May 2011 Archives

Targeting Target

The news of a union organizing drive at a group of Target Corporation stores in the New York City area raises the tantalizing possibility that the master of cheap chic may finally be knocked off its pedestal.

For years, Target has used its stylish image to obscure the fact that many of its employment and other practices are not significantly different from those of its scandal-ridden rival, Wal-Mart. It’s even managed to get itself included on a list of the “world’s most ethical corporations.”

Target’s stores, like those of Wal-Mart’s U.S. operations, are entirely non-union, and the company intends to keep them that way. The New York Times account of the organizing drive has Jim Rowader, Target’s vice president for labor relations, spouting the usual corporate rhetoric about how a union (the UFCW) would undermine the supposed trust that the company has built up with its workers. BNA’s Labor Relations Week (subscription-only) reports that Target is subjecting workers to captive meetings “conducted by store management in an attempt to dissuade workers from seeking union representation.”

Since no representation elections have been held yet, it is unclear whether Target will follow the lead of Wal-Mart in eliminating the jobs of those who dare to vote in favor of a union.

Target does not have a reputation quite as abhorrent as that of Wal-Mart when it comes to other employment practices, but neither is its record untarnished. It has been accused of subjecting its largely part-time workforce to the same abuses—inadequate wages, restrictions on health coverage, overtime violations, etc.—seen among other big-box retailers. Though not as often as Wal-Mart, Target has shown up on lists prepared by state governments of the employers with the most workers or their dependents receiving taxpayer-funded healthcare benefits. Target has fought against living wage campaigns, most notably in Chicago in 2006, when it threatened to cancel plans for two new stores in the city unless Mayor Richard Daley vetoed a wage ordinance (which he did).

Target has also faced accusations relating to the treatment of minority applicants and employees. In 2007 the company paid a total of more than $1.2 million to settle cases brought by the U.S. Equal Employment Opportunity Commission involving alleged racial discrimination in hiring in Wisconsin and a racially hostile environment in Pennsylvania.

There have been controversies involving the treatment of workers by Target suppliers and contractors, as well. In 2002 Target was one of a group of retailers that together paid $20 million to settle class-action lawsuits charging them with permitting sweatshop conditions at factories run by their suppliers in Saipan, part of the U.S. Commonwealth of the Northern Mariana Islands in the Pacific. A 2006 report by SOMO, a Dutch research center on transnational corporations, documented other instances in which Target garment suppliers were reported to be abusing workers and the retailer did little in response.

Target has a history of hiring janitorial contractors for its U.S. stores that tend to engage in rampant wage theft. In 2004 one such contractor, Global Building Services, paid $1.9 million to settle an overtime-violation case brought by the federal government on behalf of immigrant workers. In 2009 another Target cleaning contractor, Prestige Maintenance USA, settled an overtime lawsuit for up to $3.8 million.

Labor practices are not the only area in which Target’s accountability record falls short. Earlier this year, the company had to pay $22.5 million to settle civil charges that its operations throughout California had violated laws relating to the dumping of hazardous wastes. Target has had a good record on gay rights, though last year the company found itself at the center of a controversy after it was revealed to have contributed to a business PAC which in turn contributed to a gubernatorial candidate in Minnesota who campaigned against gay marriage (among other reactionary positions). Target later apologized.

And then there’s the matter of subsidies. Like Wal-Mart, Target has extracted lucrative tax breaks and other forms of financial assistance from many of the communities where it has built stores or distribution centers. One of its more audacious efforts was a proposal for a $1.7 billion mixed-use project in the Minneapolis suburb of Brooklyn Park, for which Target wanted more than $20 million in property tax abatements and a public contribution of $60 million for infrastructure costs. Despite seeking all this taxpayer assistance, Target demanded a waiver from the city’s living-wage policy for many contract and part-time workers who would be employed at the site.

Perhaps the best thing that can be said about Target, aside from its style, is that it is much smaller than Wal-Mart. Its total revenues are only about one-sixth of the worldwide sales (and less than one-quarter of U.S. sales) of the Bentonville behemoth. Target’s workforce of 355,000, all in the United States, is dwarfed by Wal-Mart’s domestic headcount of 1.4 million and another 700,000 abroad. Target thus has a much smaller impact on overall labor practices and the global supply chain.

What impact it does have is not salubrious. Now that it is facing some union pressure, let’s hope Target breaks from Wal-Mart and decides that it is makes sense to treat its workers with as much respect as its customers.

NOTE: Speaking of subsidies, the Subsidy Tracker database I created for Good Jobs First has just been expanded and now has more than 65,000 entries covering 154 subsidy programs in 37 states.

The $100 Million Stickups

According to the FBI, the typical bank robber escapes with about $7,600. It would take more than 13,000 such capers to reach the amount that some individual corporations are netting in their own holdups, though of a legal variety.

This year has seen a series of cases in which large companies secure big subsidy packages by hinting that they may move their corporate headquarters to another state, and in several instances those packages have turned out to be worth an eye-popping $100 million.

The fact that state and local governments around the country continue to face severe budgetary shortfalls has not prevented them from offering—and companies from taking—these huge payoffs. Here are some new members of the $100 Million Club:

Motorola Mobility Holdings—one of the two spinoffs from the split-up of the old Motorola Inc. earlier this year—recently extracted $100 million in EDGE tax credits from Illinois as the price for keeping its headquarters and approximately 3,000 employees in the Chicago suburb of Libertyville. EDGE credits normally apply to corporate income tax payments, but the state legislature allowed the smart-phone company to keep employee income tax withholding payments instead. Motorola Mobility was awarded several million dollars more in job training and other grants.

When Panasonic Corporation of America let it be known it was considering moving its headquarters out of New Jersey, the state offered the company a tax credit worth just over $100 million to stay. But it couldn’t remain at its existing site in Secaucus. The Urban Transit Tax Credit required a relocation, so the state’s Economic Development Authority got the Japanese electronics firm to agree to move a few miles down the road to Newark. The arrangement was expected to provide a big boost in tax revenue for Newark (money in effect poached from Secaucus), but the struggling city for some reason decided it was necessary to give back a portion of that to Panasonic in the form of more subsidies, the amount of which has not yet been determined.

After raising the possibility of moving out of state in response to an increase of one half of one percent in local income taxes, American Greetings agreed in March to keep its corporate headquarters in northeast Ohio. All it took was a state package of grants, tax credits and low-interest loans worth an estimated $93 million over 15 years. Once the greeting card company settles on the exact site, it is likely to get additional local assistance that will put its total subsidies above $100 million.

A few weeks after the American Greetings deal, ATM manufacturer Diebold, which had made similar noises about a possible move to another state, was also induced to keep its headquarters in northeast Ohio. It, too, is slated to get total subsidies of about $100 million—$56 million in refundable tax credits from the state and anticipated local “incentives” of more than $40 million.

Sears Holdings could soon join the club as well. Actually, Sears is already a leader in it. Back in 1989 it got a subsidy package of $178 million for moving its headquarters from downtown Chicago to exurban Hoffman Estates, 29 miles away. The state and local tax subsidies from that deal are set to expire next year. Playing the we-might-move-out-of-state game, Sears has set off a frantic effort by Illinois officials to extend the company’s subsidies for another 15 years. No deal has yet been announced.

It is frustrating to see one company after another get away with job blackmail. If only we could get the FBI to take an interest in this kind of stickup.

Boeing’s Flight Plan

Now that Osama bin Laden has been eliminated, the greatest threat to the American Way of Life, a growing chorus of right-wingers seems to believe, is a federal agency that has been around since 1935.

That agency is the National Labor Relations Board, and its atrocity is to have challenged the absolute right of a corporation to invest its money where it sees fit.

The corporation in question is Boeing, which was recently accused by the NLRB of having violated federal labor law by locating a new production line for its Dreamliner aircraft in union-unfriendly South Carolina rather than Washington State, the company’s traditional manufacturing base. The Board’s acting general counsel, responding favorably to an unfair labor practice allegation filed by the International Association of Machinists, charged that Boeing’s siting decision was a retaliatory action against the union.

If the Board complaint prevails, “no company will be safe from the NLRB stepping in to second-guess its business decisions on where to expand or whom to hire,” thundered an official from the National Association of Manufacturers. Equally hysterical statements are being made by conservative public officials and commentators, who worry that the case could imperil job growth in “right-to-work” states. Some Republican Senators are touting a Right to Work Protection Act.

Boeing, meanwhile, continues to insist that its embrace of the Palmetto State was not driven by union-avoidance. Its CEO Jim McNerney just published an op-ed in the Wall Street Journal headlined BOEING IS PRO-GROWTH, NOT ANTI-UNION. While it is refreshing to see a major U.S. corporation disavow anti-union animus, McNerney’s statements are disingenuous. This begins with some simple facts.

McNerney asserts that the portion of Boeing’s U.S. workforce represented by unions is “about 40%…a ratio unchanged since 2003.” I hope McNerney is not involving in making any sensitive calculations about the company’s aircraft, because he seems to be challenged when it comes to numerical accuracy.

According to Boeing’s 10-K annual filing with the SEC for last year, 34 percent of its total workforce of 160,500 was represented through major U.S. collective bargaining agreements with the Machinists, SPEEA and the UAW. Other unions represent much of Boeing’s limited foreign workforce (in Canada and Australia), so there is no way the U.S. union percentage can be 40 percent, unless McNerney thinks you can round up from 34.

At the end of 2000, about 48 percent of Boeing’s U.S. workforce was represented by unions. The figure then began to slide—as a result of layoffs, outsourcing and union decertifications that must have been encouraged at least implicitly by management. The number of union-protected Boeing workers in the United States at the end of last year was more than 38,000 lower than a decade earlier.

McNerney’s description of how Boeing ended up in South Carolina is also highly misleading. He claims the decision resulted from an objective assessment of various factors in several states.

The fact is that Boeing set the stage for the move over a long period of time. South Carolina was one of the states considered in 2003 for the first Dreamliner production facility before the company bullied the Washington State legislature into enacting a $3 billion package of corporate tax breaks as the price for staying put.

South Carolina’s consolation prize was that in 2004 Vought Aircraft, a key supplier of the fuselage and other components of the Dreamliner, agreed to build a $560 million manufacturing complex at Charleston International Airport. In 2005 a Boeing executive told a public meeting in Charleston that the Vought operation could receive more Dreamliner work in the future (Post and Courier, 7/19/05). Despite the open anti-union stance of Vought management, the company’s South Carolina workers voted in 2007 to be represented to the Machinists.

Starting in 2008, Boeing bought out Vought’s interests in the Charleston operations. In September 2009 the Machinists union was decertified amid persistent rumors that Boeing would choose Charleston as the location for the second Dreamliner assembly line. In October 2009 Boeing made it official, announcing it would spend at least $750 million on the new production line.

During these years, Boeing executives made a series of public and private statements—some of which are cited in the NLRB complaint—expressing their frustration at having to deal with the assertive union workforce in Washington. Consequently, it was obvious to everyone that the Charleston announcement was a rebuff to those workers. BusinessWeek’s story about the move, headlined BOEING’S FLIGHT FROM UNION LABOR, stated that McNerney was “signaling the lengths he’s willing to go to loosen the union’s chokehold on the company.”

The need for the Charleston facility to remain non-union has been made crystal clear by South Carolina Gov. Nikki Haley, who chose Catherine Templeton, an attorney specializing in “union avoidance,” to run the state Department of Labor, Licensing and Regulation. “I think we’re going to have a union fight as we go forward with Boeing,” Haley declared in announcing Templeton’s nomination. “We’re going to fight the unions and I needed a partner to help me do it.”

The comments prompted the Machinists to file suit demanding that Haley and Templeton remain neutral in union matters. Haley, instead, has been a leader of the pack attacking the NLRB.

Despite all the righteous indignation being expressed by that pack, there is nothing remarkable or unprecedented about the Board’s complaint, as the Acting General Counsel has taken pains to point out.

What is remarkable is that so many public figures have forgotten that the National Labor Relations Act, which affirms the right of workers to act collectively to protect their interests in the workplace, is official U.S. policy on labor relations, not the “right to work” laws enacted in 22 states to weaken those activities.

Critics of the NLRB complaint incorrectly claim it will lead to the collapse of “right to work.” If only that were true. It will take a lot more—including a huge boost in labor activism—to restore the full rights of workers throughout the country.

Taking Corporate Farmers Off the Dole

The signal from House Majority Leader Eric Cantor that Republicans are ready to consider cuts in farm subsidies may be a false alarm, like the one that Speaker John Boehner recently set off with regard to oil industry tax breaks.

It’s quite possible that once Cantor and his colleagues take a closer look at the agricultural giveaways, they will realize that the biggest recipients are not traditional farmers but large corporations—the GOP’s primary constituency these days.

Unlike the oil subsidies, which consist of tax preferences available to the entire industry, farm subsidies are direct payments from Uncle Sam to specific parties. A large portion of those payments go to a small number of beneficiaries. Of the $247 billion paid out since 1995, one-quarter of the total has gone to the top 1 percent of recipients, and three-quarters to the top 10 percent.

Thanks to the efforts of the Environmental Working Group—whose president Ken Cook describes the subsidy system as a “contraption that might have sprung from the fevered anti-government fantasies of tea party cynics if Congress hadn’t thought it up first”—you can go to a website and search by name or ZIP code to see exactly how much has been paid out to any individual or business.

EWG also helpfully provides various national compilations that show which beneficiaries have had their snouts deepest into the federal trough. By far the biggest cumulative winners are Riceland Foods ($554 million) and Producers Rice Mill Inc. ($314 million). These are both technically cooperatives, but there is little to distinguish them from other agribusiness giants. Riceland, with revenues of more than $1 billion, is the world’s largest rice miller and one of the country’s largest grain storage firms. It sells rice products to foodservice operators and directly to consumers.

A more interesting entry in the top ten is Pilgrim’s Pride, with cumulative subsidies of $26 million. With a history of health and safety problems, labor abuses and financial instability, it is one of the most controversial corporations in the U.S. agribusiness sector.

The company, which tends to refer to itself these days simply as Pilgrim’s (apparently, the pride is gone), was built by Texas chicken farmer Lonnie “Bo” Pilgrim into a poultry powerhouse through a series of aggressive acquisitions that began in the 1970s. Bo did not let the niceties get in the way. He once handed out campaign contribution checks to Texas lawmakers right on the floor of the legislature. His chicken plants were criticized by labor advocates for creating an epidemic of worker injuries and by animal rights advocates for treating the chickens inhumanely.

In 2002 the company had to recall a record 27 million pounds of poultry products after an outbreak of Listeria at a plant run by its Wampler Foods subsidiary. In 2007 Pilgrim’s was sued by the U.S. Department of Labor for overtime violations and later had to distribute more than $1 million in back pay. In 2008 federal officials raided Pilgrim’s plants in five states and arrested hundreds of workers for immigration violations. The company later paid $4.5 million to settle charges of hiring undocumented workers.

Saddled with debt from a $1.3 billion acquisition of rival Gold Kist, Pilgrim’s filed for Chapter 11 bankruptcy in 2008, leading to the closing of plants, the elimination of thousands of jobs and the cancellation of contracts with many of its captive farmers. In 2009 Pilgrim’s emerged from bankruptcy after being taken over by Brazilian meat mega-producer JBS, which also gained control of Swift & Company.

Federal farm subsidies have no doubt provided essential assistance to some family farmers in times of need, but too much of the money has gone to the likes of Pilgrim’s Pride. After years in which this waste has survived despite endless criticism, perhaps the time has finally come when these corporate giveaways will be curtailed.