A Twitter acquaintance read my Saturday post on Capital One’s closure of its Sioux Falls operation and accused me of belittling the 750 South Dakota workers Capital One is laying off.
Permit me to redirect:
As Capital One CEO Richard Fairbank (wait a minute: a credit card boss named Fairbank? oh, the irony!) reduces the pay of 750 Sioux Falls workers to zero, I notice that his annual compensation in 2014 was $19.6 million. He took no salary, but a mere 1% of his stock, options, and bonus could repay the taxpayers of South Dakota for the $200K in corporate welfare we handed the company in 2011.
Let Fairbank keep his $4.4-million bonus, and he could still write each of his 750 Sioux Falls employees a $20,000 check for the value they create for Capital One. At $4.4 million, he’d still be making more than five of the six South Dakota CEOs the AFL-CIO lists in calculating our state’s average CEO pay of $2.23 million. In 2014, Fairbank made 543 times the average South Dakota worker’s wages. In other words, he convinced his board that his exertions added as much value to the company as the exertions of nearly three quarters of the people working for Capital One in Sioux Falls.
And now Fairbank has apparently taken the position that the exertions of all 750 Capital One Sioux Falls employees are not worth any paycheck.
Tell me again: who’s belittling Capital One’s soon-to-be-erstwhile Sioux Falls workers?
Related Reading: The Economic Policy Institute finds that the compensation for top CEOs nationwide was 303 times typical workers’ annual compensation in 2014. EPI says this astronomical pay doesn’t add value, and taxing that wealth wouldn’t harm value:
That CEO pay grew far faster than pay of the top 0.1 percent of wage earners indicates that CEO compensation growth does not simply reflect the increased value of highly paid professionals in a competitive race for skills (the “market for talent”), but rather reflects the presence of substantial “rents” embedded in executive pay (meaning CEO pay does not reflect greater productivity of executives but rather the power of CEOs to extract concessions). Consequently, if CEOs earned less or were taxed more, there would be no adverse impact on output or employment [Lawrence Mishal and Alyssa Davis, “Top CEOs Make 300 Times More than Typical Workers,” Economic Policy Institute, 2015.06.21].
Maybe I’m too idealistic but maybe we should invest in companies that actually commit to South Dakota. They might be smaller companies but maybe if these companies put down roots here the desire to leave will be less.
The company that I was laid off from was a smaller company but the CEO and the top brass lived in Minnesota. Maybe if they had lived here they might have cared more.
Think Fairbank gave a crap about South Dakota and its people? Not a chance,
Good idea,Owen. Start up companies that make it should be loyal to the place to the place that helped them get their business going.
Owen, solid comment! This has been suggested many times in the legislature and gets very little interest from the power clique and their sycophants, especially among newspaper editorial boards. The power clique has sought headlines, especially since the REDI Fund was created, to justify largesse thrown in the paths of corporate bosses to lure them to South Dakota. In other states it’s called smokestack chasing. What the schmucks in Pierre won’t admit is every other state has played the same game, most with much larger money resources than South Dakota. What South Dakota has promoted is its permanent under class of willing workers who will accept crap pay in return for their hard work.
I’ve watched South Dakota evolve from the days when Morrell’s was the golden child of economic development. Friends took summer jobs at Morrell’s or dropped out of college to save money to return to college by working at Morrell’s. Then Janklow licked the boots of the corporate bosses and changed the usury laws to open the state up to exploitation by Citibank and a flood of loan sharks. When this also began running low on value, then the medical industrial complex kicked in to exploit the poor diets of South Dakota’s and neighboring states’ aging population. Hospital expansion took off exponentially. The marriage of loan sharking and mega-medical became embodied in the emergence of T. Denny Sanford as South Dakota’s political kingpin and Daddy Warbucks to needy politicians who then build monuments dedicated to T. Denny.
Throughout, the Republican Party has controlled statehouse politics and governance and has done its duty with the help of editorial boards in our state to keep working families under informed and the targets of hype that they’ve never had it so good. The amazing part is watching working families, farmers, senior citizens and others vote for Republicans who announce their intention to strip out federal programs that keep South Dakota’s economic underpinnings from crumbling. No doubt, they are mildly concerned about the families that lost their jobs (if indeed they bother to read the paper or watch local news) while applauding Capital One CEO Richard Fairbank’s freedom to rape our state and national economies.
$200k in training grants. Training for South Dakota citizens. State money being spent to educate our citizens. Teachers teaching courses designed by the state Dept. of Labor to educate our citizens. State tax dollars supporting education of our citizens who will use those job skills the rest of their lives, regardless of what happens to the employer.
If you call that corporate welfare, what do you call the rest of public education?
Could be worse. Wisconsin goobernor Scott Walker controls his own slush fund that hands out millions to campaign contributors and shoot,they don’t even have to create any jobs.
Sdsm&t Pres & brand New Tail-finned Black On red Porsche And Similar Sports Cars Of Another Administrator Leave Thae Ad Bldg @4:30 and Rapidly Accelerate Outta Town. Think They Care?
SDSM&T cars are nearly matching, mentioned above.
SDSM&T former pres’ huge house on hill above west blvd has more lights on every night than the airbase runway!!
the MDU pres makes $650,000, the local nat’l gas utility (monopoly I mean) and interestingly he is a Lakota I believe. untapped democratic leadership anyone??
I grew up on that hill as a kid-Christ our pool consumed more energy in the summer than did several average sized homes, and then there was our office sized commercial AC that kept all floors and 5 bedrooms ect ICE COLD all summer.
neither of my folks were college grads. all four of the above are PHD level or at least masters level professionals. to date me, I lucked out of the last Vietnam draft with a high number, thank god.
non of my school mates that went are in this list of rapid city’s wealthy.
I still don’t care to know which fork to use, but a younger class mate , an investment broker, drives a Ferrari. he must have admired leo dicaprio’s and coppola’s movie paean to unregulated illegal capitalism.
I read this and all I can do is shake my head. The only thing that has trickled down in the country is the corruption orchestrated by corporate America. The powers that be here can’t expand medicaid, they can’t pay our teachers, they fight paying our citizens a minimum wage, and they freely hand out corporate welfare as if it were candy. We should demand get our money back. With interest.
the board of regents and NSU appear to have been co-opted for corporate churning purposes like EB5, and soon to be exploited — SDSM&T’s –south western sd shale beds for high hazard national nuclear waste disposal, and we will pay them to come–i can see it now.
Owen, good idea! Our critical needs teacher scholarship and new Build Dakota vo-tech scholarships are structured to convert to loans that students must repay if they don’t stick around in South Dakota. The vo-tech scholarship requires students stay and work here for three years. Teachers have to stay for five years. How long should we require corporate welfare recipients to stay before we declare them free and clear of their obligation to us?
96, it’s scary when you tie everything together like that. From your narrative, I draw the hypothesis that we’ve been played. Our “self-reliant” pioneer spirit and humility inclined us away from accepting help. It doesn’t take much political sloganeering to nudge that self-reliance and humility into voting to get rid of government assistance and to believe that we are more virtuous for accepting hard jobs with crap wages from captains of industry, noble job creators all. The corporate colonizers know they can trap us in their workforce all the more easily if we not only disapprove of community-based assistance but let them dismantle the social safety net and leave slave wages as our only life preserver.
And when the corporate colonizers get tired of us and leave, they may leave some parting gifts, but only if the workers they drop promise to keep quiet and not use their personal stories to make speeches for political change.
Whoa, MHS—don’t go equating the training grants to the work my fellow teachers do in K-12 classrooms. What specific training do those GOED grants cover? Are they paying the company to cover tuition for new hires to take general classes at our public universities and vo-techs? Or are the GOED workforce grants simply subsidies to help the specific company pay for the specific training it gives its workers in its specific corporate rules and business practices?
I mean, if what you’re saying is correct, that the GOED subsidy wasn’t corporate welfare but education funding, then that training ought to translate to whatever job these workers get next, and no company that hires one of these 750 Capital One firees should get a GOED workforce training grant, because those workers already got their lifelong training at Capital One on the state’s dime! Is that what’s happening?
Or ask this question: if the state money weren’t available, would Capital One have left its employees untrained? Why do we cover this cost of doing business for wealthy corporations that can afford their own training courses? Don’t we already pay for the kind of lifelong job skills you are talking about in our K-12, vo-tech, and university systems?
CEO Fairbanks is likely the envy of the privileged in South Dakota…
That’s pretty harsh, CH. Somebody gets a Windows training class so they’re never eligible for state paid education again? That’s like saying a high school kid that takes French can’t take Spanish next quarter. Whatever happened to lifelong learning? This is state money spent to develop our citizens knowledge base.
When Troy and I were in this business the #1 class every grant went to was shop math. (fractions, ugh!). DOL had a standard curriculum they taught over and over again. Grants teach skills, not how to do a specific job.
BTW: what skills does someone working in a credit card bank need to know to answer the phone? I take 27, 45-60 minute, classes every year so I know how to abide by federal banking and consumer regulations. Little things I think you endorse like Fair Lending, Non-discrimination, Fraud Protection, Responsible Lending, Do Not Call, Safeguarding Data, Anti-Money Laundering, Depository Protections. Every single employee in any bank does the same. Front-line employees on the teller line and the phone banks received the most intense training, not the least, as they have the most customer interaction.
MHS, does DOL have that curriculum available online? If we really are subsidizing classes in basic shop math, why don’t we put that in the K-12/vo-tech curriculum so everyone gets it?
I don’t think it’s harsh to say that the state can justifiable tell businesses that we already spend hundreds of millions of dollars a year educating our kids to join the workforce and that we don’t have an obligation to double dip and spend the same money over on the specific review classes the business thinks its employees need. Why can’t businesses bear their own cost of doing business?
I also don’t think its harsh to say that the training you’re talking about in federal banking and consumer regulations are even more specific to Capital One and should not be an obligation of the state… unless you’re getting ready to flip and make the Bernie Sanders argument that post-secondary education should be free. I mean, if you’re saying that subsidizing training for lifelong job skills is the justification for paying for training courses for businesses, wouldn’t it makes sense to do that for every worker in South Dakota? Why tie such opportunity to the vagaries of the market and smokestack chasing (or call-center chasing)? Why not invest in an ongoing fashion for every South Dakotan, independent of corporate employers?
Well . . . if the State put all the curriculums online, it’d be a little hard on teacher employment, wouldn’t it? :)
I also think Bernie is partly right about free education. Jesse Ventura, of all people, espoused free community college a generation ago. If we’d embraced that, vs. the huge increases in student loan largesse to universities we had under Clinton/Bush, we’d be looking at a much reduced higher education crisis right now. It’s time we put the cruel myth of Everyone Can Go to College to rest and embrace Everyone Can Learn instead.
I think the extravagant and undeserved level of CEO pay in America is a travesty. Not only that, but it plays a major role in the economic struggles Americans are facing. The myth of the beneficent, all powerful “job creator” needs to die it’s disgraceful death.