WASHINGTON—What can one corporate honcho do with a quarter of a billion dollars?
That’s the question about Steve Schwarzman, CEO of Blackstone Holdings, who topped all poohbahs last year in the AFL-CIO’s annual Executive Paywatch list.
Schwarzman “took home almost a quarter of a billion dollars in just one year. It’s almost inconceivable,” said federation Secretary-Treasurer Fred Redmond, who hosted a telephone press conference on the report on corporate compensation. Schwarzman’s actual compensation from Blackstone: $253,122,146. Bloomberg Business reported his net worth last year was $32 billion.
Schwarzman’s compensation is outrageous enough. What his industry—hedge funds—does to regular workers is even more so.
Schwarzman’s compensation is 1,068 times the yearly median pay of a Blackstone worker ($237,000). But those “workers” aren’t workers like a factory worker, a railroad engineer, or a trucker.
The wolves of Wall Street
They, like Schwarzman, are among the wolves of Wall Street, denizens of the 1% who prey on other people’s toil and other companies.
That industry of rapacious financiers has a nasty reputation for buying other corporations—especially media firms—firing workers, cutting output or coverage, selling buildings and real estate, and then closing companies down. Hedge funders like Schwarzman then walk away with huge profits and leave broken workers and penniless families in their wake.
Blackstone was among the Wall Street firms that bought the bankrupt Jim Walter Coal Company and reconstituted it as Warrior Met. Since then, Blackstone and Schwarzman sold its stock, after Warrior Met, which is 97.24% Wall Street-owned, became profitable, mostly due to enormous givebacks from the 1,100 United Mine Workers members who toiled in its Alabama mines. Schwarzman walked away with a bundle.
The givebacks included forcing workers to pay far more for health insurance, in an industry characterized by black lung disease, and a 20% pay cut. But when the workers tried to recoup those losses in contract negotiations, Wall Street’s financiers backed Warrior Met’s year-and-a-half lockout, starting April 1, 2021. The workers demanded they recoup the money they gave up to keep the firm going. The hedge funds turned deaf ears.
Schwarzman was just one of a long list of corporate CEOs who not only exploited their workers but took home big fat paychecks for doing so. The top ten received more than $100 million each. And #11, Apple CEO Timothy Cook, cleared $99.4 million.
One, Michael Rapino of Live Nation Entertainment, held another dubious honor. His Beverly Hills-based company arranges, markets, sells tickets for, and manages live concerts and performances by stars and performers from coast to coast in venues ranging from small jazz joints to big sports stadiums.
Rapino was fifth in Paywatch’s compensation standings last year, at $139 million in pay and perks, the AFL-CIO reported, using publicly available federal data. But among the top 500 corporate CEOs, he was first in comparative exploitation, out-earning Live Nation’s 44,000 workers by a 5,414-1 ratio.
The annual report highlights the monstrous corporate greed rampant in capitalist suites while workers campaign—if they’re unionized—for more dollars in their wallets, or go without otherwise. In 2022, median U.S. yearly wages declined for the second year in a row.
That is if there will be any workers left to campaign, AFL-CIO Secretary-Treasurer Redmond warned.
Because as fast as executive pay is rising, so is executive imposition of artificial intelligence (AI), a technology which threatens to make millions of workers useless, redundant, or both.
“In 2022, the average CEO-to-worker pay ratio of Standard & Poors 500 companies was 272-to-1,” Redmond explained on August 3. Those CEOs averaged $16.7 million each in pay, bonuses, stock options, and other executive compensation perks. But the top 10 honchos each garnered at least $100 million. And #11, Apple CEO Timothy Cook, cleared $99.4 million.
READ THE FULL REPORT: EXECUTIVE PAYWATCH
It only gets worse when firms turning to AI are factored in. When it comes to AI, the top-earning CEO whose firm uses AI for its business is not one of the Hollywood studios, TV networks, or streaming video companies that forced both the Writers Guild of America and SAG-AFTRA to strike—with the threat of AI putting workers out of jobs as a top issue.
It’s Hertz Rent-A-Car.
Hertz, which has a global reach, “invested in a self-service rental car system that uses AI technology,” Redmond explained. Its CEO, Stephen Scherr, took home $182.13 million last year, finishing third among all CEOs in executive compensation, the report shows.
The median pay for U.S. Hertz workers was $36,683. Scherr multiplied that 4,983 times.
“If left unchecked, AI can increase economic inequality and undermine job security. An estimated 300 million jobs are at risk of automation by AI, including nearly half of all jobs in the United States,” Redmond warned.
AI algorithms “already determine who is qualified for a job, who is worthy enough for additional medical care, and who can afford to buy a home and where. In some industries, AI is making HR decisions about hiring, scheduling, task assignment, performance reviews, and even terminations.
“It doesn’t have to be this way, and working people are starting to fight back,” Redmond said, referring to the Writers Guild’s and SAG-AFTRA’s forced strikes. For the record, the AFL-CIO reported the top earning honcho among the firms forcing the strikes was Netflix CEO Reed Hastings ($51.07 million).
The list of highly paid CEOs is filled with execs whom the late AFL-CIO President Richard Trumka said don’t deserve their million-dollar paychecks. Last year, one was Google/Alphabet CEO Sundar Pichai. He garnered $225.99 million, second to Schwarzman and ahead of Scherr.
Ironically, the pay ratio between Pichai and Google workers is only 808-1, as median Google pay is $279,000.
But that exposes one flaw in the data the AFL-CIO collected. Because it relies on federal SEC figures, it only counts median pay and CEO pay for a company itself, not for its subcontractors whose workers do the same work in the same environment but get paid far less.
That’s the case at Google. More than half of its work has been outsourced to designers and writers in the Bay Area and in Austin, Texas who don’t earn $279,000 each. Or $225.99 million. And one Google subcontractor, Accenture PLC, just responded to the organizing drive by the Alphabet Workers Union, Communications Workers Local 9889, by firing two-thirds of its 119 workers, after 70% signed union election authorization cards (see separate story).
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