Monday, September 1, 2014

Labor Day and the Parable of Market Basket

Therefore, my beloved, be steadfast, immovable, always excelling in the work of the Lord, because you know that in the Lord your labor is not in vain.
I Corinthians 15:58

Paul it taking the long view. In the end, everything matters. Nothing is lost. What we do makes a difference, and it makes a difference forever.

But in the short run, for many workers, their labor does seem to be in vain.

Things have improved. It is not as bad this Labor Day as it was a year ago, but that’s not saying much. A New York Times editorial points out that a year ago economists were estimating that it would take until 2021 to replace the jobs lost or never created since the recession of 2008. At the current rate of job growth the new date would be 2018.

The economy as a whole is growing. But labor is not sharing in that growth. In 2013 the after-tax profits of American corporations, measured as share of the total economy, equaled the record year of 1965. Wages, on the other hand, were at their lowest level since 1948. Productivity has increased dramatically, but wages have remained stagnant, resulting in large gains for corporations, and the wealthiest among us, while low and middle income workers have not benefitted, and have actually seen their wages decline over the past year, when we adjust for inflation.

At the very bottom of the workforce, there is an exception to the overall trend. The lowest 10 percent of workers made a small gain as a result of increases in the minimum wage enacted in thirteen states this year. That modest gain gives us hope that lifting the federal minimum wage might result in broader benefits.

There is no mystery in this. As Elise Gould points out in a research paper written for the Economic Policy Institute, the issue is our economic policy. And we can change it.

We can build our policy around labor, rather than around corporations. And we can change the tone of the national conversation.

Modern corporations do not treat workers as an asset. They are treated as a liability.

This is not only a problem for low wage workers. As an example, consider the widespread strategy of classifying employees as independent contractors, and workers as supervisors, in order to avoid in order to avoid paying the wages and benefits that would otherwise be required. The Times editorial observes that in California and appellate court recently ruled that Fed-Ex drivers are employees, not independent contractors, and therefore eligible for employee benefits. And the Times points out that “Decades of outsourcing government jobs to the private sector has undercut public employment, once a mainstay of middle-class life, even as evidence has mounted that outsourcing often does not save money or improve services.”

It is not a good story, but there is a counter-narrative.

The story of Market Basket might be a modern parable. The family owned chain has been immensely successful over the decades, expanding from a single store to their present total of 71 located in northern Massachusetts, southern Maine and south eastern New Hampshire. Earlier this summer, Arthur S. Demoulas engineered the ouster of his cousin, Arthur T. Demoulas, the long time CEO because he and other family members believed that Arthur T’s pro-worker, pro-consumer approach was limiting their dividends.

Arthur T, as he is known, built the business with his sharp business acumen and an intentional long term investment in his employees. They have generous wages and benefits, including profit sharing even at the lower end of the work ladder. They are also committed to promoting from within. The result is that they have many employees who have been with the company for decades, are very skilled at what they do and very committed to Market Basket and to Arthur T.

After the firing of Arthur T, there was an uprising. The non-union workforce basically went on strike in support of the man they believed had always supported them. As worker after worker repeated, “Arthur T. has always been there for us.” E. J. Dionne described the story in the Washington Post: “. . . eight senior managers organized an employee protest. They were quickly fired. Then all hell broke loose. The lion’s share of the employees at the chain’s 71 stores joined the protest, fully aware that they had no job protection. Market Basket’s customers (there is great affection for the chain) were drawn to the workers’ side.”

Dionne continues, “This worker-consumer alliance bore fruit last week when a $1.5 billion deal was arranged under which Arthur T. assumed control of the company, which has annual revenue of $4.6 billion. That is not the end of the story, of course. The new deal requires a ton of capital and that will affect the chain’s bottom line. It will be a challenge, but Arthur T. and his loyal employees believe they are up to it.

In his address to employees and supporters at a victory rally, Arthur T. told the group, “In this organization, here at Market Basket, everyone is special.” He went on to explain, “You have demonstrated that everyone here has a purpose. You have demonstrated that everyone has meaning. And no one person is better or more important than another. And no one person holds a position of privilege. Whether it’s a full-timer or a part-timer, whether it’s a sacker or a cashier, or a grocery clerk, or a truck driver, or a warehouse selector, a store manager, a supervisor, a customer, a vendor or a CEO, we are all equal. We are all equal and by working together, and only together, do we succeed.”

It is a victory for workers, for consumers, for fair working conditions, for community values, and for a compassionate capitalism that is committed to doing good while doing well. But it is not a universal solution to the problems of laborers and corporations in America. The Market Basket victory was possible only because Arthur T. was able to raise what the Boston Globe called “a boatload of cash” to buy out Arthur S. But even with all the caveats, it is still a ray of hope.

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