Thursday, April 18, 2019

If you have four flats -- meaning the NLRA -- you need a new set of tires

Scenario:  Bottom 40% earners double wages (on average) through collective bargaining (some 50% more, most 100%, some 150%).  Bottom 40% labor averages 15% of production costs.  Doubling wages adds 15% to consumer prices – which bites off 15% of sales – before we factor in new sales from the newly flush 40%.

Common sense dictates that bottom 40ers spend proportionately more of their income buying bottom 40er made products – and (what I call) the mid 59% spend proportionately less on 40er prods.  Let’s make that spread 20/10%.  (We won’t concern ourselves with the top 1% here.)

85% of previous sales retained.  Extra 10% sales from the doubled half of wages (with 15% fewer jobs) adds 8.5%.  Sales retained = 93.5%.  (Sales actually cascade up a bit from there as added jobs add jobs – but just a bit of eighth-grade math mind candy.)

To make sure we are not picking a sweet spot scenario:
 -- 10% sales lost to higher prices – 20/10% spending spread – 90% + 9% = 99% sales retained.
 -- 15% sales lost to higher prices – 40/20% spending spread – 85% + 17% = 102% sales retained.
 -- 10% sales lost to higher prices – 40/20% spending spread – 90% + 18% = 108% sales retained.  (Thinking Card and Krueger anyone?)

Most of American labor can no longer reach their sweet spots.  The bottom 40% is never going to reach them by being interchangeable workers in interchangeable jobs. 
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There’s all ways to do things. 

In Mexico -- you cannot hire scabs: "when a union officially declares a strike, ‘a workplace cannot be opened.’"  (last item)

Interesting article on the ways Japanese labor law differentiates between employees and independent contractors – more by income level.

In continental Europe, French Canada, Argentina and Indonesia, everybody doing the same kind of work in the same geographic locale may work under a single (sector wide) labor contract – union and non union employees together – thwarting the race-to-the-bottom before it starts.
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The only sure way to restore American labor union density to a healthy level – up from today's pathologically depressed 7% in private (non-gov) employment:
Why Not Hold Union Representation Elections on a Regular Schedule?  Andrew Strom — November 1st, 2017

"Republicans in Congress have already proposed a bill that would require a new election in each [private] unionized bargaining unit whenever, through turnover, expansion, or merger, a unit experiences at least 50 percent turnover.  While no union would be happy about expending limited resources on regular retention elections, I think it would be hard to turn down a trade that would allow the 93% of workers who are unrepresented to have a chance to opt for unionization on a regular schedule."

When you have a flat tire, you fix it; when you have four flats you need a new set of tires.  Forty-plus years of busting American unions under the unwatchful eye of the National Labor Relations Act demands a radically new return path to collective bargaining: skip organizing in private workplaces altogether; go straight to regularly scheduled union certification elections.  Nothing less looks plausibly workable.  Ask the 40%.

1 comment:

Denis Drew said...

We don’t need a few percent a year increase in labor’s price — we need to double (!) lower 40% wages from about 10% of overall income to 20%. Never do that playing with minimum wages. If fast food can pay $15/hr with 25% labor costs, then, Walgreen’s and Target can pay $20/hr with 15% labor costs, and, Walmart can pay $25/hr with 7% labor costs. Any two people can $1600/wk and we are on our way back.

Regularly scheduled cert elections at private workplaces would be such a great political draw in the Midwest’s so called battleground states that I can’t imagine why Democrats haven’t pick it up and run with it long ago.

These blue collar folks are not stooges just because they voted for you-know-who last time. According to NYTimes numbers guy Nate Cohn, in 2008 and 2012, we could have sliced off Cleveland, Detroit and Milwaukee and “cast them adrift in the Great Lakes” and Obama still would have won there. In 1988 Jesse Jackson won Michigan with 54%. These folks are rightfully mad at Dems because they never do anything realistic for them. Giving these folks their power back (to union power era levels) is exactly what the political and economic doctor calls for.