Molly Ivins May 19

AUSTIN — My theory is that Republican strategists have been dropping acid lately and it's causing them to have '50s flashbacks. How else to account for their latest brainstorm, which is to tie President Clinton to Big Labor to the Mob?

Hello? Earth to strategists — it's 1996. There is no Big Labor. There's only Small Labor, which is one reason, according to Lester Thurow, that 80 percent of the work force has seen its wages fall while the real per-capita gross domestic product has climbed by a third.

George Meany has been dead since 1980. Ever heard of Ron Carey? He's the man who cleaned up the Teamsters, once a notorious union. Today's labor leaders all come out of the reform tradition. "Big" Labor has raised $35 million for political education on labor issues this campaign; with $35 million in the kitty, labor will be outspent by business interests by only 7-to-1 this election.

And now let's attempt to address a real issue. In a recent issue of Harper's magazine, always a gold mine of snacks for thought, the following two items appeared:

— "The greatest asset of our business is the potential of our employees. Recognition and enhancement of this asset are of material benefit to the company and also fulfill a moral obligation to each employee. Our success may be well be measured by the extent that our efforts give meaning and dignity to the employee's life." — from a 1958 Chance Vought Aircraft personnel manual.

— "Full-time permanent employees have become an endangered species. All employees are now, in a sense, temporary. ... Unnecessary support systems should also be eliminated. ... Don't offer group purchasing plans. Don't sponsor clubs or social events like picnics. All of these promote dependency in one form or another." — from an article by David M. Noer used in a seminar on downsizing.

In a recent article on CEO compensation, Business Week magazine reports: "Historically, many CEOs bought into the notion that their organizations were responsible to a group of stakeholders, including employees, customers, the community and shareholders. In the 1990s, the balance has tilted radically in the direction of the investor, outweighing other stakeholder interests, particularly those of employees. 'Today, a CEO would be embarrassed to admit that he sacrificed profits to protect employees or a community,' says Peter D.

Cappelli, a professor at the University of Pennsylvania's Wharton School."

The question is: Why? The Wall Street Journal reports that last year, the heads of about 30 major companies received compensation that was 212 times higher than the pay of the average American employee. That's nearly a fivefold increase since 1965, when the multiple was 44. Business Week reports that the average salary and bonus for a chief executive rose by 18 percent last year, while white-collar professionals averaged a 4.2 percent gain and factory employees got a 1 percent raise. The inflation rate was 2.8 percent.

Republicans tend to dismiss concern about CEOs' pay as a form of envy or jealousy over someone else's doing well: "Why get upset? It just shows you can still get rich in America." But this isn't about grudging someone else his rewards. The whole system is screwed up. According to Business Week, "In an era of massive downsizing, stagnant wages and ever more burdensome workloads for layoff survivors, employees are feeling disenfranchised, discouraged and angry."

Although history and economics discourage single-cause theories (reality tends to be far too complex for any one thing to cause much of anything else), the most obvious suspect here is the changing form of CEO compensation. Again according to the Journal: "The colossal divide between cosseted corporate leaders and the anxious rank and file has many causes. The most crucial: a shift in rewards from cash to stock, designed to ensure that chief executives would respond more to shareholders' interest rather than equally pleasing workers and other constituencies."

CEOs used to be "company men," those who had risen within a company after long service, and they were paid largely in cash. The board of directors would occasionally dribble out some modest stock options to the CEO, but they didn't amount to much, since the market was in the doldrums from 1968 to 1978.

So pay consultants dreamed up option alternatives such as performance shares, pegged measurements such as a specified increase in earnings per share and restricted stock, which costs executives nothing but can't be sold for three to five years. In addition, CEOs increasingly began serving on the compensation boards of other companies, creating what Arch Patton, formerly of McKinney & Co., calls "the CEOs' union."

The increasingly generous stock options and the market boom combined to make CEOs richer and richer — and, of course, gives executives more and more reason to concentrate on market performance over everything else.

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Molly Ivins is a columnist for the Fort Worth Star-Telegram.

COPYRIGHT 1996 CREATORS SYNDICATE, INC.