by Dish Staff
Is the American labor movement “friendless”? Roger Martin reflects on its unpopularity in partisan politics:
A key marker occurred in 1992 when President Bill Clinton signed into law a tax change that allowed only the first $1 million in CEO compensation to be deducted for corporate income tax purposes. It was supposed to discourage corporations from paying their CEOs more than what was then thought to be an excessive $1 million (imagine that!) – and failed spectacularly as they were given stock options instead, which made them wealthier than ever before.
But in whose favor was this measure intended? Labor? Hardly. There was no obvious benefit to them. Capital? Yes indeed. Shareholders were complaining about CEOs demanding ever-higher compensation – and the Democrats responded to help capital reign in CEO talent. Arguably the attention to the needs of capital has continued in the Obama administration. This administration featured enthusiastic embrace of the TARP bailouts of banks that protected their shareholders first and foremost and the continued low interest policies that favor capital owners. Of course, the argument can be made that these policies help labor too, by avoiding a recession/depression. But the careful attention to capital first is a relatively new behavior for the Democrats.
Meanwhile, the Republican Party has increasingly shifted its allegiance to high-end talent, a tiny offshoot of labor that began to emerge around 1960. During the Reagan era, for instance, they cut the top marginal income tax rate from 70% in 1980 to 50% just two years later. By 1988 it was 28%. In seven years, an executive earning a million-dollar salary went from keeping $340,000 after federal taxes to keeping $725,000. That’s quite a raise.