Published On: Mon, Oct 6th, 2014

A Closer Look at the Nasty Necessities of Corporate America

A Closer Look at the Nasty Necessities of Corporate America

You can always count on Americans to do the right thing – after they’ve tried everything else. — Winston Churchill

Was Churchill correct, or just cynical?

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Do we only settle for doing the right thing as a last resort?

If you ask corporate America, they might say that consumers are always demanding something for nothing. They might also suggest that consumers are always blaming companies for product issues caused by their own carelessness, and expecting those companies to foot the bill. Corporate America is correct on both charges, and many more.

But when polled, consumers might accuse corporate America of being greedy, obsessed with profit and shareholder value at the expense of product quality and customer service. Some companies would rather leave a dangerous product on the shelf if they figure a lawsuit is less expensive than a recall. Sadly, the consumers are also absolutely right. 

Neither side occupies the moral high-ground they are convinced they hold. Neither does either side deserve to be regarded as the enemy. While it is easy to defend the consumer with regard to the dance with corporate America, It is unpopular to look objectively at the other side. What follows is less a defense, and more an objective look at the nastier necessities of corporate America:

Wage Garnishment

If you have ever had your wages garnished, then you know the nightmare of waking up to a zero account balance on a day when your mortgage is due. It is a little like discovering that your car has been repossessed. It is the kind of thing that leaves you questioning how such a thing can even be legal. All those work hours, all that overtime, your commission, and the Christmas bonus was on that paycheck. Now, some credit card company has all of it while you don’t have enough to buy groceries for the week, let alone, the month. You’ve been garnished. 

While it is easy to point the finger of blame at your employer who just threw you under the lorry, your more rational self has to realize that your employer has absolutely nothing to do with the process. They are bound by regulatory compliance that was in place long before they were. 

Garnishment is not arbitrary, and it has limits. According to ADP.com:

In other cases, such as child support, up to 65 percent of an employee’s weekly disposable earnings may be garnished, while state and IRS tax debts can claim up to 100 percent of earnings minus all exemptions and deductions.  Legally required deductions, such as those for Social Security, state and federal taxes and others, may not be garnished.

By all appearances, your employer is stealing the money you worked for to pay your creditors. In point of fact, they are using the best compliance processes available to keep from taking a penny more than necessary.

Pay Cuts and Layoffs

While we’re on the subject of wages, it is important to note that there are worse things than a one-time garnishment. When it comes to garnishments, you mostly have yourself to blame. Not so when it comes to pay cuts and layoffs. Thing is, the company you work for may not be entirely to blame either.

A few years ago, the parent company of the Chicago Sun-Times was forced to trim $50 million from its budget. They were forced to propose a 7% pay cut. It was either that, or cut many jobs altogether. When a company can no longer afford its workforce, the biggest expense for any company, is it more ethical to cut wages, or cut jobs? In this case, the Chicago Sun-Times was ultimately forced to do both. It was not a matter of ethics, but a lack of readership.

Offshore Taxes

How much should a company pay in corporate taxes? Should they pay more than they owe for the sake of community enhancement, or as little as legally possible? How much do you pay? While consumers use every trick in the book to pay as little as legally possible, many feel that it is unethical for a rich corporation to do the same.

There is an ongoing probe by the EU into Irish tax deals made with Apple, Google, Starbucks, Fiat, and others. While these companies are not accused of violating the letter of the law, they still may be subject to billions in back taxes if the deals they worked under are ruled illegal. Loopholes are in the tax code precisely to be exploited. Companies that don’t are subject to scrutiny by their shareholders. While the tax codes should definitely be reevaluated, this is not a matter of ethics.

None of this is a general defense of corporate behavior. There are many egregious examples of abuse. This is just a reminder that not everything that appears to be an example of corporate evil at first blush, isn’t. Less moral judgement on both sides is in order.

By: Jimmy Simond

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