Posts Tagged ‘workers’

Only in America

Posted: 2 August 2015 in Uncategorized
Tags: , ,

wage16n-3-web

Remember Gravity Payments, the company whose founder and CEO decided to the salaries of his employees and slash his own pay?

Well, according to the New York Times, the decision has generated dismay on the part of some customers, employees, and other CEOs:

a few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase — despite repeated assurances to the contrary — also left. While dozens of new clients, inspired by Mr. Price’s announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has already had to hire a dozen additional employees — now at a significantly higher cost — and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.

Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees.

B4HqqyKCQAAI4Gq

Special mention

167076_600 daily-cartoon20150726

IAM_Harley

As Emily Flitter reports,

For Wisconsin Governor Scott Walker, there’s something awkward about the Harley-Davidson motorcycles that he has been posing on at presidential campaign stops: each one bears a sticker on its frame that reads “Union made in the USA.”

Walker has made the iconic American brand a centerpiece of his campaign kick-off tour this month, visiting four dealerships and sometimes showing off his own 2003 Harley Road King as he seeks to harness its appeal to older white male voters.

But there is another side to Harley that the Republican candidate has been less vocal about – it is a leading example of a successful company that has a strong relationship with labor unions.

Indeed, as Adam Davidson explained last year, Harley-Davidson’s resurgence has been on the basis of, not (like the rest of U.S. manufacturing) at the expense of, union labor.

But, in another U.S. irony, Harley-Davidson’s success has involved significant sacrifices on the part of its unionized workers:

Harley’s very existence was in question in 2009. Today it is a manufacturing role model, and that has a lot to do with its workers. The average tenure of a line worker at the York plant is 18 years, and these workers are extremely devoted to the company. (“How many factory workers have the company logo tattooed on their arm?” Dettinger asked me.) Magee said there was no question that the workers were earning their relatively higher wages. Costs have fallen by $100 million at the plant and quality has improved even more significantly. Customer demand is extremely high, especially now that people can get a bike within a couple weeks of ordering rather than waiting a year and a half. Harley’s stock price is back near the peak it reached at the top of the bubble in 2006. Craig Kennison at the research firm Baird told me that “it’s certainly the best turnaround I’ve ever seen.” Recently, the York plant won the Oscars of manufacturing: an IndustryWeek Best Plants award.

This sort of success wasn’t without a cost. The machinist union agreed to let Harley lay off 1,000 plant workers and implement a multiyear pay freeze. But every machinist I spoke with said that he understood that the alternative would be no jobs at all in York.

Yep, on both counts, only in America!

tumblr_nrzx3b8IL51qf5yp8o1_1280

Special mention

9928 a80d2d4cf3fdd847a118a314fea34f51

subaru-parts

Up here, it seems every other car is a Subaru. That’s because they’re relatively inexpensive, all-wheel-drive vehicles. And because Subaru cultivates an environmentally friendly, socially conscious identity.

But, according to a special report from Reuters, Subaru is not particularly friendly or socially conscious about the workers in its supply chain.

Subaru’s U.S. sales have almost doubled in the past four years. At the heart of that success is the company’s Forester all-wheel-drive SUV, which has carved out a following with American drivers for its performance, price and aura of social responsibility. That’s been a key selling point for Subaru, which has marketed itself in the U.S. as the automaker with a conscience. Subaru’s “Love Promise,” in which it pledges to make “a positive impact in the world,” has helped build loyal consumers in states like California, New York and Washington.

What Subaru does not tout is that its boom is made possible in part by asylum seekers and other cheap foreign laborers from Asia and Africa.

They work at the automaker and its suppliers at Subaru’s main production hub, here in the Japanese town of Ota, two hours north of Tokyo. Many are on short-term contracts. At Subaru, some foreign workers earn about half the wage of their Japanese equivalents on the production line. At the automaker’s suppliers, workers are often employed through brokers who charge up to a third of the workers’ wages. From countries including Bangladesh, Nepal, Mali and China, these foreign laborers are building many of the parts for the Forester, including its leather seats, often in grueling conditions.

A Reuters investigation of factory conditions in Ota – including a review of payslips and asylum applications, and interviews with dozens of laborers from 22 countries – reveals that foreign workers are enduring abuses at the hands of labor brokers and companies in the Subaru supply chain. These include workers at Subaru’s suppliers like Lakhan Rijal, a stocky 34-year-old asylum seeker who said he was fired after injuring his back at a plant that makes seats for the automaker. Other foreign workers spoke about being pressured to work double shifts, being dismissed without notice and having no insurance.

Most of the 120 workers interviewed by Reuters were earning the minimum wage for machinery manufacturing in Ota’s Gunma prefecture – $6.60 an hour – or above.

But Reuters also found more than a dozen Indonesian laborers at two small Subaru suppliers who said their net monthly pay was $730. That works out to $3.30 per hour after rent, utilities and fees owed to the dispatch company in their home country had been deducted.

Subaru, like many other multinational corporations, uses the excuse that its suppliers are responsible for their own labor practices and it is not directly involved in supervising working conditions or the brokers who provide the cheap labor.

It seems Subaru shares the love with everyone and everything, except the workers who actually produce the vehicles it sells.

12wage

Until recently, we were certain what would happen with an increase in the minimum wage—and that would be the reason to oppose any and all such attempts. Now, it’s a guessing game—and that uncertainty about its possible effects has become reason enough to oppose increasing the minimum wage.

What the hell is going on?

minimum_wage

First, the certainty: neoclassical economists confidently asserted that the minimum wage caused unemployment (because it meant, at a wage above the equilibrium wage, the quantity supplied of labor would be created than the quantity demanded). Therefore, any increase in the minimum wage would cause more unemployment and, despite the best intentions of people who wanted to raise the minimum wage, it would actually hurt the poor, since many would lose their jobs.

But, of course, theoretically, the neoclassical labor-market model was missing all kinds of other effects, from wage efficiencies (e.g., higher wages might reduce labor turnover and increase productivity) to market spillovers (e.g., higher wages might lead to more spending, which would in turn increase the demand for labor). If you take those into account, the effects of increasing the minimum wage became more uncertain: it might or might not lead to some workers losing their jobs but those same workers might get jobs elsewhere as economic activity picked up precisely because workers who kept their jobs might be more productive and spend more of their higher earnings.

And that’s precisely what the new empirical studies have concluded: some have find a little less employment, others a bit more employment. In the end, the employment effects are pretty much a wash—and workers are receiving higher wages.

But that’s mostly for small increases in the minimum wage. What if the increase were larger—say, from $7.25 to $10, $12, or $15 an hour?

Well, we just don’t know. All we can do is guess what the effects might be at the local, state, or national level. But conservatives (like David Brooks, big surprise!) are seizing on that uncertainty to oppose increasing the minimum wage.

And that’s what I find interesting: uncertainty, which was at one time (e.g., for conservatives like economist Frank Knight) the spur to action, is now taken to be the reason for inaction. And those who oppose increasing the minimum wage are now choosing the certainty of further misery for minimum-wage workers over the uncertainty of attempting to improve their lot.

Addendum

They want less of a guessing game?

Then, let’s make the effects of raising the minimum wage more certain. Why not increase government expenditures in areas where raising the minimum wage represents a dramatic increase for workers? Or mandate that employers can’t fire any of the low-wage workers once the minimum wage is increased? Or, if an employer chooses to close an enterprise rather than pay workers more, hand the enterprise over to the workers themselves? Any or all of those measures would increase the certainty of seeing positive effects for the working poor of raising the minimum wage.

But then we’re talking about a different game—of capital versus labor, of profits versus wages. And we know, with a high degree of certainty, the choices neoclassical economists and conservative pundits make in that game.

mike1aug1

Special mention

166673_600 PrezHillaryLittleManColorAriail