Tag Archives: wages

Ottawa Turns Its Back on Steelworkers-Op-Ed

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Aug 23, 2013    http://www.thespec.com   https://i0.wp.com/www.thespec.com/Portals/9/Images/logo.png

U.S. Steel’s destructive agenda is tacitly condoned by Harper government

By Marty Warren, Ontario Director of the United Steelworkers

For the second time in three years, 1,000 families in Nanticoke and surrounding communities face an uncertain future, targeted again by a deliberate attack on working-class living standards achieved over generations of struggle in Canada.

U.S. Steel’s lockout of employees at the Lake Erie Works steel mill — now in its 17th week — reflects the impunity foreign multinationals enjoy to slash Canadian jobs and drive down wages, benefits and working conditions.

U.S. Steel, in particular, has ample reason to believe it has the tacit consent of Stephen Harper’s Conservative government to run roughshod over Canadian working families.

In 2007, the Harper Conservatives approved U.S. Steel’s takeover of Canadian steelmaker Stelco. The deal included legally binding commitments from U.S. Steel to maintain production levels and a 3,100-strong workforce at former Stelco operations.

Time after time, the Harper Conservatives have demonstrated they stand with giant multinationals that abuse their dominant economic power.

U.S. Steel broke those legally binding commitments, with devastating results for working families and pensioners whose combined losses ran into tens of millions of dollars.

“(Their) working lives, retirement and income security have been seriously and adversely affected,” a Federal Court judge stated in 2011 after legal proceedings were launched against U.S. Steel.

The legal action was brought against U.S. Steel under terms of the Investment Canada Act, which dictates foreign takeovers must provide a “net benefit” to Canadians.

The government’s case against U.S. Steel included expert analysis that concluded the company knew full well the implications of its legal commitments. Even in the midst of the recession, fulfilling those promises “would not have threatened the financial viability” of the company, the analysis concluded.

However, rather than enforce the law and hold U.S. Steel accountable, the Harper government struck a secret deal that abruptly ended the court case. Promises of jobs and healthy production levels were abandoned. Workers, pensioners and communities devastated by U.S. Steel’s behaviour were denied their day in court.

With a nudge and a wink from our federal government, U.S. Steel was free to continue its onslaught against Canadian employees and pensioners.

U.S. Steel has now followed the same transparent, destructive pattern in three successive rounds of contract negotiations with former Stelco employees — twice at Lake Erie Works and once at Hamilton’s Hilton Works.

In each case, U.S. Steel has betrayed even the pretense of attempting to negotiate a fair deal for Canadian employees. The agenda has been to abuse the full force of its corporate power and resources to impose its will — under threat of arbitrary, lengthy shutdowns.

In each instance the workers refused to be provoked into a strike. To their credit, they proposed to keep operating their plants while pursuing a settlement through good-faith negotiations aided by government mediation.

U.S. Steel’s agenda dictated otherwise. It locked out Lake Erie Works employees for eight months in 2009-2010, then imposed an 11-month lockout in Hamilton in 2010-2011.

In April of this year, with carte blanche from the federal and Ontario governments to do as it pleases, U.S. Steel locked out Lake Erie Works employees for a second time. Four months later, the community’s largest employer remains shut down.

The locked-out employees, members of United Steelworkers Local 8782, remain committed to negotiating a fair collective agreement and are eager to get back to work.

They have received tremendous support within and outside their community, from like-minded Canadians who understand the need to resist a relentless and orchestrated assault on our middle class.

The workers, their families and supporters will continue to fight the good fight. However, it is beyond shameful that they don’t have their government on their side.

Time after time, the Harper Conservatives have demonstrated they stand with giant multinationals that abuse their dominant economic power to drive down our working and living standards and eliminate good jobs. It is part and parcel of the Conservatives’ low-wage economic strategy for our country.

Earlier this year, without meaningful public debate or consultation, the Harper government decided to arbitrarily amend the Investment Canada Act, folding the changes into its latest omnibus budget bill.

The Conservatives’ changes weaken the Act. They allow for more foreign takeovers to be rubber-stamped. Secret deals will remain the norm. Neither the government nor multinational corporations will be required to consult with, or be accountable to, the Canadian families and communities directly affected by foreign takeovers.

It has never been clearer that only a change in government can reverse this disgraceful trend.

I’ve Always Hated The Idea Of Labor Unions, But It May Be Time To Reconsider

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Henry Blodget Dec. 2, 2012  http://www.businessinsider.com

I’ve always hated the idea of labor unions.

Why?

Several reasons.

  • They create an “us versus them” culture within companies, instead of putting everyone on the same team
  • They create a culture of entitlement
  • They restrict flexibility and hurt competitiveness
  • They drive companies to move jobs out of the country, to places where there are no unions
  • They often become career employment for their leaders, who pay themselves well (much better than the workers they’re representing)
  • They maintain ludicrous compensation and benefit levels for jobs based purely on seniority (some bartenders in one of the New York hotel unions, for example, apparently make ~$200,000 a year)
  • They force companies to treat all union employees equally, regardless of the relative skill and value of particular employees–thus reducing incentives for people to do a great job
  • Etc.

And all those are indeed negatives.

But we’ve now developed a bigger problem in this country.

Namely, we’ve developed inequality so extreme that it is worse than any time since the late 1920s.

Contributing to this inequality is a new religion of shareholder value that has come to be defined only by “today’s stock price” and not by many other less-visible attributes that build long-term economic value.

Like many religions, the “shareholder value” religion started well: In the 1980s, American companies were bloated and lethargic, and senior management pay was so detached from performance that shareholders were an afterthought.

But now the pendulum has swung too far the other way. Now, it’s all about stock performance–to the point where even good companies are now quietly shafting other constituencies that should benefit from their existence.

Most notably: Rank and file employees.

Great companies in a healthy and balanced economy don’t view employees as “inputs.” They don’t view them as “costs.” They don’t try to pay them “as little as they have to to keep them from quitting.” They view their employees as the extremely valuable assets they are (or should be). Most importantly, they share their wealth with them.

One of the big problems in the U.S. economy is that America’s biggest companies are no longer sharing their wealth with rank and file employees.

Consider the following two charts:

1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before.

Corporate Profit Margins

Business Insider, St. Louis Fed

2) Wages as a percent of the economy are at an all-time low. This is closely related to the chart above. One reason companies are so profitable is that they’re paying employees less than they ever have before.

Wages To GDP

Business Insider, St. Louis Fed

When presented with these charts, many people invoke one of two arguments. First, technology is making employees irrelevant. Second, low-skill jobs command low pay.

Both of these arguments miss key points: Technology has been making some jobs obsolete for 200+ years now, but it is only recently that corporate profit margins have gone through the roof. Just because you can pay full-time employees so little that they’re below the poverty line doesn’t mean you should–especially when retention is often a problem and your profit margin is extraordinarily high.

More broadly, what’s wrong with this picture?

What’s wrong is that an obsession with a narrow view of “shareholder value” has led companies to put “maximizing current earnings growth” ahead of another critical priority in a healthy economy: Investing in human and physical capital and future growth.

If American companies were willing to trade off some of their current earnings growth to make investments in wage increases and hiring, American workers would have more money to spend. And as American workers spent more money, the economy would begin to grow more quickly again. And the growing economy would help the companies begin to grow more quickly again. And so on.

But, instead, U.S. companies have become so obsessed with generating near-term profits that they’re  paying their employees less, cutting capital investments, and under-investing in future growth.

This may help make their shareholders temporarily richer.

But it doesn’t make the economy (or the companies) healthier.

And, ultimately, as with any ecosystem that gets out of whack, it’s bad for the whole ecosystem.

So, for the sake of the economy, we have to fix this problem.

Ideally, we would fix it by getting companies to voluntarily share more of their wealth with their employees. But the “shareholder value” religion has now been so thoroughly embraced that any suggestion of voluntary sharing is viewed as heresy.

(You’ve heard all the responses: “The only duty of a company is to produce the highest possible return for its owners!” “If employees want to make more money, they should go start their own companies!” Etc. Beyond basic fairness and the team spirit of we’re-all-in-this-together, what these responses lack is any appreciation of the value of personal loyalty, retention, respect, and pride in the workforce. People love working for companies that treat them well. And they’ll go to the mat for them.)

Anyway, it would be great if companies would start sharing their wealth voluntarily. But, as yet, with a couple of notable exceptions (Apple recently gave its store employees a raise it didn’t need to give them), they’ve shown no signs of doing that.

So if companies can’t be persuaded to do this on their own, maybe it’s time to rethink our view of labor unions.

Although correlation is not causation, the chart below suggests that labor unions might be able to help induce companies to share their wealth, at least in some industries.

This chart is from EPI. It is based on the work of Piketty and Saez (the deans of inequality research).

The chart shows the correlation between the share of the national income going to “the 1%” with membership in labor unions.  What it suggests is that, as unions have declined, income inequality has soared.

Income Union Membership

EPI, Felix Salmon

Again, right now in this country, we have the painful juxtaposition of the highest corporate profit margins in history, combined with one of the highest unemployment rates in history. We also have the lowest wages in history as a percent of the economy.

That’s not good for the economy… because rich people can’t buy all the products we need to sell to have a healthy economy (they can’t eat that much food or drive that many cars, for example).

And it’s also just not right.

Healthy capitalism is not about “maximizing near-term profits.” It is about balancing the interests of several critical constituencies:

  • Shareholders
  • Customers
  • Employees
  • Society, and
  • The Environment

It’s time more of our business leaders started to understand that.

Reverse public spending cuts, introduce progressive measures to boost jobs and growth: CUPE

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Government spending cuts have increased unemployment, are slowing economic growth, and are diminishing services and standards for Canadians.

In its pre-federal budget submission to the House of Commons Standing Committee on Finance, CUPE is expressing deep concerns over the harm these imposed austerity measures are having on Canadians, and the need to strengthen social programs, like the Canada Pension Plan (CPP) and Employment Insurance (EI).

Canada’s economic growth has been much slower than it was in previous recoveries. Federal spending reductions will slow the economy by an average of one percentage point (or close to $20 billion) a year and reduce employment levels by over 100,000, as estimated by the Parliamentary Budget Office last year.

CUPE is recommending an expansion of public services that could generate hundreds of thousands of additional jobs, boost wages, living standards and economic growth. The vast majority of individual Canadians and businesses would benefit from federal government measures focused on improving public services, boosting the economy, generating jobs and reducing inequality.

CUPE also recommends expanding the Canada Pension Plan by phasing in modest contribution increases over seven years that would in time double benefit levels. Improving CPP would benefit all workers, help stabilize existing workplace pension plans, increase economic security and stability for communities, reduce poverty and reduce pressure on social assistance programs.

When CPP contribution rates were last increased, unemployment fell significantly. The increase in contribution rates that we envision is considerably less this time. Polling shows that 75 per cent of Canadians support an expanded CPP, as do many pension experts and the majority of provinces.

CUPE is also advocating for the immediate reversal of cuts to Employment Insurance made in Bill C-38 that reduce eligibility for benefits, force claimants to take unsuitable and lower paid jobs and eliminated the EI Board of Referees.

Introducing different classes of claimants and changing access to EI benefits particularly hurts seasonal workers and those in precarious employment most, including women, youth, low income and other marginalized workers in communities across Canada. Changes to the appeals process has reduced fairness for claimants unjustly rejected. All workers are negatively affected as such changes drive down wages.

Pre-budget submissions are being accepted until August 5, 2013.

Read CUPE’s pre-federal budget submission
(357 kB)