7 AMERICANS ARE ANGRY AT CORPORATE EXCESS AND WANT THEIR GOVERNMENT TO STEP IN Focus groups and an opinion poll, conducted in May- June, 1996, show Americans are so frightened by their economic vulnerability they are willing to take a chance on government intervention. EXECUTIVE SUMMARY Anger and anxiety over layoffs, wage stagnation, declining benefits and the movement of jobs overseas has left the American public with a starkly negative view of the actions and motivations of corporate America. Ire at large corporations crosses race, class and political lines and is not waning despite the upbeat economic news of the last several months. It's so intense that, for the majority of citizens, it now rivals or exceeds anger at government. Most significant and most surprising, anger at corporate America has begun to translate into broad public support for government action to make corporations act more responsibly - and has the potential to change the nation's political landscape. These are central findings of a public opinion survey commissioned by the Preamble Center for Public Policy in order to better understand public anger at corporations and how it relates to issues of public policy and to American politics. The study, and a corresponding series of focus groups with middle and working class Americans, reveal that the American people have become firm in their belief that corporations are good investments but bad citizens. For example, when asked to assign corporate America letter grades for its performance in various areas, 78% of respondents give companies good grades (an A or a B) for making profits. "When it comes to keeping jobs in the US" and "being loyal to employees," however, seven in ten people say companies are not getting the job done (giving companies a C, D or F in these areas). Between 70% and 80% of the public recognize "serious problems" in the way corporations put the interests of their executives and shareholders ahead of their employees and society, and identify greed "as the motivation behind new waves of corporate layoffs and downsizing," rejecting the corporate argument that such actions are necessitated by competitive pressures. These attitudes are held across the economic and political spectrum, and are especially evident among the core middle class workforce hard-hit by corporate layoffs and downsizing. This attitude has remained intense and shows no sign of abating - even as media coverage of downsizing has dwindled, and despite the recent stream of positive economic news. The public now realizes that corporate profitability does not guarantee worker well being (even though much economic policy making in recent years has been based on exactly that assumption). The study also demonstrates that public anger at corporations has significant political and policy implications as it begins to translate into popular support for more aggressive efforts to alter corporate behavior. While anger at government remains high, people are so fed up with corporate behavior and so frightened by their economic vulnerability that they are willing to take a chance on government intervention. Consequently, seven in ten people (69%) favor government action to promote more responsible corporate behavior and to penalize bad corporate citizenship. Large majorities favor a host of specific policy approaches, many of which are already part of the political debate - from "living wage" laws, to proposed New Jersey legislation designed to penalize corporate downsizers, to Minnesota's law requiring corporations that get tax breaks for job creation, but do not create new jobs, to pay back the money. The survey results also indicate that issues of corporate accountability and economic fairness may well have increasing salience in the electoral debate. This opinion climate creates the potential for a new kind of political dialogue - the public is increasingly eager to hear what their leaders have to say about the problems created by big business. Those who present a strong critique of corporate behavior and show how proactive government action can be a remedy will be striking a responsive chord. Americans are much more likely to support leaders who favor such policies as setting standards for responsible corporate behavior and rewarding companies that meet the standards, denying tax deductions for CEO raises granted at the same time layoffs are occurring, and requiring large companies to provide basic benefits to all employees. And when the public faces a choice between a politician focusing on the problem of corporate greed and one attacking big, bad government, public sentiment will increasingly be with the former. In 1994, simply being the more antigovernment candidate was often enough; in the future, it won't be that simple. Progressive leaders focusing on corporate misbehavior as a central cause of economic problems for working families can more than hold their own in the battle for the public's hearts and minds. Among the additional major findings: * While public anger at government remains high, a majority of people (68%) now view "corporate greed" as an equally important or more important cause of the economic difficulties faced by working families (46% of people say corporations are a bigger problem than "waste and inefficiency", 22% chose both). * Americans firmly believe that recent trends in corporate behavior such as large- scale layoffs, downsizing, reduced benefits, and overseas job relocation - is motivated by greed (70%) rather than a quest for competitiveness and efficiency (22%). * Americans across party lines - Democrats (79%), Republicans (67%), and ticket-splitters (74%) - believe the economic and human impact of these corporate behaviors are serious enough to warrant purposeful government intervention - through incentives, mandates and penalties designed to make corporations think twice before trading jobs and wages for profits and CEO compensation, including: 1. Setting standards for corporate behavior, and rewarding companies which meet these standards with a lower tax rate than non-complying companies (82% favor - 44% strongly favor); 2. Requiring corporations receiving government assistance (tax breaks, subsidies, etc.) for the purpose of job creation to make specific commitments, and to pay back the aid if the proposed jobs do not materialize (as is now law in Minnesota) (78% favor - 39% strongly favor); 3. Requiring that all employees receive a basic package of health and pension benefits, so that corporations cannot cut costs by replacing current workers receiving benefits with new ones who will not (77% favor - 42% strongly favor); and 4. Requiring any company that does business with a city or town government, or receives any special tax break, to pay employees a living wage of at least $7/hour (76% favor - 42% strongly favor). In contrast, laissez-faire economic policies tested in the survey generally received significantly lower levels of support. In order to measure the true depth of public sentiment on these policy issues, the survey asked respondents whether these issues would significantly affect their voting decisions. Looking at the same breadth of progressive and laissez-faire policy options, people were asked if candidates campaigning on these policies would be more likely or less likely to get their vote. We take the percentage who say they would be much more likely to vote for a candidate who takes a particular policy position and subtract those who are much less likely to vote for that candidate - creating a measure of net impact. Three policies stand out as having particularly strong popular support, yielding a net impact of +37 percentage points or more: * Setting standards of responsible corporate behavior and rewarding companies that meet the standards with lower taxes; (+48) among all voters and (+56) among ticket-splitters; * Disallowing tax deductions for excessive CEO compensation; (+38) among all voters and (+45) among ticket-splitters; * Requiring large companies to provide a basic benefits package to all employees; (+38) among all voters and (+37) among ticket-splitters. About one-half of the public says each of these issues makes them much more likely to vote for a candidate. All three are progressive policies aimed at increasing corporate responsibility. Middle class Americans are among the strongest advocates of a progressive agenda for holding corporations accountable. The middle class is angry at finding itself stalled on the ladder of success, with suddenly limited prospects for more affluent futures, and new fears that their careers and lifestyles are no longer as secure as they once believed. * People in middle income families earning $35- $44,999 are most likely to favor government taking action to make corporations act responsibly (81% versus 71% of Americans as a whole). They are also most likely to believe that government serving corporate interests has a more adverse impact on the economy than government waste or inefficiency (45% versus 21%). (Overall, 40% of Americans pick government serving corporate interests versus 33% who pick government waste.) * Middle class Americans are the strongest advocates of mandating health and pension benefits (60% say they are much more likely to support a candidate who takes this position compared to 3% much less likely - a net impact of +57 compared to +48 among all Americans). They also give strong support to candidates who campaign on setting standards for corporate behavior (+47) and eliminating tax deductions for CEO raises at companies laying off workers (+34). * Economic changes are creating a gray ceiling. Middle-aged workers, once inclined to take steady promotions and pay raises for granted, are less likely to find them. Younger entry level workers - whose salary increases and promotions are less costly to their corporate employers are experiencing more good news than other segments of the workforce. The percentage of workers who have received both a promotion and a pay raise, or know someone who has, declines as the workforce moves from entry-level (42% of the workers 18-34), to more seasoned workers (26% of workers 35-54), to those nearing retirement age (only 17% among people age 55-64). About one in three Americans facing retirement (aged 55 to 64) is close to someone who has lost a job (31%) or had benefits reduced or eliminated (38%) - or has experienced one of these crises themselves. Among workers age 45 to 64, 55% give corporations a failing grade for loyalty to employees - the highest of any cohort. An extraordinary 69% of people age 55 to 64 say corporate greed is a bigger cause of economic problems than big government. Anger at corporations crosses racial lines. Large numbers of Caucasians and African Americans say corporate greed is a serious problem which requires government intervention. Large majorities of both Caucasians (67%) and African Americans (83%) favor government doing something to insure that corporations act more responsibly. About 7 in 10 Caucasians (71%) and 8 in 10 African Americans (81%) support five out of seven progressive legislative items tested. At least three-quarters of both Caucasians and African Americans say corporate actions are causing serious problems for the nation. Specifically, they are concerned about layoffs (81% Caucasians and 85% African Americans), outrageous CEO salaries (80% and 83%), and stagnant wages (75% and 89%). Angry White Males may be angry at government and government programs, but they are even more angry at corporate America. So are Caucasian women. Caucasian men chose corporate greed (43%) over government waste (32%) as the greatest obstacle to the middle class from getting ahead, 22% chose both. Caucasian women also chose greed over waste (51% to 24%). Nearly two-thirds (62%) favor government taking action to ensure that corporations act more responsibly. Caucasian women are even more likely to want action (72%). Caucasian men report a deep support for the progressive legislative agenda including: * Mandating basic benefits packages (net impact +31); * Setting standards for corporate behavior (+47); and * Disallowing tax deductions for excessive CEO compensation (+36). The American Dream promises that hard work and loyalty will propel people up the economic ladder into larger salaries, bigger homes, better lives, and comfortable retirements. Throughout the twentieth century, that dream has depended on the economic might and communal benevolence of corporate employers. From health care to pensions, defining elements of family and individual security have long been fundamentally connected to voluntary corporate largesse. Law and government never required corporate employers to guarantee such things (as did the collective public might of labor unions), but they seemed to many Americans like birthrights all the same. Now, the public sees corporations beating a rapid retreat from long-term standards of employee loyalty, high pay, and community partnership. And the working families left behind - and denied pay raises, promotions, and job security as a result - are angry. Americans believe corporations have broken an unwritten social contract whereby hard work and loyalty on the part of employees was respected and rewarded. The sense of betrayal many people now feel is reflected by the comment of a San Jose focus group participant: A lot of these people who have had a job for twenty years, they were told something when they first started working there. They were given very clear issues that this is what we expect from you and this is what we will give you in return. And they're not keeping their word. So, when you see that happening it creates some real problems because that is truly dishonest bad faith. - San Jose, CA; focus group participant Despite decades of anti-regulatory politics, a majority of Americans now believe corporations should be subjected to additional government oversight designed to ensure more responsible behavior. What is emerging from this intensifying public mood is strong support for a new agenda of corporate responsibility - an agenda geared toward ending the ability of corporations to treat workers unfairly with impunity; compelling corporations to fulfill responsibilities beyond the maximization of earnings, CEO compensation and investor return; and reclaiming the guarantee of a tradition whereby American citizens who play by the rules are protected and rewarded by corporate citizens who do the same. METHODOLOGY The study was conducted by EDK Associates, a New York based research firm, and directed by Ethel Klein, president of EDK. Guy Molyneux, a vice-president of Peter D. Hart Research Associates, served as a consultant throughout the project from design to analysis. The project began with six focus groups involving working and middle class Americans without clear allegiance to either major political party. The focus groups were conducted in order to gain a sense of how Americans feel their lives are affected by changing economic circumstances, how they view corporations as employers and economic actors, and what policies, if any, they support to improve the economic well-being of working families. Three focus groups were conducted with Caucasian, working class, non college educated men and women in Hartford, Connecticut on May 6, 1996; San Jose, California on May 23, 1996; and in Oak Brook, Illinois on June 27th, 1996. Two focus groups were conducted with Caucasian, middle class, college educated men and women in Iselin, New Jersey on May 9th, 1996; and in San Jose, California on May 23rd, 1996. One focus group was conducted with African American, working class men and women of mixed educational levels in Oak Brook, Illinois on June 27th, 1996. A public opinion survey involving telephone interviews with 800 randomly selected registered voters nationwide was conducted from June 17-21, 1996. The margin of error for the poll is 3.5%. All percentage differences discussed in this report are statistically significant at the 95% confidence interval. http://www.igc.apc.org/preamble/pollsum.html
