Typically, the bread line isn’t open on Sunday, but I read this story last night and cannot for the life of me decide whether this is the singularly funniest economic quote of the year or the most naive. It also got me thinking about the nature of the employer-employee dynamic:
“What did we do wrong?” asked John Weber, sitting on a stool at his restaurant, Ye Old Fort Diner. “Did our union get too strong? Did GE get too greedy? What?” — as told to Michael Hill, AP Reporter in a story that appeared on the wire on 21 December.
General Electric is closing operations in an upstate New York town and moving them to Florida, where there is another, already existing facility. The reasons are clear: 1) the New York plant was already redundant; 2) Florida is, by most indicators, an overall better business climate; 3) GE can save on payroll because they don’t need to factor in cost of living bumpers like state income tax and other artificial income inflaters while, 3b) employees have a more transparent paycheck, meaning they keep more of what they earn by ratio.
Now, no one, and especially not I, should gloat at job loss; in writing reflecting upon these events, I should be clear that I do not. The facility had decades of cache with the community and, according to the report, generations of employees came through those doors and punched timecards. These are facts that should not be taken lightly out of respect for the community and those affected by the closure, directly or otherwise. That being said, Mr. Weber is showing signs of complete and total denial with his tone-deaf rhetorical questions, and the following propositions can be safely inferred from a man’s single line of questions:
1) The mill and, by extension, the employer, was taken for granted. In the classic, ownership-collective bargaining dynamic, the relationship has to be symbiotic: the business needs employees, workers need a paycheck. Through mutual understanding of each other’s needs, negotiations are mediated to bring value to both business and labor: productivity and jobs, money and money. That being said, Weber asks the two least-logical questions: ‘Did our union get too strong?’, in which case the factory would either be held hostage, having no choice but to acquiesce to workers’ demands or close up shop altogether. The fact GE is consolidating operations demonstrates precisely the opposite, the union had zero leverage because they lacked the broad-range vision to ensure their jobs were safe by negotiating concessions in good faith long ago or urging stoppage of multiple facilities doing the same work before it started by establishing their value as first-rate workers in a first-rate environment. Let alone the fact that Florida is a right-to-work state, that’s a red herring, especially since organized labor still exists in Florida and, in relation to GE’s presence there, still helps to dictate the market’s ‘prevailing wages’, using the words of a GE spokesperson to Hill: this is a matter that was doomed to this outcome the moment there was an announcement about operations expanding in Clearwater.
1.5) What this shows, at least in a small not but insignificant factor in GE’s decision-making, is that the relationship had changed from symbiotic to a parasitic one. The union had become overly reliant on stasis to retain its viability. Nothing was done to help retain their viability as a workforce for the business: the talk from labor in Hill’s article of wages needing to be slashed to $12/hour is probably accurate, but the reality of the matter is that these negotiations only ramped up when it probably became obvious to the workers in Fort Edward that mill was going to close. It shows that they were in some way oblivious to the overarching factors which have weighed against unionized employment nationwide, the onset and lasting aftereffects of the recession, a global workforce competing for jobs in a high-demand arena for production–green/efficient energy is booming right now…at least in non-government subsidized firms and companies or former entities which rhyme with ‘bolyndra’–and the fact that our fiscal policy is causing stagflation throughout entire pockets of the American economy right now (including at my former employer, The Man): wages are down or flat while costs for just about everything are up.
2) ‘Did GE get too greedy?’ Well, if by greedy, we mean ‘we need to stay competitive and need to do what we can to survive’, then, yes, GE is being greedy. But such is not the province of avarice: in business, you stay on top or you get run over. In a competitive marketplace, greed cannot exist: just ask the 4,500 folks in Waterloo, Ontario formerly employed by RIMBerry what happens when you try to be greedy and not keep innovating, or those people who ran the entity which rhymes with ‘bolyndra’ how greed works out in the development of green energy products. Greed is a craven desire for more dovetailed with the propensity for unscrupulous action to that end; when there is only so much to consume and produce, and so many others at the trough fighting to sustain themselves, there is no room for greed, only for sustenance.
This is the realization I had last night, and it’s not so much a surprise as it is a moment of clarity, and one of the commenters on that story touched on it: a labor body exists to provide jobs to its membership, an employer exists to produce something of value to the marketplace. Labor makes a fatal mistake when they conflate their raison d’etre with their counterparts, i.e., an employer exists to provide jobs. In this respect, the ongoing national conversation about the most important three-letter word–J-O-B-S, right, Mr. Biden?–is entirely misplaced emphasis: we ought not be emphasizing jobs, for jobs for jobs’ sake are jobs neither worth having nor worth offering. The conversation necessarily has to be about what it takes to encourage innovation, value-based productivity and to create or foster a regulatory climate which encourages entrepreneurs and empires alike to keep pushing industry and ideas forward. To clamor for jobs is to harken back to the late 19th/early 20th century, when workers had minimal rights and industry strove toward monopolies, when now isn’t then and hasn’t been for quite some time.
The point isn’t to keep people employed, it’s to get business to keep finding ways to maintain viability and profitability which justifies more employment. And this isn’t some kind of tax-breaks-for-the-rich tripe, either. When the climate is such that profitability can be penalized and workers remain working is a core value, one cannot reasonably expect either Joe Blow running a small tool-and-die shop down the street or Jamie Dimon at JPMorganChase to expand payrolls and workforces. In this climate, everyone is staying on the sidelines, not just big business or key financiers because the incentive to push revenues forward is greater taxation, regulation and dishonest scrutiny from self-interested parties.
People in jobs which do not produce real value are people who are not employed for very long. Parse that out how you will, and I readily concede that it can be taken as a polemic for both sides of this unfortunately bilateral debate, but it’s true. It’s part of the reason why I am currently looking for work: low-value positions where wages are susceptible to stagflation can and do have employees swapped out for new employees who will do the same work for lower wages and lower legacy costs. The booming sector of the economy are these revolving door positions, and that’s not a sustainable recipe for economic success by any measure. Unions were designed and intended to help stop the revolving door; in this era, though, they’re counter-productively only accelerating the revolutions.
By way of a helpful illustrative aside, I was working as a front desk supervisor at an upscale hotel in a major mid-American city a few years ago. We hosted a major national organized labor body’s subcommittee for a work week. More than a few of them strolled in decked out in high-end suits and power business apparel, wearing Rolex watches and gaudy jewelry. One could have easily mistaken them for sleazy businessmen or the exploitive bourgeoisie; in reality, they were union brethren and they clearly weren’t suffering with the working masses. If anything, the best reforms organized labor could ask for would be a leveling of the playing field within their own ranks, making sure those at their top aren’t really doing the same thing they think big business is. Exploitation is exploitation, union label or otherwise.
The only thing that was done wrong, Mr. Weber, was that you went to the same diner for years, ordered the same thing and failed to realize that the prices have steadily gone up while paychecks didn’t. As you have your coffee and two-egg special, your local labor chapter didn’t look out for your best interests. The sad truth is that these days, no one is. As a result, not only is Mr. Weber losing out, but so is his waitress.
And his questions are neither funny nor naive, but pathetic.
Dispatches from the Bread Line are week-daily blog posts until I’m employed again, apparently with no Sunday differential.