GM, Jobs, and Corporate America’s Incentive to Exploit
On Monday morning, November 26, the auto giant General Motors announcedplans to shut down production at five plants in the United States and Canada and shear off 15 percent of the company’s salaried jobs. The moves will cost 14,700 GM workers their livelihood.
The communities where those workers live will lose out, too. In Lordstown, the Ohio locale that hosts one of the plants set to be shuttered, officials estimate that every GM job cut will cost seven other workers outside GM their employment.
Did the GM executives who made the shut-down decision take that spin-off devastation into account? Did they soberly conclude that they had no choice, that only massive job cuts could ensure their enterprise a stable and sustainable future? Or do the GM job cuts reflect, in the end, nothing more than naked self-interest on the part of those executives, an attempt to enrich their own future — at worker expense?
The simple answer: We can’t get into the minds of the GM execs who’ve ordered the job cuts. We can’t divine how much greed determined their decision. But we can, rather easily, see who stands to gain from GM’s massive job cutting. Certainly not GM workers. In the wake of the GM layoffs, thousands of workers and their families will be poorer. GM execs, on the other hand, will be richer.
Substantially richer. At GM, as at all major U.S. corporations, the ultimate compensation top executives take home rests either directly or indirectly on their enterprise’s share price. The more that price rises, the more they pocket. In the afternoon after the GM job-cut announcement morning, Wall Streeters bid up the company’s shares a whopping 7.9 percent. Shares ended the week almost as high.
Corporate execs at GM and elsewhere tend to fixate on their share prices. They’ll do most anything to jack them up, even have the corporations they run expend big bucks — an estimated $1 trillion this year — to buy back their own corporate shares on the open market. This maneuver has just one purpose: to heighten demand for a company’s shares and raise the price they sell for. GM execs last year spent $100 million on “buybacks.”
