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Tell Us What You Think: Caterpillar Makes Billions, Demands 6-Year Wage Freeze

Caterpillar workers and their families recently rallied against the massive giveback demands. Photo by peoplesworld/Flickr

Braving record heat and dangerous midwestern summer thunderstorms, groups of 15 members from the Machinists (IAM) Local 851 take four-hour shifts every day picketing the gates of the Caterpillar factory in Joliet, Ill.

The New York Times covered the story of the Caterpillar workers on Monday. This is their 12th week on strike after Caterpillar, which made $4.9 billion in profits last year, demanded the nearly 800 workers accept a six-year wage freeze, doubled health care premiums and cuts to pensions.

Demands for concessions are nothing new, but what sets Caterpillar apart is that it is a thriving company, not a struggling corporation trying to stay on its feet.  The New York Times reports not only did it rake in nearly $5 billion last year, Caterpillar is on pace to do better in 2012. The heavy equipment maker was so happy with its performance it awarded CEO Douglas Oberhelman an $11 million bonus and other executives pocketed huge bonus checks, too.   

What do you think about Caterpillar making record profits and demanding its workers take a six-year pay freeze?

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Leading labor experts weighed in on this development. They are concerned. 

Joseph McCartin, associate professor of history and director of the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University, told us if Caterpillar is successful “it would make the onset of a new and dangerous era in American labor relations.” 

If Caterpillar is able to put into effect its decision to lower the standards of its workers despite the company's profitability, it would mark the onset of a new and dangerous era in American labor relations. In past years, when Caterpillar and other corporations sought to lower the living standards of their workers, cited a lack of corporate profits. Now, it no longer matters whether companies are doing well or not. In good times and in bad their message is the same: they want to cut workers' benefits and income in order to increase profits. This is a dangerous and ultimately unsustainable course for this nation. All workers thus have an interest in fighting this move.  

Marick F. Masters, director of [email protected] and professor of Business at Wayne State University, told us Caterpillar’s tactics “pose serious threats.”

When is enough, enough?

Caterpillar executives ask almost 800 production workers to take a six-year pay freeze, which is effectively a major cut in real pay. Yet, it saw its profits rise 82 percent in 2011 and its CEO’s total compensation jump 60 percent. 

A stumbling jobs market, falling real wages and rising income inequality pose serious threats to our economic and political future.   If we want to preserve the virtues of capitalism, corporate executives must lead by example. They should take the high-road of employee not just executive compensation.  As a society, we pay dearly for both under-employment and under-compensation. We should support efforts to raise rather than submerge standards of living for working Americans.

Robert Bruno, a labor relations professor at the University of Illinois, who was quoted in The New York Times article, told us:

To be very clear, the Caterpillar strike in my home state is not about the economy or just about one plant in Joliet, Ill. The fight at Caterpillar encapsulates contrasting visions of America's future. One view coercively pushed by the employer is that prosperity for working-class men and women is no longer attainable by working a full-time manufacturing job. In this world view, economic stability for workers and their families is unachievable. It is a decidely dystopian vision of American class mobility, and if it takes hold, the country will have seriously damaged the most viable means to increasing income equality. The alternative view, championed by the Machinists union, insists that a job remains a viable pathway to economic security. It is a world view that is deeply embedded in America's promise. What workers are defending is nothing less than whether work will continue to be a means to creating a dignified life. It's a lot to fight for, but even more to lose. 

IAM District 8 business representative Steve Jones says:

There is no good reason for a company that made $4.9 billion in profits last year and $1.5 billion in the first quarter of this year to try and shake down their own employees like this.  

At a recent rally in Joliet, IAM President Thomas Buffenbarger said:

The practice of raising executive compensation to obscene levels while making it harder for working families to pay for basic medical expenses is impossible to justify at a company as successful as Caterpillar.

The company is operating with replacement workers and managers, but according to Local 851’s latest update, operations are not running smoothly.

We have received information that injuries and defects are high. Members have witnessed several ambulances going into the plant. Since the start of the strike, there has been an average of one per week. Also, we have heard that there has been a high turnover rate with the temporary work force.

Click here to visit Local 851 on Facebook.

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Tagged under:
CEO pay
Corporate Greed

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