Excessive CEO Pay and Job Losses: Are They Linked?

Responding to Mitt Romney’s 59-point plan to kick-start the economy if he is elected president, former Secretary of Labor Robert Reich wrote recently: “Remember, corporations are now showing record profits. They’re sitting on $2 trillion of cash. Why it is Romney believes they need more money and lower costs in order to create jobs is one of the wonders of the universe.”

Reich’s pithy point suggests another possible explanation for the stagnant job market: Corporate greed — or, to be more specific, greed on the part of those who run large corporations.

It was international news when Bank of America proposed — and this week backed away from — a $5 monthly fee on debit cards. But it created only a ripple in the financial press when Kenneth D. Lewis, the ousted Bank of America chief executive officer, took pension benefits estimated at $53 million with him when he left in 2009. Earlier this year, Brian Moynihan, Lewis’ replacement at CEO, and three other executives were awarded about $33 million in stock. (One of those executives, Thomas Montag, who came to Bank of America in the merger with Merrill Lynch, was paid $29.9 million in total compensation in 2009.)

Shortly after the stock bonuses were paid in 2011, the financial giant began effecting layoffs: 2,500 at first; then an announced 3,500 in the third quarter of the year. Then, in September, the bank announced that it had plans to shed some 30,000 jobs — 10 percent of its worldwide workforce.

“Mind you this is the financial giant that paid its global banking and markets president nearly $30 million dollars last year — and this year turned around and announced it’s going to fire 30,000 workers!” thundered AFL-CIO President Richard Trumka recently. “My question is, just when is enough, enough?”

There’s an even more disturbing question than that, and it’s this: Are these huge compensation packages themselves one of the reasons corporations are shedding jobs — and not hiring new workers?

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