The recent struggle in Major League Baseball (MLB) between owners (employers) and workers (players) illustrated once again how big corporations are driven only by the bottom line (profits). Consider that when you go to the store and balk at high prices; corporations are cashing in on this moment of anxiety by jacking up prices for no reason other than greed.
What is more American than baseball? Not much--and not just because it’s our national pastime; it also has a lot to teach about how our economy works.
Over the last few weeks, the MLB was embroiled in a battle that is becoming more and more familiar in countless workplaces. That battle was pitting team owners against the players in a model that speaks to how the US economy functions (or not).
Consider the math: MLB revenues have soared from $8.2 billion in 2015 to over $10.7 billion in 2019--a 30 percent increase. At the same time, players’ salaries have decreased by 6.4 percent, with the average salary declining from $4.45 million to $4.17 million during the span of the current collective bargaining agreement.
While the MLB has some complicated factors in terms free agency, arbitration, and teams with differing revenue streams, the upshot is still about how much of the profit will be shared with players vs. kept with owners. In fact, owners have indicated that they are only willing to give an increase based on inflation to players while players insist that their salary increases should be commensurate with revenue increases.
The MLB players association sums it up quite well:
- “… Sure, the top 1 percent or so are receiving plenty of money, but salaries for the middle class are not growing commensurate with the at-times explosive growth of the sport’s revenue over the past few decades. A system that works for those at the top does not automatically or even usually work for those at the bottom.”
Workers are standing up for rights, compensation, and dignity
It’s not just baseball, as we all know. Across the country-- from baristas to tech workers to dance choreographers--similar scenes have been unfolding, with workers squaring off against Corporate America to have a voice in the workplace, a share of the profits, and better working conditions. So, what’s going on?
For too long now, Corporate America has seen labor as a cost to be minimized or even eliminated (through automation or offshoring) rather than as a partner and frankly, an investor in the business.
In fact, if you want to know how a business works, ask the workers. They provide their “investment” in a business through their labor, and often understand the business and its operations in a way that investors never can. Yet, they are often sidelined when it comes to discussing how to move the business forward and improve its operations, efficiencies, and services.
Instead, workers should be seen as stakeholders who have much to gain from a company’s success and even more to lose from its failure. Rather than listening to its workers and rewarding them for their success, corporate America has declared war—fighting efforts to unionize, to give workers a seat on their Boards, a voice in their workplace and their fair share of the profits.
Why not squeeze consumers, too?
Now companies are pouring salt on a wound that has been growing for some time by raising prices and contributing to inflation despite record profits. Which is to say: they’re taking advantage of a moment and raising prices because they can get away with it—not because their costs have gone up proportionately.
While certain price increases may be warranted due to supply chain issues, it is clear that much of the inflation can be attributed to large conglomerates dominating the market share of certain industries.
So, while companies have worked to limit the share of the pie they give to their workers, now they are increasing the amount they take from consumers. And it’s paying off richly: Corporate profits (37%) are increasing at a higher rate than inflation (6.2%) and certainly more than compensation (12%).
In fact, companies have been making record profits, more than in the last 70 years. (See chart at top.)
In fact, if workers’ pay kept pace with productivity…
When you look at the chart, consider also that corporate profits are very directly related to the fact that worker compensation has been kept at historically low levels. The wage floor in the US, determined by the federal minimum wage, has been moving steadily downward for 13 years, as the wage has been stuck at $7.25 an hour.
Economic experts estimate that if the wage had kept pace not just with inflation, but with productivity and profits, it would be well over $20 an hour (or more).
Workers’ share of corporate revenues has fallen for two decades only to see CEO and executive pay raise at exorbitant rates (along with shareholder dividends). As companies have been forced to pay workers (just a little) more, they are looking to consumers to pick up the tab while maintaining a status quo for investors and owners.
The result is that worker compensation is now woefully behind in keeping up with costs of living. Recent research from Oxfam finds that nearly a third of all workers in the US earn less than $15 an hour. And those taking the hardest hits? Women and people of color. HALF of all women of color earn less than $15.
While there is a long and difficult history as to why this is, it has now become a plain and simple civil rights emergency. The very wealthy, shareholders, and corporate executives are getting richer and richer directly off the labor of workers and consumers who can barely make ends meet.
So, if you were wondering about where the pieces of the pie are going—it isn’t to workers or consumers. In some instances, this is just plain greed and a result of an economic model that has prioritized profit making for executives and shareholders while leaving all the other stakeholders of a company with less and less over time.
Please check out our low-wage map of the US.
 Yes, $4m is a nice paycheck, but the high number is modulated by a number of factors, including a handful of superstar players, a short playing career, and the fact that the roughly 750 active players in the MLB represent thousands of players in minor leagues.