Enact wage freeze, caps thoughtfully
Anytime someone messes with someone's pay, that's serious business.
We saw efforts to do both at the federal and state levels on Wednesday -- one which was proper, and one which is questionable.
President Barack Obama on Wednesday put a halt to a seemingly never-ending flow of cash to top executives from major banks that also stand there, hands out, asking for taxpayer dollars to bail them out.
Obama capped chief executives' salaries at $500,000 on those companies that are receiving federal aid under the Troubled Assets Relief Program, or the initial $700 billion bailout bill approved last year by Congress. The move became necessary when a study in late December showed that the first 116 banks to get $188 billion in bailout bucks paid their top executives an average $2.6 million in annual salary, bonuses and benefits the previous year. The banks spent $1.6 billion on compensation for their top 600 executives in 2007.
Taxpayers want accountability and capping top pay is a way to put the institutions on notice that they'd better clean up their act with our money at risk.
"We don't disparage wealth," Obama said. "But what gets people upset -- and rightfully so -- are executives being rewarded for failure, especially when those rewards are subsidized by U.S. taxpayers."
President Obama is right.
Meanwhile, a Minnesota state senator proposed Wednesday that a wage freeze be imposed upon public employees -- state, county, city, school districts, state universities and colleges.
While such a freeze may save $1 billion, it is problematic, as it most affects middle income Minnesotans who happen to be public workers. Also, it unilaterally breaks collective bargaining agreements, setting up a court battle or possible strikes.
Union reaction was swift against the proposal, with officials saying the proposal should be negotiated and include a guarantee of no public worker layoffs. With most union contracts in place with local governments, a possible state action would be near impossible to impose without a court fight.
And, at a time when the federal government is seeking economic stimulus by getting money and credit to people to purchase goods, imposing a public sector wage freeze would affect the buying power of a large segment of middle-class Minnesotans.
That's adversely affecting too many average families in Minnesota, and shouldn't be imposed unless properly negotiated.
-- Bemidji Pioneer