in DC. Here, DCPS teachers are still represented by the Washington Teachers Union and have all their collective bargain rights intact. What’s more, they’re earning more money than ever. The city implemented a fairly basic compensation swap, in which teachers gave up some job security in exchange for higher pay. This got dragged into a larger national ruckus for various reasons, but in concrete city-level terms this plan to give teachers more money doesn’t bear a close resemblance to the vicious, teacher-hating reforms I frequently read about.

This blog post originally appeared in ThinkProgress on October 19, 2011. Reprinted with permission.

About the Author: Matthew Yglesias is a Fellow at the Center for American Progress Action Fund. He holds a BA in Philosophy from Harvard University. His first book, Heads in the Sand, was published in May 2008 by Wiley. Matt has previously worked as an Associate Editor at The Atlantic, a Staff Writer at The American Prospect, and an Associate Editor at Talking Points Memo. His writing has appeared in The New York Times, the Guardian, Slate, The Washington Monthly, and other publications. Matthew has appeared on Fox News and MSNBC, and been a guest on many radio shows.

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