“Freedom For The Few”: Corporations, Miniature Governments With Their Own Undemocratic Governance Structures And Election Systems
We should be done by now with the idea that a corporation is a single thing. Corporations contain a multitude of conflicting interests and are much more like miniature governments with their own governance structures and election systems than is commonly recognized. While these structures are far more hierarchical and undemocratic than we require of our public institutions, Americans should not be resigned that this is the best or the only way the private sector can be structured.
The debate over corporate disclosure currently going on at the SEC exposes some important fissures within the modern American corporation. On the one hand, corporate managers and their allies have argued that corporations should be able to engage in political activities without having to disclose how much they spent or who that money went to. But there is a subtle slight-of-hand to this argument. It conflates the overall interests of the corporation with the desires of management and directors. What proponents of this view really mean is that management and directors should be able to make political expenditures without getting any input from shareholders or other constituencies within the corporation.
On the other side of the debate, shareholders and shareholder advocacy groups have been calling for greater disclosure regarding how corporate money is spent in politics. Shareholders have pointed out, rightly, that management’s political activities are not necessarily good for business. The money spent on political activity is money that shareholders might otherwise see reinvested in the company or have paid out in dividends, and it is money they have residual legal claims to. And, importantly, it often expresses political views that shareholders have no interest in supporting.
Shareholders have been introducing and voting on proposals to improve disclosure. But even when these measures pass, they are merely advisory and do not bind managers. It’s simply not the case that corporate political spending reflects the views of all the people who make up a business. Under existing corporate law, these intra-business disputes already tend to be resolved in management’s favor. And right now it is only management and directors whose views are reflected in political activity. It’s also noteworthy that employees’ interests aren’t even a part of this picture.
In spite of all that, management continues to push back against shareholders. Likely emboldened by Citizens United, proponents of management-dominated corporate speech have begun to claim First Amendment freedoms against their own shareholders. Consider this rather surprising statement from former SEC Commissioner Paul Atkins:
shareholder activists, including unions, state pension funds, and ‘socially responsible investors,’ have increasingly turned to shareholder proposals to selectively burden American businesses exercising their First Amendment rights.
Leaving aside the fact that nobody has First Amendment rights against other private actors, this is an extremely bold assertion. This is tantamount to saying that the interests of management should trump all others and that neither private nor public actors should be permitted to interfere.
Frighteningly, recent developments have begun to enshrine this pro-boss, pro-management bias elsewhere in the law as well. This trend can be seen in a number of settings. During the last election cycle, a number of journalists were reporting that employers were asserting a First Amendment right to trample on the voting rights of their employees. In the ongoing fights over the Affordable Care Act, a number of employers have asserted a constitutional right not to pay for employees’ access to birth control and reproductive health services. (And in the religious non-profit setting, the Obama administration appears prepared to give them the exemption they were seeking.)
Corporations are a “they,” not an “it.” And it’s vitally important that this “they” doesn’t only mean corporate management. More democratic private sector institutions would be an important start. But we need a new constitutional framework for understanding people’s positive rights in the private sector as well. Freedom under the First Amendment doesn’t simply mean, as Paul Atkins might like, protecting bosses from public and private accountability. It means empowering a variety of people, shareholders, workers, communities, and the broader public, to shape the political conditions they live in.
By: Anthony Kammer, The American Prospect, February 6, 2013
“Stuck On A Plateau”: Progress For Women Continues Flatlining At Top Ranks Of The Private Sector
After the election, word was that we had just lived through another Year of the Woman. After all, a record twenty women will now be serving in the US Senate next term, representing a fifth of all seats. We had previously failed to breach the 18 percent mark in that legislative body.
But women’s progress has stalled out somewhere else: the top of the private sector. The research organization Catalyst released its 2012 Census today, which tracks the number of women in executive officer and board director positions. Women held just over 14 percent of executive officer positions at Fortune 500 companies this year and 16.6 percent of board seats at the same. Adding insult to injury, an even smaller percent of those female executive officers are counted among the highest earners—less than 8 percent of the top earner positions were held by women. Meanwhile, a full quarter of these companies simply had no women executive officers at all and one-tenth had no women directors on their boards.
But as in the Senate, progress may be slow and even small percentages can be victories. Did this year represent a step forward? Not even close. Women’s share of these positions went up by a mere half of a percentage point or less last year. Even worse, 2012 was the seventh consecutive year in which we haven’t seen any growth in board seats and the third year of stagnation in the C-suite. Meanwhile, women may hold the majority of the jobs in growing sectors such as retail, healthcare and food service, but of the executive officers in those industries they represent less than 18 percent, under 16 percent and just 15.5 percent, respectively.
If this is the sign of the end of men or the richer sex, I fail to see how. Reversing these numbers may take time. But we’re not even on a steady uptick—we’re stuck on a plateau. Fortune tellers who tell us women are on track to dominate the economy need to explain how that can be if we aren’t seeing any movement in these top indicators. Representing half the workforce can still mean inequality if we aren’t breaking through to the top jobs.
By: Bryce Covert, The Nation, December 11, 2012
“The Emergency Exits Are Always Open”: Wal-Mart’s Strategy Of Deniability For Workers’ Safety
Bangladesh is half a world away from Bentonville, the Arkansas city where Wal-Mart is headquartered. This week, Wal-Mart surely wishes it were farther away than that.
Over the weekend, a horrific fire swept through a Bangladesh clothing factory, killing more than 100 workers, many of whose bodies were burnt so badly that they could not be identified. In its gruesome particulars — locked doors, no emergency exits, workers leaping to their deaths — the blaze seems a ghastly centennial reenactment of the Triangle Shirtwaist fire of 1911, when 146 workers similarly jumped to their deaths or were incinerated after they found the exit doors were locked.
The signal difference between the two fires is location. The Triangle building was located directly off New York’s Washington Square. Thousands watched the appalling spectacle of young workers leaping to the sidewalks 10 stories down; reporters and photographers were quickly on the scene. It’s not likely, however, that the Bangladesh disaster was witnessed by anyone from either the United States or Europe — the two markets for which the clothes made inside that factory were destined. For that, at least, Wal-Mart should consider itself fortunate.
The Bangladesh factory supplied clothing to a range of retailers, and officials who have toured the site said they found clothing with a Faded Glory label — a Wal-Mart brand. Wal-Mart says that the factory, which had received at least one bad report for its fire-safety provisions, was no longer authorized to make its clothing but one of the suppliers in the company’s very long supply chain had subcontracted the work there “in direct violation of our policies.”
If this were an isolated incident of Wal-Mart denying responsibility for the conditions under which the people who make and move its products labor, then the Bangladeshi disaster wouldn’t reflect quite so badly on the company. But the very essence of the Wal-Mart system is to employ thousands upon thousands of workers through contractors and subcontractors and sub-subcontractors, who are compelled by Wal-Mart’s market power and its demand for low prices to cut corners and skimp on safety. And because Wal-Mart isn’t the employer of record for these workers, the company can disavow responsibility for their conditions of work.
This system isn’t reserved just for workers in faraway lands: Tens of thousands of American workers labor under similar arrangements. Many are employed at little more than the minimum wage in the massive warehouses in the inland exurbs of Los Angeles, where Wal-Mart’s imports from Asia are trucked from the city’s harbor to be sorted and packaged and put on the trucks and trains that take them to Wal-Mart stores for a thousand miles around.
The warehouses are run by logistics companies with which Wal-Mart contracts, and most of the workers are employed by some of the 200-plus temporary employment companies that have sprung up in the area — even though many of the workers have worked in the same warehouses for close to a decade. Last year, the California Department of Industrial Relations, suspecting that many of these workers were being cheated, charged one logistics company that runs a warehouse for Wal-Mart with failing to provide its employees with pay stubs and other information on their pay rates. Wal-Mart itself was not cited. That’s the beauty of its chain of deniability.
A small band of these warehouse workers has been demonstrating for the past couple of months to bring attention to the bizarrely contingent nature of their employment and the abuses that flow from it. Their numbers were augmented Friday by actual Wal-Mart employees in stores around the nation, calling attention to the everyday low wages and absence of benefits that the vast majority of the company’s 1.4 million U.S. employees receive.
Other discount retailers — notably Costco and Trader Joe’s — pay their workers far more, train them more extensively, have much lower rates of turnover and much higher rates of sales per employee, according to a Harvard Business Review article by Zeynep Ton of the MIT Sloan School of Management. Costco is a very profitable business, but Wal-Mart maintains an even higher profit margin, which it achieves by underpaying its employees. The conservative economic blogger Megan McArdle estimates that if Wal-Mart held its profit margin down to Costco’s level, its average worker would make about $2,850 more each year — a considerable increase in a sector where workers’ earnings average less than $25,000 a year.
But Wal-Mart neither pays its own nor takes responsibility for those who make and move its wares. For America’s largest private-sector employer, the emergency exits are always open.
By: Harold Meyerson, Opinion Writer, The Washington Post, November 27, 2012
“Combating Concentrated Wealth And Power”: The Right To Form A Union Should Be A Civil Right
In 1961, Martin Luther King Jr. spoke to the United Auto Workers about what the civil rights movement had learned from the labor movement. He said that, in the 1930s, “you creatively stood up for your rights by sitting down at your machines, just as our courageous students are sitting down at lunch counters across the South.”
When King was describing the “kinship” between the two movements, organized labor was strong, representing about a third of the non-agricultural private-sector workforce. The civil rights movement was still a fledgling campaign, not yet having won passage of the Civil Rights Act or the Voting Rights Act.
This Labor Day, the roles have reversed. The civil rights movement is the nation’s iconic cause. The gay rights movement, hardly a blip on the radar screen a half-century ago, is winning meaningful victories in the courts and in legislatures. But unions are on the road to virtual extinction.
Even public-sector unions, now a majority of the labor movement, are on the defensive. A new movie, “Won’t Back Down,” unfairly paints teachers unions as impediments to quality education for students of color. One character asks, “When did Norma Rae get to be the bad guy?”
To revive itself, labor must rediscover its roots as an early civil rights movement for workers. In some places, this is already starting to happen. On Aug. 11, the AFL-CIO held a massive rally in Philadelphia demanding a “Second Bill of Rights,” including the right to organize and bargain collectively. This summer, the UAW has been trying to organize a Nissan plant in Canton, Miss., where 70 percent of the workforce is African American, using a civil rights frame.
“The civil rights experience was fought on that very ground,” the UAW’s Gary Casteel told Reuters. “We’ve been saying that worker rights is the civil rights battle of the 21st century.”
In particular, unions should emulate three strategies of the civil rights movement.
First, labor must make clear, in word and deed, that it is part of a broader movement for social justice and against concentrated wealth and power, not just a special interest concerned only with its membership. The civil rights movement has succeeded when it has made a pitch for ending discrimination universally, and it has struggled when focusing on narrow, race-specific preferences. Labor has a good case to make: When union wages increase, nonunion employers respond by raising pay, too, to attract workers. And each percentage-point decline in the U.S. unionization rate has been accompanied by a comparable fall in the proportion of income going to the middle class.
Second, unions need to show that they are a vehicle for vindicating the individual rights that Americans hold dear against the power of large employers and the government. Just as King fought for individual civil rights as a fulfillment of the Declaration of Independence’s promise of equal opportunity, so the labor movement should fight for individuals’ First Amendment right to engage in the freedom of association, including the right to form a union.
Third, like the civil rights movement, labor needs to codify its notion of rights through strong federal legislation. The crowning glory of the civil rights movement is the Civil Rights Act of 1964, which through the force of law and sanctions helped delegitimize racial bias. Organized labor has the National Labor Relations Act of 1935, which institutionalizes the right to organize, but its sanctions are so weak that employers routinely flout the law and pay the penalties. In part because employers frequently fire or demote employees for trying to unionize, the watchdog group Freedom House rates the United States as less free for labor than 41 other nations.
The Civil Rights Act should be amended to outlaw employment discrimination not only on the basis of race and sex, but also for exercising the right to join a union. Doing so would allow employees to sue in federal court and to receive compensatory and punitive damages from employers. It would stigmatize employers who broke the law as civil rights violators. Without employers trying to block organization, polls suggest that many American workers would join unions, if given a free choice.
Organized labor has been written off before. But if a civil rights approach succeeds in strengthening the movement, more people will join it. And if part of the reason the gay rights movement is succeeding is that more people know someone who is gay, the growth of the labor movement could generate a similar virtuous cycle for American unions.
By: Richard D. Kahlenberg and Moshe Z. Marvit
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