Archive for June, 2014

Ikea’s Double-Edged Living Wage Initiative

Thursday, June 26th, 2014

ikea2In an era of rising inequality, the announcement by Ikea that it will adopt a living wage policy for employees at its stores in the United States is good news for those who will enjoy a fuller paycheck. Yet the news is not as good as it could be.

Ikea’s move, like a similar action by Gap Inc. earlier this year, is a voluntary initiative, not a legislated or negotiated policy that can be enforced. Just as Ikea adopted the wage policy on its own, it could rescind or modify that policy in the future.

It’s significant that in its announcement Ikea noted that the new wage structure, which will raise the average hourly minimum to $10.76, does not apply to those working at its U.S. distribution centers and manufacturing facilities. That’s because, the company says, those facilities “have hourly wage jobs that are already paying minimum wages above the local living wage.”

What Ikea fails to mention is that some of those workers are represented by collective bargaining agreements that brought pay rates to their current levels. Also omitted is the fact that those unions were organized because of poor conditions, including inadequate wages.

For example, in 2010 the Machinists union (IAM) and the Building and Wood Workers International labor federation organized a campaign to pressure Ikea over dangerous working conditions and discriminatory employment practices, as well as pay and benefit issues, at the company’s Swedwood furniture plant in Danville, Virginia.

That campaign served as a springboard for a successful union organizing effort at the plant, where IAM members ratified their first contract with the company in December 2011. A month later, workers at the Ikea distribution center in Perryville, Maryland voted in favor of representation by the IAM. In May 2014 Teamster members  at an Ikea distribution facility in Washington State approved their initial contract.

It’s quite possible that Ikea’s new wage policy for its stores is an effort to undermine any union organizing at those outlets. For if there is one thing large companies hate more than paying higher wages, it is paying those higher wages and having to negotiate on other conditions of work.

The desire by management to retain control is the shortcoming of both voluntary wage increases and other initiatives undertaken under the rubric of corporate social responsibility. What proponents of CSR rarely acknowledge is that these supposedly enlightened corporate policies really amount to an effort to avoid stricter, enforceable regulations. Companies would prefer to congratulate themselves for deciding to cut greenhouse gas emissions or eliminate toxics rather than being compelled to take such actions under government mandate. A management-designed wage increase is more palatable than a union contract.

Corporate apologists would have us believe that CSR is preferable to tough regulations and collective bargaining, but what they fail to acknowledge is that major corporations have a long history of engaging in abusive practices.

In the case of Ikea, taking advantage of weak labor laws in the United States is far from the whole story. Two years ago, Ikea was forced to apologize after an investigation showed that it had benefitted from forced prison labor in East Germany in the 1980s. There were similar reports concerning Cuba. And now the company is facing allegations that during the same period it channeled funds to a firm run by the secret police in Romania.

Earlier, Ikea was embroiled in controversies over the use of child labor in countries such as Pakistan, India, Vietnam and the Philippines. One way the company sought to overcome that stigma was through philanthropic initiatives such as a partnership the Ikea Foundation created in 2013 with Save the Children and UNICEF to help children in Pakistan “find a route out of child labor.” Unaddressed, of course, was the issue of how companies such as Ikea got them into child labor in the first place through their use of exploitative contractors.

The same issue applies to the wages of Ikea’s U.S. store employees. There would be no need for a living wage initiative if the company had not been paying too little to begin with. That’s the problem with much of CSR and voluntary corporate reforms: they are all too often initiatives designed to address problems that companies created themselves and are structured in a way that does not prevent them from reverting to those bad practices again in the future.

Will Obama Help Contractor Employees Join a Union?

Thursday, June 19th, 2014

vail-good-jobs-nationAfter the passage of the Wagner Act in 1935, labor activists organized workers with the slogan: “The President wants you to join a union.” We haven’t seen much encouragement of collective bargaining from the White House during the past 75 years, but there is a move afoot to change that, at least with respect to employees of companies working for the federal government.

The Good Jobs Nation campaign, which has been highlighting the plight of low-paid employees of federal contractors and helped prod President Obama to issue an executive order that will boost the pay of those workers to $10.10, is raising the ante. It is now calling for another executive order that would pressure contractors to bargain with workers in exchange for a commitment not to strike.

While there would certainly be legal challenges to such an order, it is the logical next step in the effort to address poor working conditions among portions of the federal contractor workforce and to use those standards to promote better standards for the entire U.S. working population.

It’s already well documented that many contractors flout federal workplace regulations. A report issued last year by the majority staff of the Senate Health, Education, Labor and Pensions Committee showed that contractors were among the worst violators in areas such as wage and hour standards and occupational safety and health. A federally mandated wage increase will certainly help, but it is only through collective bargaining that contractor employees will get all the protections they need.

Good Jobs Nation is focusing on workers in fields such as foodservice and security, but how much unionization is missing from the overall contractor workforce? To begin to answer this question, I looked at what the largest contractors are saying (or not saying) about unions in their filings with the Securities and Exchange Commission.

I started with the list of 50 largest contractors in FY2014 shown on the USA Spending website. Excluding those that are privately held, foreign-owned or non-profit, I looked at each firm’s 10-K annual report, which is required to report the total number of employees and has traditionally been the place where companies indicate the extent to which those workers are covered by collective bargaining agreements. Since the main goal of the 10-K is to inform investors of potential risks that could affect the value of their holdings, the company is supposed to indicate whether a work stoppage is possible.

Back in the day when unions were stronger, most large companies had something to report on labor relations. These days many companies indicate that they are not a party to any collective bargaining agreements or don’t bother to say anything on the subject.

Numerous 10-Ks of the top contractors fall into this category. Healthcare companies such as McKesson (the 5th largest contractor), Humana (8th) and UnitedHealth (20st) say nothing about unions. Other firms such as Health Net (11th), telecom equipment maker Harris Corp. (33rd) and Orbital Sciences Corporation (43rd) proudly announced that their U.S. workforce is union-free.

The companies with the biggest union presence are leading Pentagon contractors. Shipbuilder Huntington Ingalls (9th) reports the highest figure I found: 50 percent. Boeing (2nd) reports 37 percent while General Dynamics (4th) and L-3 Communications (10th) each give a figure of 20 percent. The largest contractor of them all, Lockheed Martin, says its unionization level is 15 percent.

On the other hand, some of the aerospace contractors are only lightly unionized: the figure for Raytheon (3rd) is 8 percent and for Northrop Grumman (19th) only 5 percent. Once a heavily unionized firm, General Electric (22nd) says only 7 percent of its total workforce has collective bargaining, even though it has shifted more than half of that workforce overseas, where unions remain stronger.

In other words, not a single one of the companies profiting most from the bloated military budget has a workforce that is majority union, and some have kept the union presence to a bare minimum.

Unions are even more scarce among the large information technology firms that account for another substantial portion of federal contractor spending. Among the firms that don’t mention any union presence are: SAIC, Computer Sciences Corporation, Hewlett Packard, CACI International and IBM.

Employees at these firms are certainly better paid than those employed by contractors performing functions such as building maintenance, but the absence of unions among better treated workers makes it harder for everyone to organize.

Cantor’s Collapse and Crony Capitalism

Thursday, June 12th, 2014

Dave Brat: hot stuff.It’s easy to see House Majority Leader Eric Cantor’s primary defeat as a sign that the country is moving far to the Right. Dave Brat’s successful underdog campaign was filled with the usual litany of immigrant bashing, Obamacare vilification and federal debt scare-mongering. Yet it appears that one of his most potent messages was an attack on Cantor for being too cozy with big business and thus fostering the culture of crony capitalism.

“If you’re in big business, Eric’s been very good to you, and he gets lots of donations because of that,” Brat (photo) was reported to have told supporters in a meeting earlier this year. “Very good at fundraising because he favors big business. But when you’re favoring artificially big business, someone’s paying the tab for that. Someone’s paying the price for that, and guess who that is? You.”

We tend to think that promoting anger at big business is a theme of the Left, but conservative libertarians such as Brat have their own version of that critique. Yet whereas progressives tend to criticize giant corporations for a variety of sins — wage suppression, union-busting, environmental degradation, monopolization, extravagant executive compensation, etc. — people like Brat focus on one thing: the way that those corporations use their influence to extract special favors and financial assistance from Uncle Sam. Business should be able to do pretty much whatever it wants and pay as little as possible in taxes, they argue, but taking subsidies is beyond the pale.

The libertarian Right has a long history of criticizing what used to be more commonly called corporate welfare. For more than two decades, groups such as the Cato Institute have been publishing diatribes against grants, loan guarantees and other forms of business assistance. In a 1995 Cato paper entitled “Ending Corporate Welfare as We Know It,” Stephen Moore and Dean Stansel wrote:

Because they intermingle government dollars with corporate political clout, business subsidies have a corrupting influence on both America’s system of democratic government and our system of entrepreneurial capitalism. Despite the conventional orthodoxy in Washington that the United States needs an even closer alliance between business and politics, the truth is that both government and the marketplace would work better if they kept a healthy distance from each other.

Over the years, Cato and like-minded group kept up a drumbeat calling for the elimination of programs such as the Export-Import Bank, whose efforts largely benefited the overseas business of U.S. companies such as Boeing and Bechtel. For a period of time, Ralph Nader, who had long attacked some of the same programs from a different direction, made common cause with the libertarians and created a “strange bedfellows” alliance. The alliance got a lot of attention and statements of support, but in the end entrenched interests preserved most corporate welfare programs.

In the past few years, the tea party movement has helped revive the opposition to federal corporate subsidies, though the critique has often been imprecise. There has been a tendency to conflate the TARP program to bail out the banks with the Recovery Act stimulus designed to help the overall economy recover from the recession generated by the financial meltdown.

There’s also the issue of hypocrisy. The Koch Brothers, who have directly or indirectly funded many of the tea party groups, have benefited from a considerable amount of corporate welfare given to their Koch Industries conglomerate, including more than $89 million in state and local assistance my colleagues and I have documented in Subsidy Tracker.

Nonetheless, the notion of crony capitalism, which gained much of its currency during the Solyndra scandal, continues to be a favorite on the Right. In the Daily Signal web news service recently launched by the Heritage Foundation, Cronyism is one of the few highlighted topics, up there with Benghazi and Obamacare.

In his new book Unstoppable, Nader cites corporate welfare as one of the cornerstones of an emerging left-right alliance to “dismantle the corporate state.” Such an alliance may very well succeed in eliminating some of the most dubious forms of federal business assistance, but it cannot overcome the gulf between those who believe that giant corporations should otherwise be left alone and those of us who see the need to use the power of the state to rein in the power of those enterprises.

Civil Servitude

Saturday, June 7th, 2014

madison protestPublic employees used to be known as civil servants, and the way things are going that label is becoming more and more accurate. The 5 million people employed by state governments and the 14 million employed by local governments are under attack in a variety of ways, and the U.S. Supreme Court may soon provide the crowning blow.

Going after public employees — even firefighters and other first responders — became a popular sport in the wake of the Republican gubernatorial victories of 2010. Wisconsin Gov. Scott Walker and his allies in the legislature defied mass protests (photo) and pushed through a law gutting public employee collective bargaining rights. Tennessee and Idaho enacted laws restricting bargaining rights for public schoolteachers. Ohio’s legislature curbed those rights for all state employees, but the move was repealed in a 2011 referendum.

At the same time, fiscal austerity measures led to widespread layoffs even among those public workers who did not lose their union protections. Between 2009 and 2013 state and local governments shed around half a million jobs, which has been a blow not just to those let go but also to the national economy. The private sector recovery has been held back by the ongoing slump in much of the public sector.

There are other pernicious forces at work. A new report by In The Public Interest describes the ways in which the outsourcing of public functions “sets off a downward spiral in which reduced worker wages and benefits can hurt the local economy and overall stability of middle and working class communities.” Using examples involving functions such as nursing, food service, trash collection and prisons, the report brings together data showing how job quality can plummet after the work is contracted out. For example, it notes that private-sector trash collectors earn around 40 percent less than their public sector counterparts.

Wages are not the only way in which privatized jobs are inferior. Slashing retirement benefits is one of the key ways that outsourcing companies achieve “savings.” Those who remain on public payrolls are also finding their pensions under assault. Led to believe that retirement costs for government workers are out of control, governors and legislators in numerous states have been moving to cut benefits, tighten eligibility requirements and push now hires into 401(k)-style defined contribution plans instead of traditional and more secure defined-benefit coverage.

As if all this were not bad enough, public employee unions are facing a legal challenge that could undermine their ability to survive. The Supreme Court is expected to rule this month on a case called Harris v. Quinn, which started out as a narrow dispute over the obligation of home health care workers to pay agency fees to unions that bargain on their behalf.

That case was concocted by the vehemently anti-union National Right to Work Foundation, which by the time the matter was heard by the Supreme Court in January was arguing that decades of settled law on the collective bargaining rights of all state and local employees should be scrapped.

This position was so audacious that even Justice Scalia seemed to have a problem with it. Yet other conservatives on the court as well as the man-in-the-middle Justice Kennedy seemed to be open to the idea. This could set the stage for a reprise of what happened in Citizens United: the transformation of a narrow case into a broad ruling with disastrous consequences.

The consequences being sought by the “right to work” crowd go far beyond the enfeeblement of public sector unions. They also want to dismantle the political influence of public sector unions, which are a key source of support for the Democratic Party and for progressive public policy. As Jay Riestenberg and Mary Bottari point out in PR Watch, the National Right to Work Committee has long had deep connections with rightwing players ranging from the John Birch Society to the Koch Brothers.

The ties with the latter are an indication that the “right to work” forces are not hurting for money. While enjoying their own solid funding, they are seeking to undermine the money flows which unions depend on to pursue their mission. In an era in which, as the Supreme Court has declared, money is free speech, the Right is doing everything in its power to silence workers and their representatives.