Obama surging in polls; unveils economic plan

[Voyager]

@Sam Stone

I’m fully aware of what unions do. And I support unions. Somehow you seem to have missed the crux of the argument, which is that Obama wants to make it illegal to fire striking workers. Any ‘negotiation’ carried out at the point of a gun isn’t a negotiation, it’s a protection racket.

Unions derive their powers from the worker’s ability to bargain collectively, and to cause a company a large monetary loss if the entire workforce walks off the job. That costs the employer all the training he’s invested in the workforce, all the experience they have, and all the revenue he loses while he re-hires a workforce and retrains them.

If the employer no longer has the ability to fire the workers, then the ‘negotiation’ boils down to, “Give us what we want, or we’ll shut your business down.”

Which way is this gun pointing again? Workers get together and want better conditions. Boss says fuck you. Workers go out on strike, get fired, and no doubt some come back agreeing to the terms. No one is ever going to try to ask for more money ever again.

There are plenty of ways in which companies stay open during a strike. You move managers to essential operations. The proposal you quoted doesn’t even prohibit hiring temporary workers. Meanwhile the strikers have lost their income, which Magellan (and now you) conveniently ignore.

During the AT&T strike of '86 we sent engineers (classified as management) to do operator duties. The essential revenue producing functions were preserved, some of our research was slowed up, and the company as a whole did a lot better than the workers.

Not very much in the U.S., because it doesn’t have the kinds of laws Obama wants to enact. Go have a look at what unions have done in other countries when they’ve had more power. Go look at what was going on in Great Britain in the 1970’s.

Unions were very strong in the '50s, and we managed. I’m hardly saying unions are perfect - I remember Jimmy Hoffa. I’m not calling for socialism because of Enron - everybody abuses power from time to time.

Look, you could make a case for either one of the protections Obama wants to offer - allow employees to organize into unions - sure. If they do, and they strike, they run the risk that the employer will decide that their demands are too high and fire them. But they do gain power, because now they can act collectively. It’s a lot easier to fire a single worker than a union full of them.

Ask Ronald Reagan about that.

Or, you could allow businesses to refuse to allow unionization, but for those who do, you could force them to deal with the union. There would still be some checks and balances, because companies that don’t want to unionize could forbid union activities - and if that is unacceptable to the work force, the employer won’t be able to hire people.

We can think about that when we hit full employment. But this is another example of the fantasy land you live in. What guy, out of work with benefits running out, is going to turn down a job because there is no union and he might make less money in the future? It’s true that during the rare times of full employment, like during the bubble, unions hardly mattered because employers had to bid up salaries to get people. During the Clinton years the gap between rich and poor actually narrowed. But those times seem to be rare.

But if you have both - employers can’t stop unions from forming, and once they form the employer has no choice but to meet their demands or be forced out of business, then you’re severely restricting the employer’s rights to do what he wants with his own money, and you’re essentially turning control of industry over to labor.

The union workers don’t get paid during a strike. If the law made the employer pay them, then you are right, all the power would be with the union. But they still have to eat, they still have mortgages, and they still have to pay for electricity. And, by the way, if they force the company out of business - guess what. THEY DON’T HAVE JOBS.

But this plan will hurt labor as well, because if you make unions too powerful and thereby increase the costs and risks of hiring people, the natural result will be higher unemployment, and you’ll make it harder for employees to move out of a job they don’t like. Have a look at France - they have all kinds of ‘worker friendly’ laws that make it very hard for an employer to fire an employee. The result is that young people without an employment track record are seen as very high risk, because if you hire a lemon you’re stuck with him. So the unemployment rate in France for people between the age of 16 and 24 is 21% - compared to 11% in the United States.

I’m not arguing against at will employment - only against retaliation for a strike. Let’s stay on topic, shall we.

Wow - a paycheck is equivalent to ‘shackles and a whip’, huh? But using actual government force against an employer is just promoting freedom or something. This is all vaguely Orwellian.

Read what I wrote. It doesn’t. However, forbidding workers from unionizing is a diminution of their freedom, and plenty of paychecks don’t come with this restriction.

The cite to the actual proposal was in the OP.

Which is nothing at all like the nightmare scenario offered.

No, it’s to the union’s benefit to extract every ounce of blood they can get out of the employer, just short of pushing the employer out of business. See: The United Auto Workers. They went on strike constantly in the 70’s and forced unsustainable benefit packages from their employers. Then when the employers started going under, they renegotiated a little less. Recently, GM has started to make a small recovery, with their key vehicle in their recovery being the Chevy Malibu. Workers in the Malibu plant recently went on strike again.

And it is to the employer’s benefit to pay as little as possible. When we negotiate a contract with a supplier, we try to get the product for as little as possible, as vice versa. Does free enterprise work for you except when employees are involved? The automakers screwed things up in lots of ways. They wussed out and suffered the consequences. You think they should be guaranteed cheap wages?

This is especially true in the modern era where we seem to be constantly near full employment, and the prevailing minimum wages are already higher than the goverment minimum, meaning there is no glut of labor.

I’m sure you’ll show me statistics indicating the growth in real wages over the past 8 years. Maybe wages above the federal minimum have something to do with how long it was since the minimum wage was increased - before the increase last year. BTW, has the economy cratered due to it? We might not have noticed from all the other causes, I’ll admit.

I don’t know about your Costco, but mine has really crappy service. There are always huge lines at the cashiers, the goods are stacked warehouse-style, and they don’t have change rooms, nice aisles with clothes on the rack, and huge collections of small packages of food. In short, Costco works because it hires fewer people per dollar of output. That works for their model because they mostly sell goods in bulk.

Costco can’t be compared to WalMart, but to Sam’s Club and other warehouse stores. I’ve never been in a Sam’sClub so I can’t compare, but CostCo takes heat from Wall Street from giving benefits - but they are still cheap. Of course they’re like a warehouse - that is their business model. They don’t pretend to be Neiman Marcus.

For a little more perspective: Wal-Mart employs about 1.9 million people. Costco employs about 71,000. Per dollar of output, Wal-Mart employs three times as many people. Also, the average wage at Costco may be higher, but that’s because they have fewer menial jobs that need to be done. Wal-Mart employs a lot of people who just walk around and arrange shelves and put stock out. And because their stock has to be presented better (clothes on racks instead of in heaps or in bins), it takes more labor to do this. Costco hires mostly cashiers and warehouse personnel. Costco’s average sale amount per shopper is also much higher, meaning they need fewer cashiers to sell the same dollar value of goods. The bottom line is that Costco can afford to pay its employees more, and Costco’s business model is far less sensitive to the change in labor costs.

By the way, no one is going to compete with Wal-Mart on price - they compete with Wal-Mart on quality and shopping experience. Price is Wal-Mart’s competitive advantage. Take away that advantage, and why would you shop at Wal-Mart?

CostCo competes on price also - and only price. One criticism is that you are not guaranteed to find every product there every time you go. I don’t know the relative margins between them (and they’re not in the same business segment) but CostCo’s can’t be high, yet they still offer benefits, even to the menial workers.

Target and WalMart are far more comparable. Target has managed to be cheap and fashionable. Remember, WalMart tried fashion and screwed the pooch. They are still big, but they’re not the darling of Wall Street the way they used to be.

Hey, I thought you liberals didn’t like foreign sweat shops? Obama plans to force foreign factories to adhere to higher labor and environmental standards. So Wal-Mart’s supply chain advantage is also under attack from Obama.

Do you even know what supply chain means? I’m talking about their RFID effort, and how they use data mining to have the right stuff at the right time. RFID is meeting a lot of resistance, but they are very good at using information for competitive advantage. I bet those guys get benefits.

Or more likely, Wal-Mart will have to do with even fewer employees, meaning the stores will be dirtier and the cashier lineups longer.

In any event, Wal-Mart could gain a competitive advantage by paying its employees more, don’t you think they would? If it helped the bottom line? In fact, they DO do that, or they’d be paying everyone minimum wage. Since they don’t, they obviously have had to respond to market pressure and pay their employees more than they legally have to. You just don’t like where the market price landed, and you’re trying to rationalize the use of force to get more money for the workers by claiming that somehow it will be better for the company, because you have some special insight into their business model that allows you to make this determination better than they can.

See minimum wage discussion above. They have been quite clever in getting government to pay benefits to their workers. That they are better now is from social pressure, not from the goodness of their hearts.

I don’t. There’s lots of union activity right now. As you point out, AT&T has a strong union. What will be the death of capitalism is if people like Obama manage to elevate the status of the worker above the status of the person who owns the business, and allows workers to dictate to the businessmen, and the businessmen having no choice but to accept their demands.

I agree, that would be bad. But what the proposal is is to restore sort of parity, which has been sadly missing lately. And please tell me about the growth in union membership.

Are you kidding? The average hourly wage in the U.S. is currently $17.64 - more than twice the minimum wage (and about 20% higher than in ‘worker friendly’ Canada, btw). Most of those jobs are not unionized. The U.S. has the second highest per-capita income in the world (second only to Luxembourg).

Come on, don’t try to slip that past us. I’m not innumerate. Average wage means nothing - try the median wage, which from 2000 to 2007 was up 3%, 1% for men. (Cite). Average wages get affected by the great growth in income for the rich, median wages don’t.

[Sam_Stone]

Sorry - the Median wage is around $16/hr. Pretty much the same points hold.

[Sam_Stone]

And just for yucks, I did a little math to see what it would cost Wal-Mart to pay its employees what Costco pays - about $8/hr more. At 35 hours per week, 50 weeks per year, that would be an additional $14,000 per employee. At 1.9 million employees, that would cost about 26.6 billion dollars per year. That’s almost a quarter of Wal-Mart’s entire sales, and more than double Wal-Mart’s entire profit. Clearly, this can not be achieved with Wal-Mart’s business model. Not even close.

A Berkeley study critical of Wal-mart concluded that if you cut Wal-Mart’s profits in half, the best you could do is give employees of only 13%, and that’s if you exclude all supervisory and management jobs and focus all the raises on the low end of the wage scale.

That’s the difference between a very labor intensive retail model and something like Costco.

The bottom line is that Wal-Mart cannot afford much in the way of higher wages, and probably couldn’t survive unionization. This isn’t just theoretical - in 2005, a Wal-Mart store was forced by the Province of Quebec to allow its employees to unionize. The union demands forced the Wal-Mart store to close six months later, putting them all out of work.

Quebec is, in fact, a good case study in the difference overly generous labor laws can have. Quebec has the highest unionization rates in the country - 40% of all workers in Quebec are unionized - more than twice the percentage of the rest of Canada. Quebec has exactly the kind of labo laws Obama wants - if workers in a company can present enough signed cards to the government, the union is certified, and management is forced to deal with them. if management and the union cannot reach a deal, a government mediator steps in and tells the business what offer it must accept.

A worker’s paradise, no? Well, guess again. Quebec as an 8.4% unemployment rate, even though Quebec receives billions of dollars in equalization payments from other provinces (equalization payments are a kind of large scale welfare scheme in which the richer provinces of Canada give money to the poorer provinces). Quebec’s economy under-performs the rest of Canada’s. A combination of low birthrates and people leaving the province for work has Quebec’s population projected to begin declining by 2025. Quebec’s labor productivity is much lower than the rest of Canada’s. Quebec has difficulty attracting investment dollars and high value employees. And remember, this is with huge federal subsidies to the province of around 7 billion dollars a year (almost $1000 for every person in the province).