Posts tagged with: Labour relations

gaplogoThe furniture store Ikea has announced they will begin to base their minimum pay on what’s considered to be a “living wage” in each local area, rather than on what competitors are paying. Similarly, the clothing retailer Gap says it will set $9 as the minimum hourly rate for its United States work force this year and then establish a minimum of $10 next year.

This makes good business sense — but will lead to a lot of bad economic reasoning.

A prime example is the latest column by Slate’s business and economic writer, Jordan Weissmann:

Notably, Ikea isn’t raising prices on its furniture to pay for the raise. Instead, the company’s management says it believes the pay hike will help them compete for and keep talent, which is of course good for business. The Gap used a similar justification when it announced it would raise its own minimum to $10 by 2015.

Which I think hints at something about what would likely happen if the U.S. raised the federal minimum. Conservatives who argue that higher pay floors kill jobs tend to assume that businesses are already running at pretty much peak efficiency, and so forcing them to spend more on labor will lead to less hiring. But left-leaning economists see it differently. They tend to argue that increasing wages can lead to savings for business by reducing worker turnover, for instance, and forcing managers to make better use of their staff.

Both the conservatives and the left-leaning economists are largely correct. Higher pay floors do tend to kill jobs and increasing wages can lead to savings for business by reducing worker turnover. But where Weissmann and other liberals go wrong is in assuming that businesses can still prevent worker turnover when the minimum wage is increased.
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mcdonalds“Clean up your own mess. Your mother doesn’t work here.”

That was a sign, printed on dot matrix printer paper, which hung in the breakroom of the McDonald’s where I worked. While that was nearly thirty years ago, I suspect that same sign is still there (though probably reprinted on a laser printer). But the idea behind it has changed. Your mother may not work at McDonalds, but the company—and others that hire low-skilled employees—are increasingly taking on the role of in loco parentis.

Lessons in basic life skills that were once taught by parents—such as punctuality, self-direction, basic personal hygiene—are increasingly being provided by the shift manager at the local fast food restaurant. That is why it’s absurd to claim that companies that are willing to hire people who are unqualified for the labor force are somehow getting over on the American taxpayer.

As Reihan Salam,
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Blog author: jcarter
posted by on Thursday, February 21, 2013

“[He] belongs more in an insane asylum than at the head of a multinational corporation.”

beret-on-cowboyThat was the reaction by a French union official to an amusingly harsh letter by Maurice Taylor, chief executive of tire maker Titan. Taylor was initially interested in buying the French tire factory, which is facing closure following five years of unsuccessful negotiations with unions to enhance its competitiveness. However, after visiting the plant three times, he wrote a letter to France’s industry minister Arnaud Montebourg, saying: “Sir, you would like to open discussions with Titan. You think we’re that stupid?”

Taylor says the plant’s 1,173 workers “have one hour for their lunch, they talk for three hours and they work for three hours. I said this directly to their union leaders; they replied that’s the way it is in France.” The Titan CEO added:

“Titan has money and the know-how to produce tyres. What does the crazy union have? It has the French government. The French farmer wants cheap tyres. He doesn’t care if those tyres come from China or India and these governments are subsidising them. Your government doesn’t care either: ‘We’re French!’

Titan is going to buy a Chinese tyre company or an Indian one, pay less than one euro per hour wage and ship all the tyres France needs. You can keep the so-called workers.

Taylor isn’t exaggerating the problems caused by French unions. In his new book, Becoming Europe, Acton’s Director of Research Samuel Gregg writes,
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Solidarity designed by Thibault Geoffroy, from The Noun Project

Solidarity designed by Thibault Geoffroy, from The Noun Project

When I moved to west Michigan, one of the things that struck me the most were distinct cultural differences between the different sides of the state. While I was pursuing a master’s degree at Calvin Theological Seminary, I worked for a while in the receiving department at Bissell, Inc. I remember being surprised, nay, shocked, that a manufacturer like Bissell was not a union shop. (All those jobs are somewhere else now, in any case.)

Before attending Michigan State as an undergrad, I had lived in Detroit, and although I never had a union job myself, the cultural expectations of organized labor were (and still are) deeply ingrained on the east side of the state. My dad is a longtime editor at a suburban newspaper, and one of the reasons he still has a job amid the economic downturn and the upheavals facing that industry is his membership in the guild.

But things really are different on this side of the state. That’s one reason why the protests taking place today in Lansing, the centrally-located state capital, are symbolic of two sides of the state, in many ways divided by culture, economy, and politics. As to the latter, consider some statewide candidates for public office in recent memory that haven’t done so well when trying to move beyond west Michigan, including Pete Hoekstra, Dick DeVos, Dick Posthumus. The fight over Right to Work legislation in Michigan is, in this way, a tale of two Michigans.

It is also a tale about two paths forward for Michigan, though. On the one side is the state’s historic identification with Big Labor and the Big Three. On the other side is a Michigan that embraces enterprising innovation and entrepreneurial competition.

The Wall Street Journal editorialized yesterday on this topic (HT: Ross Emmett), and captures the essence of the choice facing Michigan: “Unions loathe right to work because they know that many workers would rather not join a union.”

I think that the right to organize and therefore unions are fundamental to flourishing societies. But what concerns me is that the argument against Right to Work is not about this fundamental right to organize, but rather about protecting the entrenched and embedded political interests of a particular kind of union.

There is a world of difference between voluntary union membership and mandatory, government-enforced, union membership. If the former is akin to something like the freedom of religion, then the latter is more like the government establishment of a particular religion or church. What we need is the separation of Union and State in the way that we have historically had free churches. We need to disestablish labor in the same way that we have disestablished religion in America, while simultaneously protecting the right to organize and join a union as well as the right to worship and express our religious convictions.
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Acton On The AirIf you’ve been following the news recently, no doubt you’re aware of the controversy in Wisconsin surrounding Governor Scott Walker’s budget proposals – which include curtailing collective bargaining for state employees – which have led to massive union protests in Madison and the state Senate Democrats fleeing to Illinois to try to delay the vote and force changes in the bill.

Last week, a couple of radio shows turned to Acton for insight on the Wisconsin situation. On Monday, Rev. Robert A. Sirico joined guest host Sheila Liaugminas on The Drew Mariani Show on Relevant Radio to discuss how to properly value the work of public employees, Catholic teaching on unions, and some of the problems posed by public sector unions:

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On Tuesday, Acton’s Director of Research, Dr. Samuel Gregg, joined host Al Kresta on Kresta in the Afternoon on Ave Maria Radio to discuss both the Catholic Church’s historic teaching on unions and its response to the present situation:

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In today’s Milwaukee Journal Sentinel, Acton President and co-founder Rev. Robert A. Sirico publishes a new opinion piece that looks at “the protests in Wisconsin against proposed changes in collective bargaining for public-sector unions” through the lens of Catholic social thought:

Catholic teaching’s pro-union bias

By the Rev. Robert A. Sirico

There is a long-standing bias in Catholic social teaching toward unions, and this dates from the long history of labor struggles for fair wages and safe working conditions. There is a romance associated with this history, and it is bound up with strong moral concerns. And it is not just historical. The Catholic Church played a heroic role in the fall of Communism in Poland through its influence on labor unions that were striking against oppression, which is to say state coercion.

Pope John Paul II, who knew something about the social role of labor unions, also warned about their drift into politics. In his encyclical Laborem Exercens, he wrote: “Unions do not have the character of political parties struggling for power; they should not be subjected to the decision of political parties or have too close links with them.”

The reality with all public affairs, however, is that conditions change. Just because something is called a union does not make it automatically good and moral. Essential considerations of justice and freedom must be in place. Generally speaking, the long history of unions has been bound up with the right of free association. So far as I can tell, the current practice of public-sector union organizing has little or nothing to do with this principle, so it is right and proper that Catholic social teaching should also recognize this.

This reality comes to mind because of the protests in Wisconsin against proposed changes in collective bargaining for public-sector unions. But the driving force behind the budgetary move has nothing to do with human rights, unless one considers the rights of Wisconsin taxpayers.

The alarming reality of state and federal overspending and debt is something that cannot be denied. Prudent and necessary cuts must be made in the Wisconsin budget, and state employees must be part of that plan. How do public-sector unions fit into this? It is nearly impossible for anyone to work for the public sector without being a member, and unions collect dues, which operate like taxes for most everyone else.

This was not always the case. Public-sector unions emerged after World War II in the wake of the crack-up of many big-city political machines, and they were a convenient way for government employees to extract higher salaries and benefits at public expense.

What does this have to do with the freedom of association? Industrial unions have been on the decline for decades precisely because of the freedom of association. Organizing activity for years has shifted to the public sector, where union political contributions carry a lot of weight. Unions that remain strong are that way because they push against the freedom of association, denying alternatives to workers and taxpayers.

A one-time member of a Wisconsin union, Stephen J. Haessler, tells me: “My previous experience with agency shop as a former member of a WEAC (Wisconsin Education Association Council) local affiliate is instructive. I opposed my dues monies going to endorse pro-choice political candidates, but my opinions and preferences did not matter because dues were automatically deducted from my pay whether I joined the union or not. This was a violation of the principle of the freedom of association.”

Here’s the question Catholics need to ask themselves: Are the unions I support of the same type that are idealized in Catholic social teaching? Or have they changed to the point where they are unions in name only but actually just political machines for coercing workers and extracting money through the political process?

The bias toward unions in Catholic social teaching is rooted in a perception that unions fulfill certain moral conditions. When they fail to do so, the application of moral teaching can change. There is no a priori reason to back every union demand and no reason for Catholics to feel under any doctrinal obligation to do so.

The Rev. Robert A. Sirico is president of the Acton Institute in Grand Rapids, Mich.