This is scary stuff
[Barney Franks’s proposed] “Pay for Performance Act of 2009,” would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.
If this happens it would apply not just at the top of these companies, nor would it apply to only the financial firms. Auto manufacturers, car parts suppliers, heck, depending on how broadly the language is construed, perhaps any company with a government contract could find its complete payroll come under Washington’s scrutiny. Imagine when a unionized Democratic party gets that power. Union workers could see astronomical increases in pay, while their non-union counterparts don’t. Regulators could impose a de facto increase in the minimum wage, instead of having to use that messy democracry stuff to pass the change. The same regulators could limit the pay of top executives to some arbitrarily decided proportion of the income of the lowest paid employee. What’s reasonable? 50 times? 20? 10? 5? Who gets to decide?
I can guarantee you one thing: any company where Washington meddles will fail to compete with its free market competitors. What then? Subsidies? Tariffs?
This is scary stuff.
March 31st, 2009 at 9:14 am
If this applies to ALL employees it could override union agteements but don’t look for that to happen during Obama’s term.
March 31st, 2009 at 12:21 pm
The one positive that could come from this type of legislation, as well as the political brouhaha involving AIG and GM, is that struggling industries will be much more hesitant to accept government bailout relief. If the price for bailouts is this kind of interference, many will look for other available solutions.