Huge severance amounts are not exception

Huge severance amounts are not exception
 
Date June 27, 2006
Section(s) Columnists
By Wendell Wendt  
 
Like many other persons, I was amazed when I learned that the CEO of Maytag would receive about $17 million in severance pay when Whirlpool completed its acquisition of Maytag. However, a look at some other mergers shows that huge severance amounts are not an exception.

For example, the telephone giants AT &T and Bell South are planning a merger. If the merger goes through as planned, the CEO of Bell South and seven of his assistants will share $32.5 million in severance rewards.

Undoubtedly, financial maneuvers like the above are part of the reason Mortimer B. Zuckerman, editor-in-chief of U.S. News & World Report, recently wrote an editorial with the title “Rich Man, Poor Man.”

In the editorial, Zuckerman says Americans still have faith that in this country a person can start out poor, work hard and become well off. We have that faith, he says, because as a people, we are natural optimists.

However, Zuckerman believes only a small minority now have the possibility of starting poor and becoming well off. This is a change, he says, that has occurred in the last 25 years and is an issue we must address with urgency. We must address it with urgency, not just for the sake of social justice, but “also to obtain the greatest benefits from the talents of our fellow citizens and maintain a cohesive community.”

Zuckerman backs up his contentions with statistics. As a nation, the U.S. experienced exceptional financial growth from 1980 to 2004. Our gross domestic product rose almost two-thirds, but during that period the wages of an average worker fell, once his income is adjusted for inflation.

Zuckerman gives three reasons for the decline in the probability of the American dream. They are: 1. Our tax system has become much less progressive. 2. “Globalization and technology have increased the rewards for intellectual skills, vastly increasing the value of a college degree.” 3. College-educated women tend to postpone having children, while at lower income levels women have children at a younger age, and more of them.

Zuckerman closes his editorial with these sentences, “We must make climbing the ladder of success a reality for more and more Americans, and begin reducing the gap between the rungs. This means that governments, at all levels, must give more of a helping hand to poorer qualified college students, expand preschool education and develop a tax system that no longer turns the American dream into an American nightmare.”

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