Call it The Fall. In the Biblical Fall, greed played a role. Eve had to go for that apple. So too greed has played a role in this fallthe overarching grasp of millions of Americans for more of the good life.
Todays Fall, though, is literally a fall. The numbers that mark our lives are tumbling. The Dow is down, stores are closing, tax revenues are plummeting. Teachers, firefighters and police officers fear layoffs. Even gamblers are retreating, leaving shortfalls in casino takes. Seers are trying to predict the nadir of this tanking economy.
One casualty has been the multi-million-dollar salaries of those who managed our money. Before The Fall, the gurus behind the hedge funds, investment banks and brokerage houses regularly took home $10 million dollars a year, often more with bonuses and stock options added. A star earned more than $100 million a year. The palaver was that this rewarded stellar performance. Of course, even when companies were faltering, boards rarely cut compensation. Multi-million-dollar salaries became normal compensation for top-level management in the private sector. And since this was the private sector, the public had no standing to object.
After The Fall, those financial megaliths have withered or vanished; and salaries have tumbled down, down, down, approaching (but still above) the level of public sector honchos. The president of the United States earns $400,000 annually. Now that Uncle Sam has bought his (our) way into the innards of those megaliths, we taxpayers have imposed ceilings.
In the nonprofit sector, before The Fall, salaries also crept up, up, upnot to the stratosphere of Big Business wizards, but high enough to raise eyebrows. The managerial class of the nations large nonprofits demanded the raises that their predecessors never envisioned. University presidents today regularly earn more than $1 million a year. So do hospital executives.
This Fall has depleted the revenues of those non-profits. Endowments have withered. Annual giving has dropped. For hospitals, a rising census of the unemployed has translated into a rising census of the uninsuredwhich has translated into more accounts receivables that collection agencies will never collect. In November, Moodys downgraded the prognosis of the health care industry from stable to negative. This ebbing tide is leaving a lot of boats on the sand.
What hasnt tumbled are the salaries of the non-profit honchos. When the president of Brown University announced she would take a 20% salary cut, people praised her decision. But there has been no cascade of similar offers. In fact, her predecessor recently negotiated a package that approaches $2 million to head Ohio State University.
As for hospitals, the head of a major system easily earns several million dollars annually. Even the head of a not-major system can earn that much. Even the head of a non-profit system that struggles under a mounting debt of unpaidunpayablebills can earn that much.
Because the private sectorincluding the nonprofit sectorsets its own rules for compensation, the public has no say. Trustees determine competitive compensation. But the public constitute the patients, the ultimate customers, of our nations health care systems. Ironically, the largest systems, in inner cities, serve the sickest patients.
It is time to inject seemly into the compensation decision. Cutting compensation to the top CEOs of Healthcare America will not solve those systems woes. Their balance sheets will be just as red; their revenues, just as dismal. But the cuts will demonstrate empathy, recognition that we all are suffering this Fall together.
Biblical scholars consider the Fall a blessing: it started humans on our complicated history.
Perhaps this Fall will bring some good, if it ends the multi-million-dollar salaries for the people who manage the systems that serve the sick.
Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email firstname.lastname@example.org.
From The Progressive Populist, April 1, 2009
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