« Prescription For Failure | Main | Winning Product Strategy: Taking Responsibility »
January 29, 2006
Beggar Is Better
The path to a growing, robust economy is through impoverishing workers, according to Eduardo Porter of the New York Times. You see, here's the skinny: Unions have been too successful. Private-sector union members, on average, make 23% more than non-union employees. This, in turn, means that unionized companies -- such as Ford and GM -- operate at a severe competitive disadvantage. Porter must believe this is the sole disadvantage explaining why these auto giants have announced layoffs of 60,000 workers in the past few months. Porter doesn't seem to think product strategy, distribution channels, shareholder value demands from the financial markets, executive compensation, or anything else is worth throwing into the mix of any explanation about the failures of these companies. Or, at least if he is thinking such things, his editors have deleted such musings.
You see it's that 23% advantage that's killing competitiveness. The path to business success, by this logic, lies in reducing the wages of workers (and, of course, it also lies in reducing health and other benefits). Beggar thy workers! That's the answer!
It's an answer and strategy that has characterized the US economy for decades. Real wages have steadily declined for more than thirty years. Meanwhile, folks at the top of the heap are doing better and better. Since we're looking at car companies, let's consider Michigan. In the past 20 years, families in the bottom 60% of the population have seen their incomes rise a total of, at most, 26% -- or at best just over 1% per year. Those in the top 5% in Michigan -- the auto executives and other well-to-do who guide the economy -- have seen their incomes double -- rise by a total of over 100%; or, straightlining for simplicity, by 5% per year. Put in dollar terms, the lowest sixty percent of families have gotten pay raises of between $165 and $2200 per year while the top folks have seen their incomes rise by over $4800 per year for 20 straight years.
The same pattern pertains in other states. And, according to a spokesperson for New York's Business Council, this is a great thing because the wealthy pay 'huge sums in taxes' enabling New York State to have generous social services for the poor.
So, here's the strategy: Beggar workers so that companies can be competitive so that the executives and shareholders of those companies can continue doubling their incomes every twenty years so that those folks can pay 'huge taxes' to support government social services needed to respond to poverty which, of course, will be rising rapidly as we make sure that workers continue to see their incomes remain flat to declining and any health and other benefits disappear.
To Eduardo Porter and the editors at The New York Times this is as good as a glory road to national health and prosperity. And, it's all down to the the success of the American Union movement.
