Fairness in Business Part 2

My last article brought up some interesting questions.  In the article, I established that the government has a responsibility to make sure that employees are treated fairly by employers.  I gave some examples of how legal contracts are not inherently fair, but the first example actually showed how such a contract could be unfair to the employer and give an unfair advantage to the employee.  This brings up a new question on the subject of fairness in business.  If the government has a responsibility to enforce fairness in business, as it relates to the employee, does that not also mean that the government has a responsibility to make sure that the employer is treated fairly as well?

My answer to this is yes.  If the employee deserves protection from unfair contracts, the employer also deserves to be protected from unfair contracts.  If the employee is legally entitled to a fair share of the profits generated, the employer is also entitled to a fair share of those profits.  Just as the employee deserves protection from unfair treatment from the employer, the employer deserves protection from unfair treatment from the employee.

You might ask if this is really a problem in the US.  Most businesses seem to be doing far better than the average worker.  Why should we even bother offering the businesses protection from unfair treatment by employees when the businesses have been the ones ripping the employees off for so long?  The answer is actually very complicated.  First let us talk about how employees are treating businesses unfairly.

There are some obvious ways in which employees treat businesses unfairly.  The first is theft.  Businesses already have some protection from that.  If a business catches an employee stealing, the business can fire the employee and take him to court for damages.  Theft is illegal, and the government does its best to enforce the laws against it.  The second is laziness.  Again, a lazy employee can be fired, though there are no laws requiring that the lazy employee compensate the business for losses.  Firing a lazy employee can be dangerous though, as the business must keep enough records to back up their decision to fire the employee.  This, however, is required to prevent businesses from firing employees for reasons that are illegal (religion or race, for instance) and then claiming that the employee was lazy to avoid prosecution.  This is not all, but all of these are fairly minor, or are already protected against.

The biggest way in which employees treat businesses unfairly is unfair contracts.  If you have not read the first article in this series, you probably should.  I give a very good example of how an employee can benefit from an unfair legal contract with a business.  Now, you probably want to know, if this is really that big, where can we actually see this problem in action?  The answer is upper management.  There are not exactly a lot of people out there with the experience to be qualified CEOs, but there are a lot of corporations out there that need qualified CEOs.  This means that businesses are forced to agree to absurdly unfair contracts to hire a decent CEO.  You might ask if CEOs do not deserve more pay, because they do harder work.  I would agree.  CEOs do deserve more pay than regular employees.  CEOs generally put much more labor capital into a business than other employees.  Further, CEOs often have to be available constantly and are often required to travel a lot.  All of these things deserve greater compensation.  That said, according to aflcio.org CEOs in 2011 made 380 times what the average worker made.  Even if the average was minimum wage, the average CEO would have been paid $2,717 an hour.  Computer programmers and electrical engineers do far more complex and difficult work than CEOs and they do not generally get more than $50 an hour.  According to about.com the US President currently makes $400,000 a year.  Assuming that the President only works 40 hours a week (which is absurd), that is only $192 an hour, and he runs the country!

This is a clear case where businesses are being taken advantage of by employees.  This is wrong and not just because it is harmful to the businesses.  That is money that has to be generated by paying other employees less and charging customers more.  When one employee rips off a business, other employees suffer, even if the one ripping off the business is the CEO.  In addition, when an employee rips off a business, customers suffer for it.  Because of the extremely widespread harm that unfair treatment of businesses by employees causes, maybe it is more important for businesses to be protected from unfair practices than it is for employees.

Unfair treatment of businesses by their upper management is very probably the root of our recent economical problems.  Much like unfair treatment of employees by businesses is very destructive to the lower and middle classes, unfair treatment of businesses by employees is very destructive to businesses and our economy as a whole.  In the previous article, I said that without government enforcement of fairness in business, capitalism will ultimately lead to implicit slavery.  The employees that are treated unfairly will be the slaves.  The masters will be the employees that are treating the businesses unfairly.

Lord Rybec