Robert Reich's latest post on his website: http://robertreich.org/post/36219730368. Reich, now a professor at Cal, is the former Secretary of Labor under President Clinton.
Wednesday, November 21, 2012
A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly wage of around $50, in today’s dollars, including health and pension benefits.
Today, America’s largest employer is Walmart, whose average employee earns $8.81 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t qualify for benefits.
There are many reasons for the difference – including globalization and technological changes that have shrunk employment in American manufacturing while enlarging it in sectors involving personal services, such as retail.
But one reason, closely related to this seismic shift, is the decline of labor unions in the United States. In the 1950s, over a third of private-sector workers belonged to a union. Today fewer than 7 percent do. As a result, the typical American worker no longer has the bargaining clout to get a sizeable share of corporate profits.
At the peak of its power and influence in the 1950s, the United Auto Workers could claim a significant portion of GM’s earnings for its members.
Walmart’s employees, by contrast, have no union to represent them. So they’ve had no means of getting much of the corporation’s earnings.
Walmart earned $16 billion last year (it just reported a 9 percent increase in earnings in the third quarter of 2012, to $3.6 billion), the lion’s share of which went instead to Walmart’s shareholders — including the family of its founder, Sam Walton, who earned on their Walmart stock more than the combined earnings of the bottom 40 percent of American workers.
Is this about to change? Despite decades of failed unionization attempts, Walmart workers are planning to strike or conduct some other form of protest outside at least 1,000 locations across the United States this Friday – so-called “Black Friday,” the biggest shopping day in America when the Christmas holiday buying season begins.
At the very least, the action gives Walmart employees a chance to air their grievances in public – not only lousy wages (as low at $8 an hour) but also unsafe and unsanitary working conditions, excessive hours, and sexual harassment. The result is bad publicity for the company exactly when it wants the public to think of it as Santa Claus. And the threatened strike, the first in 50 years, is gaining steam.
The company is fighting back. It has filed a complaint with the National Labor Relations Board to preemptively ban the Black Friday strikes. The complaint alleges that the pickets are illegal “representational” picketing designed to win recognition for the United Food & Commercial Workers (UFCW) union. Walmart’s workers say they’re protesting unfair labor practices rather than acting on behalf of the UFCW. If a court sides with Walmart, it could possibly issue an injunction blocking Black Friday’s pickets.
What happens at Walmart will have consequences extending far beyond the company. Other big box retailers are watching carefully. Walmart is their major competitor. Its pay scale and working conditions set the standard.
More broadly, the widening inequality reflected in the gap between the pay of Walmart workers and the returns to Walmart investors, including the Walton fammily, haunts the American economy.
Consumer spending is 70 percent of economic activity, but consumers are also workers. And as income and wealth continue to concentrate at the top, and the median wage continues to drop – it’s now 8 percent lower than it was in 2000 – a growing portion of the American workforce lacks the purchasing power to get the economy back to speed. Without a vibrant and growing middle class, Walmart itself won’t have the customers it needs.
Most new jobs in America are in personal services like retail, with low pay and bad hours. According to the Bureau of Labor and Statistics, the average full-time retail worker earns between $18,000 and $21,000 per year.
But if retail workers got a raise, would consumers have to pay higher prices to make up for it? A new study by the think tank Demos reports that raising the salary of all full-time workers at large retailers to $25,000 per year would lift more than 700,000 people out of poverty, at a cost of only a 1 percent price increase for customers.
And, in the end, retailers would benefit. According to the study, the cost of the wage increases to major retailers would be $20.8 billion — about one percent of the sector’s $2.17 trillion in total annual sales. But the study also estimates the increased purchasing power of lower-wage workers as a result of the pay raises would generate $4 billion to $5 billion in additional retail sales.
This seems like a good deal all around.
However, the thought of an American work force without the presence of unions is pretty terrifying, and we've been getting a pretty good look at that future since the 2008 economic crash. I'm not in a union and I wish I was. My company has unilaterally cut benefits, salaries, put workers on furlough and had massive layoffs, and the workers have NO recourse to do anything about it. There's not even any way to slow the destruction of the company down and talk about it. The pronouncements just come in the form of emails from on high. Not even very human, much less humane.
Why do you think companies work so hard to get rid of unions?
Relatively few non-government employees now work for unions, but their presence still serves as a deterrent to wage and benefit slashing. And government unions are pretty much powerless, since they can't strike.
Tell you the truth, it was their practices that inspired unions and government regulations of business, as well as antitrust laws.
When you think about it a country such as Russia gave rise to Lenin who was an advocate for the working masses. Don't believe unions rose in that country like they did in this country. The "party" was entrusted with the care of "the workers." In a sense the unions alleviated the potential for revolution as happened in Russia - notwithstanding the fact that the government in Russia was oppressive (unlike the government in this country).
It is the heigth of irony in my opinion to think about how businesses are established in this country. Businesses are formed under state law - not Federal law. Whether they organize as a partnership, a corporation, an LLC, or any variation all that is necessary to create the entity is to file with the respective state bureau. The rules get more complex when a business has employees, pays employee benefits, goes public, serves the public across state lines or goes international. A host of laws beyond the state level come into play. Oversight Federal agencies begin to check things (SEC, FTC, IRS, etc.).
The way a business is organized does not really change its profit motive. Whether the company is "public" or "closely held by the family" that formed the business the motivation is still the same - make money. Under the rules a corporation must have a board of directors. Yet, the way members of such board are selected often boils down to who the owner/founder or CEO/President wants... Putting such picks on the board does not make the board "arms distant." Rather, it tends to make the board more compliant with the stated interests and plans of the owner/Founder or CEO/President. Of course, often, members of such boards have a vested interest in the success of the enterprise because they own a lot of stock. On the surface the board "approves" whatever the owner/Founder or CEO/President want - but that is more profuctory than substantial. It is more a proforma appearance of oversight and review (which is, ultimately, what a board is supposed to be about).
For me, the irony is in what boards of directors are supposed to be vs what they actually are about. The boards, for example, are the ones who set the compensation rates for executives. The boards typically will not set the wage rates for line employees or echelons down within the organization. What drives those numbers are the production quotas for departments as driven by budgets enacted under the leadership of the owner/Founder or CEO/President.
For me, it is unconscionable that a principal executive (for example, a CEO) should have a compensation package that amounts to several millions in compensation, several millions in stock options (the goal of which is that under his leadership the stock will go up), and other benefits (dedicated jet transportation, relocation expenses, home buying help, health care, etc.).
I think it is horrendous for a school district (which, in a sense, is like a business) such as greater Grand Rapids to pay its Superintendent about $200k per year, plus benefits. But, I know of classroom teachers who cost the school district about $100k...
Key leadership is one thing and considering the value they bring to the company vs the value any other employee brings to the firm are really tough issues to deal with. It just seems that priorities are upside down. Despite the value a key leader brings there is a point where his compensation package is beyond reasonable. In fact, in too many cases they are unreasonable.
I don't think it's a coincidence that the treatment of workers has declined markedly simultaneously with the demise of unions.
Today in America, a person would need to make $42 per hour to have the same purchasing power of a minimum wage worker in 1963.
Yes. You read that correctly. In 1963, a minimum wage worker made $1.35 per hour. Think about that for a minute.
$42 per hour today provides the kind of purchasing power $1.35 per hour provided in 1963.
In 1963, a person could find a job without having to go to college or accumulating student loan debt and provide for his or her family. Furthermore, the family only needed one parent to work to support the family.
■We used less gas because of this, so it was better for the environment even with big, powerful, comfortable, practical, dependable vehicles.
■We got to spend more time with family – family meals, baseball games, help with homework
■One spouse could work while the other ran the house and took care of budgeting and bills, again, providing more quality time.
■Less debt. A solid income could be earned without huge student loan debt. The dollar could buy more, so it was easier to save and purchase high quality items without using credit cards or taking on loans.
This is just a small sample of the benefits of having the kind of purchasing power that was available in 1963.
What is the difference between the dollar then and now?
■In 1963, the dollar was backed by precious metals – When the dollar’s value was tied to precious metals, the government couldn’t print more money than they could exchange in precious metals. This not only preserved the value of the dollar, it kept government spending in check.
■Today, our dollar is backed by nothing. It is just pieces of paper with numbers printed on it. It only has value because the government tells you it does.
■The Federal Reserve Bank prints lots and lots and lots of money (or creates digital money). Printing trillions of dollars will devalue the dollar and make each dollar worth less. It’s a simple thing to grasp. However, once it starts happening, tracking down all of its problems, effects and unintended consequences can be more complicated.
Hell, these days it's hard for someone with a college degree and experience to find a good job. Try it if you don't even have a high-school diploma.
I used to work part-time at Target. One of my co-workers and her husband both fit in this category. Both were working two service-industry jobs each and still were not really making it. And on top of that, they had a son with a chronic and serious heart condition that required a transplant, and despite having insurance were having trouble making enough money to live on, plus pay their share of his incredibly expensive medical bills. These are hard-working people who weren't making it. Tell them the solution to their problem is to get a better job.
And just shopping online isn't the solution. It may make life easier for you, but it also has a big downside. If brick-and-mortar stores go out of business, and they are, it means more people are going out of work.
I'min an industry affected by online,too, and the unfortunate reality is that the Internet means a net loss of jobs. And LOTS of them. The Internet requires a much smaller work force.
So help out your local economy and do some live shopping, too. (But maybe not on Black Friday.)
Its worth it to have it all shipped to you instead of having a frustrating day driving there, finding parking, fighting crowds, waiting in huge lines.
I'll bet its often the same cost or cheaper to purchase online when you factor everything in.
Fuck this:
Bottom line is if the employees do not like the working conditions they can find employment elsewhere, but probably a challenge in today's economy for unskilled labor.
Walmart like any other large corporation is focused on profits not employees, got to give the UPPER MANAGEMENT their bonuses you know.
Two other companies have also been in the spotlight lately. Papa John's for their statement it would cost an extra $0.14 per pizza to provide healthcare to their uninsured employees. I guess no Papa John's pizza is in my future.
Hostess for not wanting to deal with the bakers union and now in bankrupcy. The squak from the union was that upper management took their multimillion bonus paychecks and bonuses and told the union to eat cake.
All are just Corporate greed!
Shop small and support your local Mom and Pop stores this year.