------------------------- Via Workers World News Service Reprinted from the Sept. 5, 2002 issue of Workers World newspaper -------------------------
WHY WAGES SHOULD BE PAID IN CASH, NOT STOCK OPTIONS By William Gottlieb The economic crisis has been most severe in the high-tech sector. This part of the economy grew fastest during the 1990s upswing and, as would be expected, it has been hit hardest by the inevitable crisis of overproduction that followed. The evolution of the high-tech industry is important because U.S. imperialism has increasingly relied on it to offset the decline of so many traditional industries in the U.S. During the last economic boom, there was a great growth in the number of workers employed as computer programmers--usually dubbed software engineers--and systems administrators, etc. Many of these high-tech workers were partially paid in something called stock options. It goes like this. Startup dot-com companies like to pay in options because they usually do not have cash on hand to pay workers the old-fashioned way--in money. An option is a contract that enables the owner of the option to purchase stock in the company at a certain price. There may be a certain period before the options can be exercised and eventually they expire. Suppose at the time the options are issued, the stock of Exploiters Software is selling at $50 a share. If the stock of Exploiters rises to say $100, this means that the owner of an option can buy stock for $50 and then sell the stock for $100 and pocket the difference, less broker commissions, etc. But if the stock falls below $50, an option to buy the stock at $50 is worthless. What good is the right to buy a stock for $50 if you can buy it on the market for $49 or less without the option? While holding any stock is risky, holding options is riskier by a wide margin. It is easy to lose everything, especially if one is not a "professional investor," that is, a very wealthy capitalist. But there is also a much greater possibility of getting rich very quickly than through the holding of "mere stock." Many of the early employees of Microsoft, for example, became quite rich--not nearly as rich as Bill Gates, but rich all the same--through stock options. However, with the collapse of the stock market bubble, many of the options issued by Silicon Valley firms are now quite worthless. The workers of "the brain" who were paid in options were effectively swindled. They sold their labor power for what turned out to be very little. Many of the victims of the options swindle in Silicon Valley are programmers and systems administrators from India who hoped to strike it rich in the U.S. through options. One of the consequences of paying salaries partially in options is that tech workers hope to get rich. They are therefore unlikely to identify themselves with industrial and service workers, seeing themselves as future members of the capitalist class. They are therefore likely to be hostile to unions, and the most reactionary and pro- imperialist currents are strengthened in this way. THE STOCK MARKET CULTURE This points to a broader problem. The U.S. ruling class is continually encouraging at least the better-paid U.S. workers to put their modest savings into the stock market. The IRAs and 401K plans encourage this. George Bush and other Democratic and Republican politicians continue to talk of "privatizing" Social Security and encouraging workers to invest "individualized" Social Security accounts in the stock market. According to official figures for 1998, just under 50 percent of the U.S. population is directly or indirectly in the stock market, mostly through private pension plans. The current figure is well over 50 percent. All of this is designed to break down working class solidarity and prevent the development of class- consciousness. Stock market culture is the opposite of class- consciousness and solidarity. The current stock market crisis underlines also that all these stock-market-based pension plans are a deadly danger to the finances of the workers. The working class should leave the stock market to the capitalist class and demand the expansion of the social insurance principle, not stock- market-based saving schemes. The new workers of "the brain" should learn a lesson that the workers of the brawn learned long ago: wages should be paid in cash and nothing else. - END - (Copyright Workers World Service: Everyone is permitted to copy and distribute verbatim copies of this document, but changing it is not allowed. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: [EMAIL PROTECTED] Subscribe [EMAIL PROTECTED] Unsubscribe [EMAIL PROTECTED] Support the voice of resistance http://www.workers.org/orders/donate.php) ------------------ This message is sent to you by Workers World News Service. To subscribe, E-mail to: <[EMAIL PROTECTED]> To unsubscribe, E-mail to: <[EMAIL PROTECTED]> To switch to the DIGEST mode, E-mail to <[EMAIL PROTECTED]> Send administrative queries to <[EMAIL PROTECTED]>
