Labor Act Hits Wal-Mart Prematurely

[Omaha Steve]

http://industry.bnet.com/retail/1000935/labor-act-hits-wal-mart-prematurely/

By Mike Duff | March 14th, 2009 @ 1:27 pm

Call it the Employee Free Choice Act or the card check bill, but if new legislation amending labor laws to make it easier for unions to organize does squeeze through the United States Senate, it could have some interesting and unintended consequences for Wal-Mart, among others.

The bill already is having an impact on Wal-Mart as Citigroup analyst Deborah Weinswig lowered her rating on the company’s shares because of concern that it is the top target of the unions backing the legislation. If it passes, she asserted in a research note, “the company could have to concede higher wages for more seasoned employees and increase employee benefits significantly.”

She has a point, yet passage of the legislation isn’t necessarily a disaster for Wal-Mart. The company has dealt with various labor regulations and union forces internationally – including a food workers union that operated in its German stores before the company pulled out of the market and a state-sponsored union in China — and would have experience that could help it manage the situation. More importantly, Wal-Mart would retain the competitive advantages it derives from its industry leading distribution and data application capabilities.

In contrast, Target never has operated with unions and could have a harder time adjusting to a union workforce, particularly as it puts more employees on the sales floor than does Wal-Mart. Target hasn’t been subject to the same degree of labor criticism as Wal-Mart has, but unions and their allies have it in mind. Target will become even more of a labor concern as it expands its food operation and increasingly competes with union organized supermarkets.

Weinswig’s particular decision as regards Wal-Mart shares stems in part from her determination that Wal-Mart will be the first non-union retailer that labor tries to organize, but it might not be a singular target. One reason that a labor-led effort against Wal-Mart expansion in California has faded is because the United Food and Commercial Workers Union has shifted resources to a campaign pressuring Tesco as it attempts to organize that company’s Fresh & Easy stores. The UFCWU has been zealous in its Fresh & Easy organizing drive, even challenging store liquor license applications and attacking Tesco’s environmental record as tactics to gain leverage over the company. The Tesco decision to start worker pay at $10 an hour was viewed by some as a tactic to make union representation less attractive.

Of course, Tesco is actively competing against Kroger, Supervalu and Safeway in California, and their employees are UFCWU members. If the Employee Free Choice Act passes, it would make Tesco, their competitor and a Wal-Mart rival, easier to organize. Yet, passage of the act also would give Tesco, and Wal-Mart, some common interests with the supermarket chains, and that could have consequences for the retailers and unions.

FULL story at link.

[AdHocSolver]

1. Organizing Wal-Mart empoyees is as useful as Moses organizing the slaves under Pharaoh.

Moses could have gotten the slaves an extra ration of crumbs. However, they would have remained slaves under Pharaoh.

The workers' power comes from being able to withhold their labor from company A which has competition from companies B, C, and D, through X, Y, and Z. When the UAW was strong, it would strike GM or Ford alone, while not striking the other auto companies. That competitive pressure pushed the struck company to negotiate with the union or lose a lot of business to competitors. Then the first negotiated contract was used as a model for negotiating other contracts. Without such leverage, the unions have little bargaining power.

Another source of employee bargaining power is the threat that, if the company won't negotiate in good faith, then the employee will leave and go to work for a competitor. Wal-Mart has used its deep pockets and political clout to put local businesses that would be its competitors out of business. Smaller businesses are inherently labor intensive. Big box stores like Wal-Mart can operate with surprisingly few employees (which is the purpose of building big box stores).

As long as jobs can be easily and profitably offshored, the U.S. economy will deteriorate, the middle class will slowly disappear, and organizing the workers just to beg for crumbs will be an exercise in futility.

What needs to be done is to rewrite the trade and tax laws to make it less profitable for the multinational corporations to offshore jobs and evade taxes on their profits. Then companies who want to create jobs here will be able to do so profitably.

No other course of action will save the American middle class or the U.S. economy. When just about everything is imported, all money, eventually including the stimulus package funds, will just leave the country. At least 75 percent of the money spent by Americans must go to other Americans, not to Asia. This is the only kind of economic activity that will sustain a viable American economy.