Russ Nelson argues briefly and amusingly that if business corporations are to give "stakeholders" decision-making authority, then union corporations should give non-union "stakeholders" the same form of authority over their activities:
Thus, I claim that I am a stakeholder of the Communications Workers of America (just to pick on one of them), and the next time they vote on a union contract, I get to vote on it too.
How about it UFCW, would you like the entire population of cities to vote on whether or not Wal-Mart should be unionized, or whether a union should be disbanded entirely? Would that not be more "democratic"?
Posted by Kevin on April, 18 2005 at 01:31 PM
james wrote:Sure, Kevin, the whole town voting would be very fair when the whole town is employed there, then they too can vote, "God your stupid"!
-- April 19, 2005 01:05 AM ∞
Kevin Brancato wrote:So why is it fair for non-owners to have a share in corporate businesses? Surely consumers have a "stake" if unions succeed in gaining higher wages that will raise the prices they have to pay? So by stakeholder logic, why shouldn't all potential consumers have a say?
You're missing the point!
-- April 19, 2005 07:20 AM ∞
Brandon Weber wrote:Kevin,
You're assuming that any presumed increase in pay for the workers will have to be covered by higher prices for the consumer rather than come from the pockets of the owners and highly paid execs.
Wait, we're talking about Wal-mart...of COURSE it won't come from the owners and execs...
-- April 19, 2005 10:44 PM ∞
Keivn Brancato wrote:No, Brandon, this is pretty clear cut.
The reason WM's stock has done poorly is that its profitability has, as a share of capitalization, not been very good. Dan Akst is right in a sense, shareholders are subsidizing consumers.
While the total profits of WM are ~$10 billion, the actual rate of profit on capital assets is not, by historical standards, or by standards of its competitors, high. There really isn't much room in the profit margin for meeting union demands.
Quite simply, the low prices at WM do come in part from its compensation policies. I have not denied this, but insisted that other factors are also, perhaps more, important.
But let's say the UFCW completely unionizes WM. What are the cost implications? I've heard it that WM has wages $2 an hour less than the competition. I'll be conservative, and list an average workweek for fulltimers of 36 hours, and for part-timers of 18 hours. Let's use a 48 week year, to be even more conservative. Furthermore, say 50% of WM 1.2 million associates are full-time, 50% are part-time.
Full Timers
600K X $2/hr X 36 hours X 48 weeks = 600K X $3456 = $2.074 billion annually
Part Timers
600K X $2/hr X 18 hours X 48 weeks = 600K X $1728 = $1.037 billion annually
Plus, a union wants better health benefits. Figure in $100 a head per month:100*$1.2million*12=$120,000,000*12=$1.44 billion annually
However, this will reduce turnover, and save say $500million a year.
So far, unionization will cost 2.074 + 1.037 + 1.440 - $0.5billion = $4.051billion in additional wages an benefits net of turnover savings. And that's a conservative estimate. I think that you would agree that proposals for a "living wage" would almost completely wipe out all corporate profitability.
Prices would have to be raised.
-- April 20, 2005 07:05 AM ∞
brandon weber wrote:Ahh, but Kevin, consider this:
In early 2004, the Walton family owned $100 billion in stock. If you doubt that, see:http://www.childrenfirstamerica.org/DailyNews/04Mar/0312042.htm
http://www.timesrecord.com/website/archives.nsf/0/8525696e00630dfe05256fc10056ba8b?OpenDocument
Let's assume that your calculations are correct. What if the additional $4 billion that would go to the employees each year came from the Walton family fortune for, say, 5 years? They go down to $80 BILLION (not including any increase in valuation over that time period) and the prices do NOT have to increase at Wal-mart stores.
We won't even talk for the moment about the excessive salaries and perks of upper management, and instead just focus on the true owners of the company.
My point is still: prices do NOT have to rise if employees are better compensated.
Distrubution of wealth is one of the fundamental concepts of unionization. To distribute that much wealth to employees from the owners, which would not harm the Waltons at all, is not too much to ask. Not by a long shot.
-- April 20, 2005 09:38 PM ∞
Kevin Brancato wrote:You don't seem to understand that under your plan Wal-Mart essentially would no longer be a for-profit enterprise.
Yes, if the Waltons sell their shares and give away their wealth in the form of charity to their employees to pay for a $2 an hour increase, prices would not have to rise until the new owners refuse to sacrifice themselves.
But if you're interested in wealth redistribution, you should want the Waltons to give their wealth to the really poor -- those in Africa, India, China, etc.
There is no redistributive ethic that says the Waltons should be giving to the relatively much better off.
-- April 21, 2005 06:13 AM ∞
Brandon Weber wrote:[quote]prices would not have to rise until the new owners refuse to sacrifice themselves. [/quote]
Please...the current Waltons know nothing of sacrifice, even if they were to give up 90% of their exhorbitant wealth.
[quote]There is no redistributive ethic that says the Waltons should be giving to the relatively much better off. [/quote]
No, there is not. My point is still that prices do not have to be increased if the employees get a bit more more of the pie.
Take Costco, for example. Their shares have been on the increase during the time that Wal-Mart's have been on the decline. There are several stories about this, including this one fom early last year that actually show Costco as earning LESS for every dollar in sales than Wal-Mart/Sams (almost half, in fact).
http://seattlepi.nwsource.com/business/166680_costco29.html
And of course, Costco pays its employees much better and provides superior benefits. How can that be, given your logic? If Costco's prices are such that it makes LESS per dollar than WM, but the stocks are doing much better than WM, then what's your explanation?
I suspect it has something to do with the much lower employee turnover, but the main factor is likely the legal problems and PR nightmares that Wal-Mart continues to experience, despite its efforts to put a spit shine on the badly soiled corporate image.
-- April 21, 2005 08:55 AM ∞
Kevin Brancato wrote:I wrote that the NEW OWNERS -- the one's the Waltons would have to sell their stock to -- would refuse to sacrifice themselves.
We can argue about their charitability, but once the estate tax is completely killed, the Waltons will have no excuse not to give away large chunks of cash for education reform, like Sam wanted.
Bob Arne had some interesting stuff on Costco vs Sams on my other blog.
From his admittedly older take, I gather that you're not adusting for the fact that Costco has fewer employees and hence a higher level of profit per employee than Sams. This is attributed to higher employee productivity.
Costco may make less per dollar sold, but they make $2500 more per employee.
This is completely consistent with my logic. WM could pay more without raising prices, if it fired a bunch of people, and expected more of the ones it kept.
-- April 21, 2005 09:25 AM ∞
Brian St. Pierre wrote:"Distrubution of wealth is one of the fundamental concepts of unionization. To distribute that much wealth to employees from the owners, which would not harm the Waltons at all, is not too much to ask. Not by a long shot."
So why don't we just figure out how much the Walton family really NEEDS to live, and take all the rest for the workers? I doubt they NEED much more than $250k per family. (After all, I'm doing ok with quite a bit less than this!)
Of course, you can't eat a share of WMT, so you'd have to liquidate those shares to raise cash for distribution to the workers. Selling $100B of WMT stock will probably have a depressing effect on the share price.
Hmmm. I wonder how many shares of WMT are owned by pension funds?
-- April 22, 2005 11:31 AM ∞
