Corporate America In Today's Society

Conrad Davis

Professor Okey

ENG 102A-3

May 10, 2002

Corporate America in Today's Society

Large corporations affect most of society today, and these affects have split the U.S. workers into two factions. People are becoming frustrated over companies having huge lay-offs, firing thousands of employees, shutting down businesses, and moving to countries like Mexico to make a bigger profit. What happens to those people who have families to take care of? Where are they going to find money to pay for their children's medical bills, education, food, and clothing? How are they going to tell their spouses that they now have to work two jobs to take care of costs for their family? Top executives of large corporations often earn millions of dollars a year in salaries, bonuses, and benefits while the vast majority of people who work for them earn moderate wages, sometimes no more than the minimum hourly amount required by law. Some people believe that this type of a system for hourly working is wrong. Others argue that no change is possible without stifling human initiative. How might the economic system be changed? Should it be changed?

History of Large Corporations

The industrial revolution in America during the early part of the 20th century brought many new changes to society with the introduction of factories, construction, and businesses. As time progressed through the years, small businesses soon started looking to increase their market nationally. As small businesses soon turned into large corporations, they began to spread across the country giving people quality products anywhere in the United States. The economy was booming. Competition between businesses was moving at an incredible rate, producing many products and improving the Gross National Product. America was becoming the most powerful nation in the world. There were plenty of jobs for families to find work. As businesses grew, bureaucratic systems were set up within them to ensure better management. One man could no longer run his business alone. He needed supervisors to reach every employee. Hierarchies were introduced and so businesses were now ran by a select few individuals who were most likely the founders of the company, and they got all the profit.

Capitalism

Some people say that today's minimum wage is not a livable wage. That it doesn't make up for the cost of living in today's society. "If a person is making $5.15 an hour and he or she works 40 hours a week, they are only making about $10,000 dollars a year" (Kronemer 79). Singles have a difficult time living off that salary, but if a person is trying to raise a family, life is almost impossible. After the food is bought, rent is paid, and the utility bills are paid, what money is left for schooling or clothes? Granted, a person can get welfare or go to Goodwill, but that is degrading. Everyone wants to believe they can support their family. People need to be making about 9 to 10 dollars an hour to at least pay for the cost of living. Most people who are making $5.15 an hour need to have at least two jobs to support their family. Working two jobs can put a lot of stress on a family because the parents don't get to see their children as much as they would like to.

Since 1994, welfare roles have dropped by more than 50 percent nationwide. More than half of these people--about 800,000--have moved into unsubsidized paid employment, yet the very success of welfare reform has brought another problem into stark relief: for many people, getting into work doesn't mean getting out of poverty. People who leave welfare typically find a job paying between $6 and $8 per hour, well below the income needed to bring their families above the poverty line (Kazis, Miller).

Wealth and income is concentrating at the top of the industries in America creating an ever-increasing gap between the CEOs and the average worker. CEOs on average today are making about $550 to every $1 made by a regular worker with minimum wage.

Since 1980, the average pay of regular working people increased just 66 percent, while CEO pay grew a whopping 1,996 percent. According to Business Week, the average CEO of a major corporation made 42 times the average hourly worker's pay in 1980, 85 times in 1990 and a staggering 531 times in 2000. If runaway CEO pay growth continues at its current exponential rate over the next 50 years, the average CEO will be paid more than 250,000 American workers. (New York Times)

If the government keeps the minimum wage income down to $5.15 an hour, then who will buy the $30,000 cars? Who will be able to afford the new houses?

Competition between products is what keeps America's economy stable. When competition occurs, companies try to make their products cheaper for the consumers so that they can sell their products. The American Economy is fixated on the mal-distribution of government income and wealth and the domination of huge multinational corporations. What this means is that companies with private ownership are seeking to gain personal profit. They have a "laissez-faire" approach where people keep their hands off the way the system is set up. If people try to go against the system and rearrange the way corporations work, then they are going against the laissez-faire approach. When mergers create monopolies and shared monopolies, then there is no more competition for that product. When there is no competition, the top executives of these companies gain a majority of the profit, and the consumer is no longer faced with the cheapest price, but any price the corporation wants to set.

CEOs

One thing that is appalling about the CEOs of these large corporations is that they are already earning millions of dollars each year off of profits from their company, and yet they still layoff thousands of workers in their warehouses and factories.

The flagging economy and poor corporate performance--including falling stock prices, declining profits and big layoffs--have barely made a dent in executive pay. Median pay actually grew by 7 percent--meaning half of all executives made more and half made less. This rate is twice the growth of workers' paychecks (McCarthy 8).

The Pillsbury Company made 6 billion dollars in profit from 1993 to 1996 and they still tell the media that they are trying to stay competitive (The Big One). How much money do these companies really need? One of the main reasons these companies need to keep making so much money in profits is because they have shareholders that invest in their company. If the company

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