Finance

Elon Musk Isn’t Modern Day Robber Baron, Does Offer Modern Day Repartee To Accusation by Former Labor Secretary

Does Reich have a point? Or is it at the top of his head?

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On September 7, Robert Reich, who was Secretary of Labor under Bill Clinton and held various high-level government positions before and since, tweeted the following:

Tesla forced all workers to take a 10 percent pay cut from mid-April until July. In the same period, Tesla stock skyrocketed and CEO Elon Musk’s net worth quadrupled from $25 billion to over $100 billion.

Musk is a modern-day robber baron.

A couple days later, Elon Musk tweeted this pithy retort:

All Tesla workers also get stock, so their compensation increased proportionately. You are a modern day moron.

In the time we’re living in, considering the garbled word salad our president vomits onto Twitter on a daily basis, that qualifies as rapier wit.

So why do Robert Reich and Elon Musk apparently have beef? Near as I can tell, there is no pre-existing reason really — it seems Reich just randomly decided to call out Musk on Twitter because Musk is a popular public figure and putting his name in things gets lots of strong reactions. People put Elon Musk’s name in headlines for articles that have little to do with him all the time (yeah, I’m guilty of that too).

But does Reich have a point? Well, Musk is indeed a billionaire. There is a certain swathe of voters who find “billionaire” synonymous with “robber baron.” But the real situation is a bit more nuanced than that.

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Musk did not dispute the COVID-related pay cut, but accurately pointed out that Tesla employees are able to share in the gains of Tesla stock, which is not a benefit that publicly listed companies universally provide. Furthermore, the compensation Tesla provides to its production employees is not grossly unfair. The available data’s a bit old, but as of 2018, the median Tesla employee made $56,163 annually, which was 81 percent more than the median American. That lagged the median employee compensation for automotive competitors like Ford and General Motors, but it exceeded the median employee compensation for some automakers, like Fiat Chrysler, and it was more than the median compensation at some other well-to-do (and more consistently profitable) tech companies, like Apple.

Tesla’s CEO famously refuses to accept a salary from the company, although he does have one of the handsomest performance-based stock option plans in corporate history (which, of course, only pays out for him if the company does very well, which it has in the past several years). Robert Reich followed up his original tweet with some commentary about Musk discouraging unionization at Tesla’s auto plants — but what CEO welcomes in a union chief with a big bear hug? I think a tweet suggesting Tesla’s employees already have it pretty good and so would be wasting money on union dues is a far cry from the gangs of armed mercenaries the real robber barons of the Gilded Age tasked with literally smashing union resistance.

While Musk is obviously a very rich, very powerful man, he just seems like an odd target for Reich’s ire. What about the Walton family, who pay the average full-time hourly worker at Walmart just $14.26 an hour? How about the Sackler family, who amassed a fortune poisoning thousands of Americans with highly addictive opioids and then sucked $10.8 billion out of their company Purdue Pharma to try to shield it from the coming wave of meritorious lawsuits? Or maybe take a look at the DeVos fortune, which came from a multilevel marketing scheme in the first place and then was used by one DeVos sibling to start a shady mercenary army and by another to become Secretary of Education so she could undermine public schools.

Musk is far from perfect. But at least he spends his money in a lot of good ways. Musk has signed The Giving Pledge (along with such other business titans and philanthropic luminaries as Warren Buffett and Bill Gates), which is a promise to contribute a majority of his fortune to charitable causes over his lifetime. And unlike a multitude of other billionaires you could name off the top of your head, Musk’s money doesn’t come from doing something horrible (actually, producing vehicles that don’t pollute the air is a plus, in my book), and it doesn’t come at the expense of his workers, who are doing relatively well.

So, I don’t think Reich is really a modern day moron, but maybe he did overshoot a little on this one. Elon Musk is a flawed genius, and a rich man, but a robber baron? I think not.

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Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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