Best. EFCA post. Ever.

Just a taste from Facing South:
Labor advocates point out that the passage of the EFCA could have a huge impact on improving wages in the South and play a vital role in the region's economic recovery from the current downturn. Indeed leading economists have explained that pro-worker labor reform should be a key component of any economic recovery program. Employees able to garner better benefits and better wages create a workforce able to move the economy forward -- research shows that one of the primary reasons the recession endures is because workers do not have the purchasing power they need to drive the economy.
By all means read the whole thing, and if you do you'll see that much of it is Walmart specific.

7 Responses to “Best. EFCA post. Ever.”

  1. Two things I think:

    1. The last thing you want to do is increase costs during a recession.

    2. Employers will respond by reducing the number of employees they have as much as possible.

  2. Someone:
    Do you ever read any of the actual studies on economic outcomes from wage increases or do you just keep believing in the Easter Bunny?

    There was a well done study about what happened when the minimum wage was increased. There were two nearby towns one in NJ and one in PA. NJ raised their minimum wage and employment went up in their town.

    Even places like McDonald’s hired more workers. There were various explanations given, but one of them had to do with the ability of the higher paying town to attract more workers and fill open positions at the bottom of the pay scale.

    Perhaps this effect wouldn’t be as pronounced now when there is an excess of labor available, but the stimulus package is designed to put money in people’s pockets. I’m sure most people would prefer to get this through higher wages rather than a tax break. People want to feel that their work is appreciated and rewarded.

    One of the reasons that Walmart opposes unionization so strongly is because they can’t export jobs to China and can’t really cut back on employees (or at least total hours worked) for a certain level of sales. Things need to be shipped, shelved, etc. and this requires workers.

    So Walmart would just have to pay more in wages, and if they are really as competitive as they claim much of this increased cost would come out of profits.

    This is probably also a false claim. Productivity of workers at rival firms is higher because they have less turnover, better motivated workers and can attract those with better skills. Yes, even the most routine job can be done well or poorly and Walmart has been shifting to indifferent workers as long-time employees have been commenting on for some time now.

    If Walmart treated their workers better they might actually end up saving money, but they are too stubborn and too interested in throwing their weight around to find out.

  3. Ross says:

    Feinman, you gotta be kidding. And you claim to be an economist? Before you say any more silly stuff please learn about supply and demand. And do some research on the impact of unions on prices. Or if you don’t like theory then just observe the evidence: GENERAL MOTORS.

  4. Hey Ross!

    Robert doesn’t claim to be an economist, but he sure as heck knows a lot more about the way the economy works than you do. You and Someone both believe in the fairy tale version of economics pedaled at places like CNBC where everything is predictable. Well guess what! It seldom, if ever, works that way. Otherwise we wouldn’t be in the gigantic mess we’re in now.

  5. Ross:
    The US experienced the highest period of economic growth during the same period that unionization spread the most, roughly between 1920 and 1960.

    High wages and good benefits didn’t stop GM from being the biggest firm in the world for awhile. Other big industries were also heavily unionized, like steel (US Steel), telecom (AT&T) and oil (Esso/Exxon).

    The decline in the fortunes of these industries is due to many factors, but the least important is the fact that the workers were (are) organized. In the case of steel it was the unwillingness of management to modernize when new types of steel production were developed. The best parts of the business moved to Japan. Japan has unionized workers, as does Korea, another major economic success story.

    In the case of AT&T the problem was that their monopoly status made them lazy and uninterested in innovation. When it was broken up the remaining company had no decent R&D to fall back on and US telecom has been second rate ever since.

    Exxon is still the most profitable company in the world, unionized workers and all.

    If you looked you might see that every car maker in the developed world is in trouble, Fiat, Saab, Volvo, VW, etc. Even Toyota is showing a loss and laying off workers. What do they all have in common – lack of vision and an inability to adjust to a new world which won’t have cheap gas anymore.

    Instead of being a monopoly like the old AT&T the auto firms were content to be a shared monopoly or oligopoly. They only competed with each other around the edges and none of them brought out any products that were radically different from the others. Why bother when they were raking in the money and had a constantly expanding world market?

    I think you might do a bit of study of labor history before you criticize, but I suppose that would spoil your easy answers to the world’s problems.

  6. The good people from a certain organization with which I am affiliated pointed me in the direction of a very nice study on EFCA.

  7. And you’re not going to share? How rude!

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