Best columns: Business
Wall Street’s misguided obsession
Los Angeles Times
American Airlines just “did something that’s good for its workforce and good for its passengers.” Naturally, Wall Street is apoplectic, said Michael Hiltzik. When the nation’s largest airline announced raises for its pilots and flight attendants last week, investors responded by sending the carrier’s stock down 8 percent within 48 hours, wiping out $1.9 billion of market value. “Labor is being paid first again,” one analyst complained in a memo to clients.
“Shareholders get leftovers.” Perhaps investors are forgetting that American authorized $9 billion in share buybacks between 2014 and 2016, “money that went directly into shareholders’ pockets.” By comparison, last week’s raises will cost the airline just $1 billion over the next three years. American is also smart to try to keep its employees happy at a time when customer service disasters “are turning the industry into a national joke.” Nevertheless, Wall Street adheres to a “cult of shareholder value” that insists a company’s only responsibility is to increase profits, at the expense of workers and all else. It’s that very attitude that “has placed American business and the economy in a bad way,” driving up inequality and stifling growth. But if American’s stock slide is any indication, Wall Street hasn’t gotten the message.
Where full employment doesn’t work
“It’s been so long since we’ve had strong labor markets in the U.S. that we’ve forgotten what kind of pain they can cause,” said Conor Sen. We’re seeing now how low unemployment can be great for rural Americans, “but bad for rural America.” Take northern New England—Maine, New Hampshire, and Vermont—where jobless rates are 3 percent or lower. For these states’ economies “to grow at all,” they will need an influx of workers, or for residents who aren’t currently looking for a job to rejoin the workforce. That will be tough, because migration to the region isn’t growing, and the population tends to skew older. Companies there also can’t afford to dramatically raise wages to attract new workers, because rural firms’ profit margins tend to be smaller. So when local companies run into staffing issues, “their choices are shutting down or leaving for another place with deeper labor pools.” At the same time, rural workers are increasingly being lured to urban areas by higher wages in the growing service economy, and they’ll have less competition from new migrants because of President Trump’s immigration crackdown. That ongoing exodus of talent will leave rural communities “even worse off than they are now.” Increasingly, we’ll end up with two Americas: “the withering America [and] the thriving America.” ■