WSU economist explains executive bonuses, government bailout
Feb 25, 2009 2:26 PM | Print
This WSU Newsline Podcast is available at http://www.wichita.edu/newslinepodcast. See the transcript below:
You're listening to the podcast edition of the Wichita State University audio newsline. Learn more about WSU — the home of Thinkers, Doers, Movers and Shockers — on the Web at wichita.edu.
In the midst of a massive bailout by the government, one might assume Wall Street wouldn't be paying out bonuses. Well, think again. President Obama was among those criticizing $18 billion in bonuses while the crumbling financial sector received a bailout from taxpayers. Wichita State University labor economist Jodi Pelkowski says there's more to it than meets the eye.
Although many people would like to find a scapegoat, Pelkowski says it's not easy to pinpoint the blame for the economic hardship facing some companies.
Pelkowski: "It's hard to distinguish whether it was bad decisions or bad luck in getting caught in an economic crisis. It isn't necessarily the air manufacturers' fault that demand for their product has fallen, given the banking crisis and businesses cutting back."
Pelkowski says it's hard for average laborers to understand how executives get bonuses in the midst of massive bailouts.
Pelkowski: "Really, perceptions do matter. People want to be treated fairly. It's hard for the average laborer to see so many of them being laid off and having trouble making their mortgage payments while well-paid executives are getting paid more."
While it's hard for many to feel much sympathy for management, Pelkowski says they are caught between a rock and a hard place.
Pelkowski: "Management is really in a catch 22. They need the money to stay solvent. They want to keep their executive skills and experience. But from a PR perspective, they're taking a beating in the public eye, so it might be helpful for management to delay those bonuses until a time where it's better."
Allan Johnson, managing director of Johnson Associates, a New York-based compensation consulting firm, said, "The average person does not care.
Many Americans will think, "These people make 10 times as much as I do and I'm losing my house."
Thanks for listening. Until next time, this is Joe Kleinsasser for Wichita State University.
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