Meet You in the Pitchfork Aisle?
by Scott Klinger, 8/17/2015
Businessman Peter Georgescu issued a clarion call for capitalists to respond to the growing crisis of economic inequality in an op-ed entitled “Capitalists, Arise” in the Aug 9 edition of the Sunday New York Times. Georgescu warns his fellow capitalists that if they fail to take effective action to reduce economic inequality, they will soon face “intolerable taxes and social unrest” that will threaten their wealth and their businesses.
Georgescu tells his own story as the son of refugees that fled Romania in the face of horrible persecution. He also tells the story of his friend and collaborator Ken Langone, who rose from his own humble roots to found Home Depot. “Would young people like Ken and I get those opportunities today? I don’t think so,” Georgescu writes.
“Who would be courageous enough to start the ball rolling? The most obvious choice is our government. But the current Congress is a paralyzed,” Georgescu opines before reaching the conclusion that “[w]e business leaders know what to do.”
After talking about whether business leaders have the will to overcome excessive greed and invest in better education and things that deliver opportunity for more citizens, he delivers the punchline: businesses could do more if government provided tax credits to employers who raised wages for workers making less than $80,000 a year.
Let’s see if I’ve got that straight. Congress is paralyzed when it comes to investing in opportunities for people, but they will be able to agree to give a handout to corporations so businesses can give a little more to their lowest-paid workers. We thought business people knew about numbers. But Georgescu excoriates Congress for failing to invest in an opportunity agenda while asking for more of the corporate tax subsidies that deplete the Treasury and take money from programs that serve ordinary people.
Home Depot is not the average “Main Street” hardware store struggling against big box competitors. Perhaps the local hardware store could do better by its employees with some help from the federal government, but Home Depot doesn’t need more handouts.
In 2009, Home Depot reported $2.3 billion in profits. By last year, those profits had nearly tripled to $6.3 billion. In contrast, six years ago, the lowest-paid full-time Home Depot employee made $15,080 a year; today, the lowest paid employee makes $16,432, an increase of just nine percent. The poverty line for a family of three is $20,090. Home Depot generates more than $17,000 in profits per employee. Does it really need a tax cut from the federal government to share more of those profits with its workers?
The real conversation we need to have about economic inequality should start with the question of how much profit is enough. If Home Depot made $50,000 in profits per employee, would it then have enough to pay workers more?
Corporate leaders once talked openly about their responsibilities to the communities where they resided – providing stable jobs to people in their communities was part of that; paying taxing was another. And many also contributed to the community’s quality of life – with contributions to cultural institutions, parks, the arts. The post-WWII generation lived the “we’re all in this together” ethos. Like Henry Ford, they understood that a well-paid workforce was key to consumer demand and growth and that it was the responsibility of business to provide wages.
If the best policy for dealing with rising inequality and social unrest that Mr. Georgescu can come up with is more crony capitalism – more government subsidies for exceedingly profitable businesses – then Home Depot should perhaps start stocking more pitchforks.