Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
Keep CounterPunch ad free. Support our annual fund drive today!

How Workers Lose in Negotiations


Unlike the ninety percent of American workers who have only their own personal voice to influence their wages, benefits and working conditions, union employees use their collective organization to establish guarantees.

And, union workers come to negotiations very well prepared with lots of economic data, with each contract proposal “costed out,” and with the whole team backed up by a professional staff of legal and industry analysts. So, then, how is it that we still get hammered?

In real dollars, wages and benefits have not risen since the middle 1970s. We know this, but it still doesn’t make any sense. Why haven’t things improved for most of us and how has the seemingly impossible happened with 95% of all new income since the 2008 “recovery” going to the top 1%?

To answer these questions properly, we have to go beyond just blaming offshoring and contracting out and dig deeper, right down into the heart of how finance capital operates today.

Here’s How It Works

Aside from the fact that unions seldom use their most powerful weapon, the strike, and aside from the fact that even fewer unions ever mobilize and organize their biggest asset, the members, our biggest problem in bargaining is that labor’s financial analysis of corporations only touches the surface. It misses the vast bulk of corporate hidden wealth.

As it stands now, the Top 500 S&P corporations come to the negotiating table after already having played most of their big money cards elsewhere, in the stock market – thus, earning the well-deserved moniker of “casino capitalism.”

In essence, CEOs try to squeeze every dollar they can from offshoring, contracting out, terminating pensions, keeping wages low and reducing the workforce, just so they can push more cash into funding their ultimate prize – buying back stocks and paying dividends. This is where the real money is for investors.

As labor economist Les Leopold explains in his new book, Runaway Inequality, as corporations purchase their own company shares from the market, the value of the fewer remaining shares are automatically increased. This is a well-known fact in the board rooms but far lesser known in the break rooms.

Leopold explains it simply this way: if 100 shares on the market have a value of $10 each because a company is valued at $1000, then, if total outstanding market shares are reduced after “buy-backs” to 50 shares, the value for each remaining single share immediately jumps to $20.

In essence, “buy backs” reduce available shares by taking them off the market and, thus, quite naturally, increasing the value of the remaining lot. Pure and simple, this is nothing less than a form of stock manipulation not one penny goes to adding any real social value such as increasing production or enhancing the quality or performance of the product.

Which is why, after the Great Depression in 1929, regulations were introduced in 1933 that severely limited “stock buy backs.” And it worked. From 1933 until 1982, corporations only spent around two percent of their profits buying back stock. But in 1982, President Reagan lifted these restrictions.

As a result, by 2007, stock buy-back expenditures from the Top 500 rose to 75% of profits and, if you include dividend payments, it represents over 100% of profits being distributed to investors, says Leopold.

This may seem untenable but, actually, there is so much money to be made by artificially inflating stock value through “buy-backs” that companies are willing to go into debt to finance the whole enterprise. Recall also that interest payments on corporate debt are tax deductible, unlike individual personal credit card debt. Being in debt is also a potent management argument used to extract even more concessions from employees.

Thus, there are both financial and political incentives for this wasteful spending and its corollary of corporate indebtedness.

These are undisputed facts. In fact, in 2015, Bloomberg reported that “S&P 500 components were on track to spend a record $914 billion on buybacks last year — roughly 95% of all corporate earnings.”

Finding ways to obtain more and more cash to feed this investor greed drives this high-stake, scheming and slick way of artificially increasing the value of a company’s stock. Even some financial news outlets see it this way. For example, MarketWatch has described stock “buybacks” as “Just another Wall Street Scam.”

Show Us the Money Say CEOs

As diabolical as it all might appear to those on the bottom, it is extremely lucrative for those at the top. In fact, to make sure increasing stock value is the singular pursuit of upper management, CEOs from the Top 100 S&P corporations now earn 95% of their salary from stock options.

In 1980, just before Reagan lifted restraints on stock “buybacks,” CEO pay was 95% salary and bonuses and only 5% stock options. Quite a difference today.

Using the Boeing Corporation as an example, we can see how all this is planned out in the boardrooms and how it affects negotiations and, by extension, the wage and benefit standards of all workers.

As some may recall, the giant aerospace company terminated pensions in Dec. 2013 for thousands of Machinist Union members. Yet, literally only a few weeks earlier, Boeing approved a $10 billion increase in its stock buyback program along with an additional increase of about 50% in its quarterly dividend payments.

This duplicity is the operating standard for all major corporations. Think not?

Let’s look at United Airlines (UAL) and the railroad, CSX, both of whom are currently asking for concessions from their unionized workforce while billions of their cash reserves have been continuously ill-spent over the past several years.

When United Airlines announced big plans in 2014 to spend $1B to buy back stock, it was only a few months after negotiating a contract with 30,000 Machinist Union members and it was while the company was outsourcing hundreds of jobs. But, the fight is not over. Teamster mechanics just rejected a few weeks ago by 93% the company’s so-called “best and final offer.”

It’s the same thing at CSX, the largest railroad in the eastern U.S. It launched in 2015 a stock buyback of $2B with a 13% increase in dividends, the thirteenth dividend increase in ten years. Overall, CSX has spent nearly $9B since 2006 buying back its stock.

And, following the same pattern described above with Boeing and United, CSX has been demanding draconian concessions from its union employees at the same time. The railroad’s proposals were so onerous that workers overwhelmingly voted them down last December.

How to Fix It

Well, that’s always the hard part. How do we fix the “fixed economy?”

First, Leopold made an absolutely crucial point in our conversation – it is impossible to cure all the ills of Wall Street at the bargaining table. The policies are too entrenched and the problems too far spread across the whole political and economic landscape, as we have tried to describe.

To carry the fight forward against the imposing obstacles workers face, labor will need allies demanding together, an end to Wall Street domination over our lives.

Of course, such a movement would have both social, political and economic goals. But, to address the problems of corporate greed cited above, Leopold suggests the following be part of the initial conversation.

1. Levy a small fraction of one percent tax on all Wall Street transactions, thus raising around $350B.

2. Restore regulations that eliminate corporate stock buybacks and put that money back into production of goods and services.

3. Put an end to tax write-offs for corporate debt of, say over $500M. This would discourage borrowing cash and going into debt to finance all the back-door deals.

We are only at the beginning of a national discussion of these issues that first jumped off in 2011 with Occupy Wall Street. But going beyond those ground-breaking protests, the big question today is whether talk will eventually materialize into organization. And by that, I mean, unions initiating the organization of the working class into a mass anti-austerity coalition.

Note to Readers: Les Leopold currently directs the Labor Institute, a non-profit that designs research and educational programs for unions, worker centers and other socially progressive organizations. I highly recommend bulk purchases by unions of Runaway Inequality: An Activists Guide to Economic Justice: (Labor Institute Press, 2015) to train stewards and members about how they are getting the shaft from Wall Street “strip-mining our economy,” a term Leopold coined. It is already in its second printing.

Carl Finamore is Machinist Lodge 1781 delegate, San Francisco Labor Council, AFL-CIO. He can be reached at

More articles by:

2016 Fund Drive
Smart. Fierce. Uncompromised. Support CounterPunch Now!

  • cp-store
  • donate paypal

CounterPunch Magazine


October 26, 2016
John W. Whitehead
A Deep State of Mind: America’s Shadow Government and Its Silent Coup
Eric Draitser
Dear Liberals: Trump is Right
Anthony Tarrant
On the Unbearable Lightness of Whiteness
Mark Weisbrot
The Most Dangerous Place in the World: US Pours in Money, as Blood Flows in Honduras
Chris Welzenbach
The Establishment and the Chattering Hack: a Response to Nicholas Lemann
Luke O'Brien
The Churchill Thing: Some Big Words About Trump and Some Other Chap
Sabia Rigby
In the “Jungle:” Report from the Refugee Camp in Calais, France
Linn Washington Jr.
Pot Decriminalization Yields $9-million in Savings for Philadelphia
Pepe Escobar
“America has lost” in the Philippines
Pauline Murphy
Political Feminism: the Legacy of Victoria Woodhull
Lizzie Maldonado
The Burdens of World War III
David Swanson
Slavery Was Abolished
Thomas Mountain
Preventing Cultural Genocide with the Mother Tongue Policy in Eritrea
Colin Todhunter
Agrochemicals And The Cesspool Of Corruption: Dr. Mason Writes To The US EPA
October 25, 2016
David Swanson
Halloween Is Coming, Vladimir Putin Isn’t
Hiroyuki Hamada
Fear Laundering: an Elaborate Psychological Diversion and Bid for Power
Priti Gulati Cox
President Obama: Before the Empire Falls, Free Leonard Peltier and Mumia Abu-Jamal
Kathy Deacon
Plus ça Change: Regime Change 1917-1920
Robin Goodman
Appetite for Destruction: America’s War Against Itself
Richard Moser
On Power, Privilege, and Passage: a Letter to My Nephew
Rev. William Alberts
The Epicenter of the Moral Universe is Our Common Humanity, Not Religion
Dan Bacher
Inspector General says Reclamation Wasted $32.2 Million on Klamath irrigators
David Mattson
A Recipe for Killing: the “Trust Us” Argument of State Grizzly Bear Managers
Derek Royden
The Tragedy in Yemen
Ralph Nader
Breaking Through Power: It’s Easier Than We Think
Norman Pollack
Centrist Fascism: Lurching Forward
Guillermo R. Gil
Cell to Cell Communication: On How to Become Governor of Puerto Rico
Mateo Pimentel
You, Me, and the Trolley Make Three
Cathy Breen
“Today Is One of the Heaviest Days of My Life”
October 24, 2016
John Steppling
The Unwoke: Sleepwalking into the Nightmare
Oscar Ortega
Clinton’s Troubling Silence on the Dakota Access Pipeline
Patrick Cockburn
Aleppo vs. Mosul: Media Biases
John Grant
Humanizing Our Militarized Border
Franklin Lamb
US-led Sanctions Targeting Syria Risk Adjudication as War Crimes
Paul Bentley
There Must Be Some Way Out of Here: the Silence of Dylan
Norman Pollack
Militarism: The Elephant in the Room
Patrick Bosold
Dakota Access Oil Pipeline: Invite CEO to Lunch, Go to Jail
Paul Craig Roberts
Was Russia’s Hesitation in Syria a Strategic Mistake?
David Swanson
Of All the Opinions I’ve Heard on Syria
Weekend Edition
October 21, 2016
Friday - Sunday
John Wight
Hillary Clinton and the Brutal Murder of Gaddafi
Diana Johnstone
Hillary Clinton’s Strategic Ambition in a Nutshell
Jeffrey St. Clair
Roaming Charges: Trump’s Naked and Hillary’s Dead
John W. Whitehead
American Psycho: Sex, Lies and Politics Add Up to a Terrifying Election Season
Stephen Cooper
Hell on Earth in Alabama: Inside Holman Prison
Patrick Cockburn
13 Years of War: Mosul’s Frightening and Uncertain Future