06 September 2010

Labor Day 2010

Ooops!  A draft of this got past me into publication.  I have revised and re-posted.

It is Labor Day here in the US. The date is interesting -- chosen by a cousin of my wife, President Grover Cleveland, this holiday was spotted mostly to distance it from May Day. Cleveland, a democrat no less, wanted to avoid association with the radical labor movements o in Europe. I suppose it worked, the holiday is at least respectable.

Unions in America represent about seven percent (7%) of the non-government work force. Seven freaking percent, much of it in private education and transportation -- truckers, airline personnel and private university teaching staff account for a lot of the that. So for the rest of us 93% of the jobs there is no union representation.

Should we have reperesentation? I do not know. I have seen amazingly bad unions over the years. And yet consider that Wal-Mart the world's largest retailer has such low wages that about 10% of its employees are on some form of government assistance while working! I suspect the number would be higher in fast food if it were not for the concentration of illegal immigrants who are afraid to seek the aid.

Without a union, Wal-Mart employees are being screwed. But(!) the AFL-CIO retail employees union is notoriously useless. Join it and your company goes out of business without you having gotten much.

One clear marker of a healthy economy is that the workers in it can buy at least some of its products. Imagine for a moment the idea of a Far Eastern child actually buying the athletic shoes made there for export to the US and Europe. Not only America is sick!

Some An idea s.

Companies people want to work for have very flat multiples from their lowest paid to highest paid workers. Economies that limit that multiple tend to be economies where many do well. So one thing Congress could do (instead of its usual stupidity)would be a simple tax change. Make the personal income tax rate for all income (including bonuses and stock options) 75% for every time an employee receives in excess of 50 times the lowest paid employee's pay and add a luxury corporate tax equal to the amount owed by the top people.

It is a simple idea, if we think income should "trickle down" then let's reward the trickle. If a company is paying its top people over 50 times the lowest wage there is not a lot of trickling going on.

So if like Wal-Mart and McDonalds you have people at $6.50 an hour, then the max total compensation available for the top paid employee is 325 an hour. That seems fair as $325 is about what the law firms charge. Of course if $676,000 a year is not enough for the CEO of Wal-Mart, who last year got $23 million dollars then he can pay the tax or maybe do something to raise the ceiling. The lowest paid employee need only make $221 an hour. If we agree that a register checker may not merit $221 (I am not convinced) maybe the board of Walmart has to ask if anyone is worth 23 million.

Maybe they could meet somewhere near the middle. I am willing to bet in the new economy this rule would create someone would be available, someone competent for a million or two. And the multiple would lead to merely $19,23 an hour if that were the working number. Saving 21 million for the top job and a lot on the ones directly below it, could fund a lot of those nineteen dollar jobs. Raising prices a little, remember that now the workers can afford a $1.50 burger so the $1.00 is probably gone, could cover the rest.

If you do not like a multiplier of 50 let me tell you where I came up with the number. It is about the mean for the rest of the world. You know, the rest of the world world where our jobs are being exported. I rest my case.


1 comment:

Christal said...

I loved this post. I especially like how you reference Walmart. Considering the fact that this company screws most of its employees, it only seems fair that they rise up as a Union, and beat this world-class pimp.

As far as how the rest of the world works, opression of the "have-nots" is how the ones who have will keep filling their enormous purses.

St Laika's

Click to view my Personality Profile page