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Business Costs & Regulation

Should the Feds Call the Shots on Salaries?

Kiplinger's editor in chief tackles queries about executive compensation and union involvement.

Q: Do you think Washington has the right to set, or at least influence, the salaries of senior executives in the companies it rescued with huge infusions of capital, such as AIG, Fannie Mae, Freddie Mac and General Motors?

Certainly -- both the right and obligation. The right to set pay levels for senior executives in the private sector should lie exclusively with corporate boards of directors, who should (but sometimes don't) represent the interests of their shareholders. If -- but only if -- Washington becomes a major equity investor in a company (as opposed to a lender, however large), it should have seats at the boardroom table. If Washington's directors on the board believe that executive compensation is excessive and doesn't serve the interests of all shareholders -- who now include the general tax-paying public -- they should work with other directors to reduce it.

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Q: I'm a young worker recently hired by a company whose wage-and-hour employees (like me) are represented by a union. I thought I would have a choice of whether to join the union. Given the amount of union dues, the slim benefits of membership and my disagreement with the union's politics, I would rather have passed on membership. But under my state's law, I have to pay dues. Do you think this is fair?

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No, I don't. I believe workers should have freedom of choice. Employees should have the right to invite in a union to make its case and solicit workers to join, free of employer intimidation, and fellow workers should have the freedom to oppose the organizing effort, free of union pressure. Everyone should have the right to vote in a secret ballot on whether they want to be represented by the union. And, even if the union is certified as the collective-bargaining agent for that shop, workers should have the right not to join the union and pay dues.

Send your own money-and-ethics question to Editor in Chief Knight Kiplinger.

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