5/10/00 The richest, most overpaid layer of corporate fat thinks everyone else is making too much money in this cycle of boom. I don't see any of these clowns taking a voluntary pay cut. Do you? If enriching the people who create the wealth and do the REAL work is detrimental to the system, then why do we tolerate this system? Joshua2 =========================== CEOs on workers wages xxx CEOs warn on wages U.S. corporate leaders say booming economy adds wage pressure May 11, 2000: 7:21 a.m. ET http://cnnfn.com/2000/05/11/economy/wires/ceos_wg/ WHITE SULPHUR SPRINGS, W.Va. (Reuters) - Executives from large U.S. corporations say a note of caution about the booming U.S. economy was emerging due to concern that a continued scarcity of workers in a tight labor market would create wage pressures. The Business Council, a group of more than 300 executives, said business conditions were now either stronger or little changed from six months ago. But like many economists in the private sector, they forecast a slowdown later this year. Some of the business leaders saw inflation picking up, but most said their companies had little pricing power. Citigroup Inc. (C: Research, Estimates) Chairman Sanford Weill, who serves as the vice chairman of the council, said Wednesday that 67 percent of its members felt that they did not have much pricing power and 73 percent did not see the situation improving. Although the group's members may not be seeing as much pricing pressure as U.S. firms overall, there were a lot of examples where costs were rising as the longest-running U.S. expansion continues and it remains difficult to hire people in many areas of the industry, Weill said. He noted construction costs as one of those examples. Labor market conditions either remained tight or tightened further from last year and few members expected conditions to improve, almost all of the council members said. [IMAGE] "I see maybe a little bit more caution, not less optimism. That's not a contradiction in that nobody here would have expected the economy to be this good (for this long)," said William Esrey, chairman and chief executive of Sprint Corp. (FON: Research, Estimates) in a press conference. "So you begin to see a couple cracks and we're not sure where the first coat of paint makes it go away or if there is something deeper that is going to continue to develop. We are aware of a bit more caution and a redoubling of efforts (from last year)." The caution was a result of the duration of the U.S. economic expansion and signs of increasing wage pressures and other costs beginning to peek through, Esrey added. At a meeting in the West Virginia mountains, the group said they were raising salaries and offering stock options and other perks to compete for workers. They were also investing in labor-saving technology. The forecasts come as the United States enjoys its longest-running economic boom. To ward off inflation in times of robust growth, the Federal Reserve has raised interest rates five times since June and is widely expected to lift rates by half a percentage point when it meets on May 16. The U.S. inflation rate likely will remain in a 2.0-3.9 percent range longer-term. One-third of the council members believed inflation would hover at the high side of this range. Federal Reserve Chairman Alan "Greenspan has taken the position of as 'steady as it goes' with 25 basis point rate hikes. I think they are going to begin to have some effect. We are already beginning to see (the economy) cooling off," Weill said. "With the economy growing at such a rapid rate and coming close to full employment it is appropriate for the Fed to put the brakes on. If it lets it alone and (the economy) runs away, it will be a larger problem in correcting." Executives were cautious about prospects for global growth, but said Europe and Asia, except for Japan, held the best growth opportunities for their companies. Eastman Kodak Co.'s (EK: Research, Estimates) George Fisher said revenue growth outside of the United States was coming back good for them, noting that China was very robust. Michael Dell, head of Dell Computer (DELL: Research, Estimates), also said Asia was particularly strong for his company, with China growing 100 percent. The executives all made a strong call for the government to grant China normal trade status. The outlook for Brazil, which has recovered from its currency devaluation, is "very, very good," Weill said, adding that Argentina and Mexico were also doing well. He also said Asia was doing very well, with changes in Japan -- once they are implemented -- creating a more welcome atmosphere for foreign capital. Citigroup is increasing its penetration of businesses in emerging markets substantially, Weill added. DuPont Co. (DD: Research, Estimates) Chairman and Chief Executive Charles Holliday Jr. said companies may have to go to different areas for new opportunities as cautious signs emerge in the U.S. economy. The cost of debt and equity financing is expected to be higher in the second half of the year compared to the first half, a large majority of the executives said. Higher oil prices are having little effect on their businesses. However, a large minority believes Washington should pressure OPEC to bring prices down to a $20-23 barrel range. Electronic commerce will help companies improve revenue, raise productivity and cut costs within the next five years, most council members said. A small majority of members expects e-commerce to have a slightly negative effect on their own firms' pricing power. Technology advances have increased productivity, said members of the council's executive committee, noting that many of their companies have achieved levels of productivity they never would have expected 10 years ago as a result of the advances. Johnson & Johnson (JNJ: Research, Estimates) Chairman and Chief Executive Ralph Larsen said that the company has tripled its growth and increased its work force by only 15 percent, thanks to technology. "We have no price flexibility and our prices are falling. Our savior is productivity," Esrey said. CSX Corp. (CSX: Research, Estimates) Chairman and Chief Executive John Snow added there is no reason to expect productivity to slow. "We are only beginning to see the power of these technologies," he said. 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