Trickle Down

I started my morning with a column from Jim Hightower and he relates this story of American Airlines and its employees. In 2003, the employees were asked to take a pay cut to help the organization survive. A large pay cut; $1.6 BILLION. To make the cuts less painful, CEO Gerard Arpey also took a pay cut. Okay, it wasn't much of one – $62,000 over two years on a salary of about $600,000 a year. ($600,000 - $31,000 = $569,000. Not bad.) Now it’s 4 years later and everyone has worked hard to keep American Airlines out of total bankruptcy. American Airlines is healthy and profitable. It’s time to show some appreciation, so Mr. Arpey handed out bonuses. To the executives. Being the #1 guy, he gave himself $6.6 million. The next 4 top exec’s shared $12+ million. The employees below the level of the executive suites? They got nothing. Zip. Oh, and some small amount of money was spent on security guards for Mr. Arpey when he addressed the stockholders meeting. Apparently some employees were a little upset. Then “Mr. Arpey added insult to injury by saying that the executive bonuses were granted as a reward for solid performance. And what about the solid performance of the employees? Rather than answer that, Arpey abruptly adjourned the meeting.”

The problem here is that the employees simply aren’t patient enough. They just have to wait a little bit longer for the ‘trickledown’ effect to come into play. All of that money that the execs took home as bonuses will eventually make its way into the employee’s wallets. Just wait and see.