Once Upon a Time in America

Unlike the grim criminal dystopia portrayed in the Sergio Leone movie, there was a period in America when the relationship between employees and workers with their companies reflected a mutual vision of a shared stake in the economic health of each and that of the nation itself. That relationship is contrasted with contemporary dynamics, where investors and shareholders are the primary interests to be served by corporations and businesses. The passing of Sears has evoked a retrospective on that earlier period. An excerpt from The New York Times (10/24/2018) describes that earlier experience.

In Its Heyday, Sears Spread the Wealth, Companies Today Don’t

By Nelson D. Schwartz and Michael Corkery

Half a century ago, a typical Sears salesman could walk out of the store at retirement with a nest egg worth well over a million in today’s dollars, feathered with company stock. A warehouse worker hired now at Amazon who stays until retirement would leave with a fraction of that.

Much as Sears has declined in the intervening decades, so has the willingness of corporate America to share the rewards of success. Shareholders now come first and employees have been pushed to the back of the line.

The shift is broader than a single company’s culture, reflecting deep changes in how business is now conducted in America. Winner-take-most or –all, and in many cases publicly traded companies are concentrating wealth, not spreading it. Profit sharing and pensions are a rarity among the rank-and-file, while top executives take home an increasing share of the profits.

Amazon shareholders have benefitted more than workers, but Sears, in its heyday, tried to serve both.

The company earmarked 10 percent of pretax earnings for a retirement for full-time employees and by the 1950s, the workers owned a quarter of Sears. By contrast, one man at Amazon, the founder and chief executive, Jeff Bezos, owns 16 percent of the company and is ranked  as the world’s richest person.

But this month, Amazon stopped giving stock to hundreds of thousands of employees, even as it lifted its minimum hourly wage to $15. While the raise garnered headlines, the move to curb stock awards may ultimately be more significant.

Not only does it reverse what had been an unusually broad employee stock ownership program, Amazon’s decision underscores how lower-paid employees across corporate America have been locked out of profit-sharing and stock grants.

“What’s happened is that shareholders’ interests have squeezed out other stakeholders, said Arthur C. Martinez, who ran Sears during the 1980s. “The mantra is shareholders above all else.”

Decades ago, he said, “the people who produced or sold the product were more central than the people in the corporate suite. There was a different mind-set and it’s linked to the larger issue of income inequality.”

Categories: Issues, Local

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