And some of the value is to be able to do a dull, repetitive job without snapping. Do you want a stable, reliable worker at $18/hour or training a new worker every few weeks at $9/hour?
Plus is that guy you hire off the street at nine bucks an hour going to mess up somewhere in the process, possibly ruining a day’s production run? The cost of the labor is only one factor.
Your translator needs adjustment.
And my preferences don’t come into it. It’s math and economics and the constraints of the fact that resources aren’t unlimited. If we arbitrarily raise the price we pay for labor at the bottom of the value chain, we have to raise it for the other positions. The guy who operates the machine that actually has to know some speicalized skills is going to want more because his labor is of more value. If we sell every Snack for a $1, because that’s the most we can sell it for, and we pay $0.20 for transportation, $0.40 for materials, and $0.10 for fixed costs, and $0.40 for labor because we want to make sure everyone is making a mininum of 30k regardless of how much value their job brings, we’re losing a dime on every unit we sell and not making any profit for ourself. And we’re out of business and nobody makes anything.
If, however, we pay people what their labor is worth, then we make a profit, we remain a going concern and there are opportunities for the person to move to positions that do provide more value and improve their life.
Yeah, there is no inherent calculable value to labor other than what people are willing to work for. If no one is willing to push buttons for $9 an hour, then pushing buttons is worth more than that.
If your so called “extra value” job can be done by others with the same education and there is a job shortage, some will be desperate and willing to work for $9 an hour, and then that is what that labor is “worth” to the job market.
There is some base, minimum level of worth to labor, and that is the simple worth of a person losing that time. And that alone needs to be compensated at a level that at full time, would allow a person to support themselves at a basic level.
If that means you have to charge fifteen cents more for a Twinkie, then that’s what it should cost for a Twinkie.
I see exceptions only for short training/probationary periods. If it really bums you out to pay someone $18 dollars to push a button, then give them more responsibilities.
If you only pay your low skilled workers $9, you stay in business, but your worker has to turn to government assistance like people at Wal-Mart. If you pay them $18, like Hostess did, you apparently go out of business. Whether you want businesses to charge more for their products so they can pay their workers a living wage, or you want to raise taxes so we have an adequate social safety net is a matter of taste, but we aren’t going to let the low skilled die and bootstraps aren’t an option. It’s higher prices or taxes. Pick your poison.
The Little Debbie knockoff cupcakes are nowhere near as good.
Disagree entirely. With the demise of the company on the horizon, they made moves to exit with as much of the company value as possible. None of that would go to the now unemployed workers or much of anywhere else; it would just disappear into the closure/bankruptcy rabbit hole.
If the board voted itself huge raises AND expected workers to keep shambling along with cuts and so forth, it would be one thing. But that doesn’t appear to be the case. If an owner selling off equipment and goodwill with shutdown in mind is “looting” then there’s been an epidemic of it over the past few years.
As both employee and business owner, I don’t see any reason the contracted, unionized employees are entitled to some division of the proceeds from liquidation of the company.
Yep, that’s what he said. Looting the company. They’re grabbing everything they can and running.
I agree. “The executives are looting the company.” and “they [the executives, presumably] made moves to exit with as much of the company value as possible.” sound like they’re saying the same thing.
Yeah, pretty much.
I think the point is that they’re departing with that value intact, as opposed to letting it go into the bankruptcy black hole, where all the PP&E would probably be sold for pennies on the dollar to pay off creditors.
It’s kind of like pausing to take something valuable with you on the way out of a burning building, instead of coming back and picking through the ashes to find it half-melted and scorched.
As for the question Invisible Chimp posed, most companies will almost always choose the higher taxes option, because it’ll impact their bottom line less. Think about it- that extra $9/hr comes directly out of their pocket if they pay it, but only some tiny percentage comes out of their pocket (in taxes) if they push that cost onto taxpayers.
Ultimately, this argument about living wages vs. added workplace value never comes to anything- we’re talking about a social concept vs. an economic one, and they don’t really overlap, and in many ways conflict with each other.
A bit more on the wage issue:
Companies are in business for the explicit purpose of earning money for their owners- that’s their goal, and this doesn’t really line up with paying workers any more than they’re worth economically. In practice, this means that there’s a wage level for each position at which people won’t bail to go elsewhere and make more money, and where other companies won’t easily poach their people through higher wages. Companies want to pay that, and not any more- more, and they’re just paying money for nothing, and if they pay less, they’ll lose their people.
The catch is that for a lot of jobs without a lot of skill, intelligence or risk involved, that number is very low- you don’t need to pay a McDonald’s burger flipper much more than minimum, because his options are basically other fast food cooking jobs and there are millions of other people able and willing to do that job. Hence his labor isn’t worth much economically.
At the other extreme, someone like Michael Jordan, on the other hand, was paid crazy money because he had every other team in the NBA willing to pay him similar crazy money, and there was only one of him in the entire world that could do what he did.
This doesn’t have anything to do with whether or not that burger flipper has 5 kids, a wife, etc… or whether his life is fun, or whatever. It’s simply supply and demand applied to wages.
It doesn’t matter how reliable you are if the company goes out of business.
You’re turning a very objective thing (economics) into an emotional thing. It doesn’t matter what anyone PREFERS. The market dictates everything, including whether a company can pay $18 to its non-skilled laborers, and still make a profit. If it can’t make a profit, it will go out of business.
The company was obviously poorly managed, but most accounts I’ve read say their union contract was very generous compared to competitors. Wages need to be carefully considered and reasonably negotiated according to market factors. However, I think it’s unrealistic to expect a pension these days.
And then it’s okay to keep it, regardless of whether or not you’re entitled to it?
By this analogy, Hostess’s management lit the building on fire, then used it as an excuse to grab all the cash out of the drawer and keep it for themselves.
A read an article where the Hostess execs say they tried to find a buyer for the company, but nobody was interested because Hostess’ bakeries are mostly old and crappy, and their competitors all have overcapacity issues of their own.
If this is true, than what will most likely happen is another company will buy the right to the Twinkee name, and make them in their own facilities. No help for the Hostess workers, although it’s possible that other workers elsewhere might be able to keep their jobs.
Honestly, for all I’ve been slagging on the management, the overcapacity is probably the biggest issue Hostess was facing. This is market correction in action, even if it is screwing over a lot of employees.
Of course, had the company been managed properly, Hostess should have been able to leverage its popularity to weather the overcapacity and keep smaller businesses from gaining enough of a foothold to force Hostess out. It’s a big name company; why is Little Debbie surviving where Hostess isn’t?
The company execs apparently thought so too; now with bankruptcy they don’t have to pay those out and taxpayers do.
I’ve said it before in other threads, but the pension system is rapidly becoming a thing of the past. We’re already at the point where companies that still offer pensions (to new employees, that is) are a distinct minority. In another decade, it will be almost unheard-of for a working American to have a pension plan.
The article really only states that this “may” happen, and that this situation “raises the prospect” of it happening. To be fair.