When engaged in contract negotiations, it’s illegal for a company to “plead poverty” in an effort to derail the union. Management is not allowed to say that they can’t afford to give the workers a raise, or to suggest that if they granted the workers the wage increases they requested, the company would risk going out of business.
This prohibition is not only fair, it’s necessary. Without this rule, unions would have no options, no place to turn. All a company would have to do is put on their long face and tell the union negotiators that, unfortunately, if the employees were granted the raises they asked for, everybody would be on the street looking for work. It’s a game-stopper.
True, there are ways around it. Companies whose healthy earnings are reported in the Wall Street Journal have no choice but to shift tactics. What they do is pit one plant against another (“whipsawing”), ominously hinting that if “crunch time” ever comes, only the low-cost facilities will have a future. But companies can’t pretend to be poorer than they are; it’s a violation of federal labor law.
In those rare instances where a company actually does plead poverty, they are required to open their books to either the union or an agreed-upon third party (an independent accounting firm), and this third party, after examining the company’s books and assessing the damage, reports its findings.
I saw this happen once with a local in our International. Because the tiny, 70-year old paper company was trying to compete in a market increasingly dominated by the conglomerates, it told the union that not only couldn’t it afford wage increases, it would require massive, across-the-board concessions to have any chance of staying afloat.
Although the union knew the company was struggling, it had no idea things were this bad. When the union asked that outside auditors be brought in, the company surprised them by throwing open their books. “Here,” they said, “look at the numbers yourself. We’ve nothing to hide.” It was bad news all the way around. They were going broke (alas, they went out of business two years later).
At the other end of the spectrum you have what is currently happening at the Mott apple juice plant in Williamson, New York. At Mott, owned by the Dr. Pepper Snapple Group (DPS), 305 hourly workers, members of the Retail, Wholesale, Department Store Union/United Food and Commercial Workers (RWDSU/UFCW) Local 220, have been on strike for more than three months, having walked out on May 23. The union is resisting big pay cuts and other concessions.
Despite record productivity and hefty profits, DPS has decided to reward Mott’s competent and loyal workforce by attempting to chisel them out of as much of their wages and benefits as possible—as much as the market will bear. Why are they doing it? Why are they ravaging the very people who made these profits possible? Because they can.
As a publicly traded corporation, DPS is utilizing the classic Wall Street argument, telling the union that the reason it’s screwing the workers out of their money is because it has a greater obligation—i.e., to maximize shareholder returns. Meanwhile, Larry Young, the company’s CEO, earned $6.5 million in 2009, double what he made in 2007.
And it’s not as if the Mott folks are raking it in. Seventy-percent of the workers at Mott earn less than $19/hour. Even at the full $19/hr., if you work 40 hours a week, 52 weeks a year, with no time off, it computes to $39,520 before taxes, which, for a family of four, doesn’t come close to gaining entry to the middle-class. Even in these recessionary times, $40K is a subsistence income.
Rewarding shareholders at the expense of the men and women who actually produce the goods evokes the Vietnam war. Americans telling Vietnamese peasants that, while they regret the horrors of napalm, they own stock in Dow Chemical. Or, as Tom Hagen said to Santino Coreleone in The Godfather, “It’s business, Sonny!”
David Macaray, a Los Angeles playwright and author (“It’s Never Been Easy: Essays on Modern Labor”), was a former union rep. He can be reached at email@example.com