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Commentary
American Workers Deserve To Be Thanked, Not Spanked
By Piper Cole
Tuesday, Sep 7, 12:00 PM PT
Labor Day began as an exercise in cynicism. It came into being in 1894, when President Grover Cleveland tried to win re-election by securing the support of the rank and file. Hey, I mean what better way to get workers on your side by giving them a three-day weekend?
Cleveland lost the election, but in a broad sense, the gesture worked. Today, over 100 years later, millions of us will celebrate the American work ethic by taking the day off.
But the great thing about Labor Day isn't just that it gave us an end-of-summer holiday. The great thing about Labor Day is the recognition and tribute that it represents for American workers. It must have been commonplace in the late 1800's, with so many millions toiling on farms and in factories, for workers to feel replaceable and unimportant, like one more cog in a great economic wheel. President Cleveland assured workers through the creation of Labor Day, that far from being unimportant, they were essential and that they merited a tribute.
That's a point we'd do well to remember today.
Regardless of their collar color, American workers are critical to the success of our democracy and our economy. The continued growth in the nation's gross domestic product has much to do with the fact that people in our country are working harder. And if we want to enjoy ongoing economic success, we've got to do more than slap our employees on the back before sending them off for a long weekend every September. Honoring, cultivating and encouraging workers has to be part of every manager's job and every company's strategy.
That is why it is short-sighted and economically counter-productive to enact policies that would force most companies to eliminate the use of broad-based stock options. The Financial Accounting Standards Board (FASB) recently proposed the regulations that would do just that. FASB uses stock option programs as a scapegoat for recent corporate scandals and assumes that if we remove this incentive we'll remove greed and malfeasance from our board rooms.
There are several problems with FASB's thinking. First, it's wrong. Well-reasoned and well-structured stock option programs encourage innovation and pride of ownership, not corruption. Second, stock options are a high-test fuel powering ingenuity and invention at some of the hottest corporations in the country. Limit that fuel and you'll end up with a sputtering, four-cylinder economic machine. And third, FASB's proposal is naïve. It suggests that the best way to end board room greed is by reducing incentives to rank-and-file workers.
The fact is that stifling broad-based stock options not only disses our best and brightest workers, it disadvantages any company that tries to retain and attract those workers. It makes our corporations and our economy less competitive. And it places the burden of corporate reform squarely on the backs of American workers who have already suffered too much as a result of scandals at Enron, Worldcom and Tyco.
I'm as aware as anyone of the toll that corporate scandals have taken on our national psyche and on the lives of individual workers who have lost pensions, benefits and job. I agree that we must have accounting and corporate governance reforms to reduce the possibility of recurring problems. But many necessary reforms are already in place. We're already starting to see the positive impact of the Sarbanes-Oxley Act and other regulatory measures that provide more accountability and transparency for investors and regulators. These policy changes were a step in the right direction.
Fortunately, I'm not the only one who feels this way. At a June rally in Palo Alto, I joined nearly 1,000 employees from high-tech companies in sending a clear message to FASB that their proposal is a bad idea.
It is not just the high-tech industry that feels this way. There are many non-technology companies, small businesses, economists, academics, and policymakers who recognize their responsibility to support employees and have also spoken out against FASB's proposal. The U.S. House of Representatives recently passed a bill to overrule FASB's proposed accounting change. The large margin of 312 to 111 sends a clear message that this issue is important to the estimated 14 million workers that currently hold employee stock options.
In spite of all the vocal opposition to mandatory expensing of stock options, FASB is pressing ahead, bent on appeasing a handful of policymakers and accounting firms, regardless of the consequences to American workers.
So, while we enjoy the family barbecues and trips to the beach on this Labor Day, we have two choices. We can naively tell ourselves that by eliminating stock option incentives and - in effect, punishing rank-and-file workers - we'll eliminate a source of boardroom greed. Or, by encouraging reasonable stock option programs, we can truly honor labor and thank the American worker for a job well done.
Piper Cole is Vice President of Global Public Policy at Sun Microsystems.
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