Dave and Saul Discuss Market Basket

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Dave

Dave is a part-time blogger that writes about whatever suits him at the time.

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28 Responses

  1. Avatar LeeEsq
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    People usually go into business because they want to make a lot of money. Most people really don’t have much of a problem with that. The real issue is whether or not you can make a lot of money by treating your workers well or not. For some business people treating workers well is not contradictory towards generating wealth or its even part of the equation because well treated employees are more likely to aid you with your goals. For other business people, the opposite is true. Labor is a cost and you make money in business by keeping down costs no matter what. If this means that you can’t treat employees well than thats that unfortunately. We will never resolve this dispute, nor will we get universal practices about this.Report

    • Avatar Saul Degraw in reply to LeeEsq
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      @leeesq

      I’m not sure that I agree with this. I am not even sure it is true for many or most businesses. Sure everyone wants to support themselves but I don’t know or think everyone is out there to be Warren Buffet, Steve Jobs, or Bill Gates.

      I think there are plenty of lifestyle businesses where people are not looking for lots of wealth but just looking to do something that they enjoy instead of being really rich. Now many of these businesses might also fail but I am thinking of things like used bookstores, record shops, comic and hobby shops, gaming stores, coffeehouses, craft breweries, music stores (not big ones like Sam Ash), boutiques, etc.Report

      • Avatar LeeEsq in reply to Saul Degraw
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        @saul-degraw, there are a wide variety of reasons to get involved with a particular business and it is often a labor of love for many people. I’m still relatively sure that people want to earn a bit more money than simply sustaining themselves even if they don’t want millionaire or billionaire level of success.Report

    • Avatar Roger in reply to LeeEsq
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      says:

      I agree with Dave’s business strategy (as opposed to ideological) lens. How well you treat workers is a strategic decision much more so than ideological, and to the extent ideology trumps effective strategy, I question whether it will tend to lead to better outcomes for us collectively.

      First, there are benefits economically (to the employer) with having happy employees. Therefore, absent a COST of treating an employee well, an employer is making a mistake to not treat an employee as well as possible. It is a tactical error. Any reasonable employer would agree.

      But many forms of treating employees better DO have costs, and thus involve trade offs. Do I treat employees better, or give them more money, or lower my prices, or increase advertising, or improve product safety, or hire more people, or….

      Every firm makes strategic decisions on the exact mix that it follows. This is their overall strategy within the market. In addition, the mere existence of certain strategies enables others to emerge either as followers or competing/contrasting alternatives. Low cost providers open up the potential for higher quality, etc.

      Prospective employees similarly choose which type of employer to work for. Some choose higher than otherwise wages and worse than otherwise conditions, others choose the opposite. These choices feed into staffing quality, training and turnover costs and thus there is a feedback loop between employee preferences and employer treatment. There are also feedback loops between consumers and firms. In the end, the consumer votes with their dollar and decides winners and losers. Return on investment means those selecting superior overall strategies prosper and crowd out those choosing poorly. Over time losers disappear from the scene and only relative winners are left.

      As such, Lee’s comment …

      ” Labor is a cost and you make money in business by keeping down costs no matter what. If this means that you can’t treat employees well than thats that unfortunately. We will never resolve this dispute, nor will we get universal practices about this.”

      Is a mis -characterization of the issue. Treating employees well isn’t always a cost. When it is a cost it is part of a cost benefit situation. When it is a cost benefit, it becomes a strategic issue with tradeoffs. There is no single standard that all employers, employees or customers want nor would a universal practice be a panacea. It will however tend to resolve itself over time (continuously’ dynamically and never endingly) via competition and market discovery.Report

      • Avatar Alan Scott in reply to Roger
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        I think this is a simplistic view on two counts.

        First, it’s a mistake to suppose that all businesses treat employees the way they do for strategic reasons. I think it’s true of the centralized policies of large businesses, but not of smaller businesses, nor of managers of small units within larger businesses that have higher degrees of independent authority. These small business owners and independent managers are very often not thinking strategically, whether that involves treating employees well even when it’s strategically unsound or whether it’s treating employees poorly as an abuse of petty authority.

        Second, I am convinced that there are employers that treat employees badly, not because they do not want to bear the costs of treating employees well, but because they have adopted strategies that rely on negative or conflicted treatment of employees. Pick-up artists and cult leaders both treat their targets poorly because a target with less self-esteem is a target they have more power over. I believe that some businesses do the same thing with their employees.Report

      • Avatar Damon in reply to Roger
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        says:

        @alan-scott

        I don’t think it’s necessarily that employers treat employess badly due to some “employment game”. It could just be that the manager of that group only knows one way to “manage”. Maybe he’s not very good at interpersonal dealings but good with technical details or such.

        I see somthing similiar to this with “not being in the office”. Several managers have told me that they only cared about production/results. They didn’t care if you were physically IN the building. Others have told me “you may not have anything to do, but you are in the office not working”. No lie.Report

  2. Avatar North
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    says:

    I suppose whether Arthur S. lost or not depends on how much the firm he was going to sell his shares to was offering. If it was more than 1.5 billion then yes, he lost (though I’d agree with Saul that my sympathy is low for him).Report

  3. Avatar greginak
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    says:

    I’m not sure there are many things to take away from this case. Sure treating workers really well has some significant benefits but i don’t’ think that is a surprise. The many businesses that don’t treat their workers well, don’t care about it and don’t see any benefit.

    This doesn’t change my feelings about unions. Unions serve a valuable purpose given that many businesses still prefer to treat workers like rented mules. Some places without unions only treat their workers well to keep unions out, which supports the purpose of having unions.Report

  4. Avatar Mark Thompson
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    It seems worth mentioning that, because of how the NLRA is structured, what the employees did here may have been possible only because they were not unionized. What the employees did would, at minimum, fit within the general concept of a “wildcat” strike, which has long been illegal if you are unionized because it technically violates the notion of the union being an exclusive bargaining unit. It was done in an uneven and erratic manner that organized labor does not, to my knowledge, have the ability to do, but that is particularly unpredictable for the employer and thus very difficult for the employer to plan around.

    While a unionized employee base could have theoretically declared a uniform strike, I’m not at all convinced that this would have been overly successful. For one – to my knowledge, at least – unionized strikes usually need to be ratified by a supermajority of the union. While that can theoretically happen instantaneously outside of circumstances inapplicable here, as a practical matter, I’d expect that it would take some time to organize and properly ratify the strike, with the employer all the while having the opportunity to plan and prepare for the strike.

    I guess what I’m saying is that, while this does show the possibilities and value of collective employee action and of labor unionism very broadly, it does not provide much support for the form of unionism that has existed in the US since the NLRA was passed in the 1930s.Report

    • Avatar Jim Heffman in reply to Mark Thompson
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      says:

      Yeah; maybe what we’ve learned from this is that the good parts of being in a union don’t actually require you to be in a union.Report

    • Avatar North in reply to Mark Thompson
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      says:

      I’d say it lends credence to the theory that unionism is dying at least partially due to it being regulated to death.Report

      • Avatar zic in reply to North
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        says:

        The VW plant in TN revealed a huge problem with union regulation — lack of any facility for setting up a cooperative process. All our regulation creates an antagonistic relationship.Report

      • Avatar Mark Thompson in reply to North
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        says:

        That of course is what I’ve been arguing for years, so…..Report

      • Avatar Saul Degraw in reply to North
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        says:

        I think this is more due to Taft-Hartley and Republican control of the NLRB during the Bush II years than it is because of the NLRA in general.

        Before the NLRA, you had fun things like corporations basically having “internal security” departments which were no more than thugs on payroll who were meant to make union-busting quite literal. See the “Battle of the Overpass”. You also had incidents like Lawrence and many more of the National Guard being brought in to bust up strikes.

        I don’t see how returning to pre-NLRA is going to be good for unions.Report

      • Avatar North in reply to North
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        says:

        I dunno Saul, I have seen a lot of pro union types point out that Taft-Harley AND the NLRA were a deal where corporations made out well, government got a lot of control and the existing corporate structures were required to be really good to the existing unions. Then economies changed and vulture capitalism ate said existing corporate structures alive. Now many of the parts of the old deal that benefited the unions are mostly gone but all the chains constraining them are still alive and well.Report

      • Avatar Saul Degraw in reply to North
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        says:

        @zic

        I don’t think that is quite true. The problems with unionization in Tennessee were multi-fold but over regulation in the neo-liberal sense. The problems down South were:

        1. Southern States have long been the least friendly to union. Union success happened largely in places where the workers were not Anglo in origin. The unions succeeded in the Northwest because a large amount of the workers were Germans, Jews, Italians, Eastern Europeans, and others who did not care about Anglo-Saxon notions of individualism.

        2. Southern politicians threatened that jobs might disappear because of unions.

        3. The laws used to hamper unions are largely so called “right to work” laws which are not found in the NLRA but largely found in post-NLRA regulations as passed by right-wingers.Report

      • Avatar zic in reply to North
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        says:

        @saul-degraw all of what you say is true; and even given less-antagonistic union regulation, I doubt it would have passed.

        But up here in Maine, where paper was once king, I’ve watched a lot of the same problems, union regulation getting in the way of a union and a company working to make the company successful and so protect the union-workers’ jobs. I’ve written about it more then once.

        The way the dialogue between a union and management takes place is, by regulation, antagonistic. This is a problem; the opposite extreme of union leaders and management colluding. Somewhere in the middle, there’s a better spot.Report

      • Avatar Mark Thompson in reply to North
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        says:

        @saul-degraw Well, I think we have to start off by recognizing that the nature of the system is that people who don’t like unions are going to be in power about 50% of the time no matter what.

        Second, I’ll link to these two pieces again: https://ordinary-times.com/blog/2011/02/23/labor-roundtable-why-market-anarchy-favors-labor
        And
        https://ordinary-times.com/blog/2011/02/23/labor-roundtable-kevin-carson

        While Taft-Hartley is certainly a huge part of this issue as a whole, and should be repealed under most circumstances, in the specific case of what the employees in Market Basket are doing here, the obstacle to it being done in a union context would not be Taft-Hartley but rather the NLRA more generally. This is because what the employees in the Market Basket context have done seems to rely heavily on a decentralized approach that would be difficult to accomplish in an exclusive bargaining rights situation,which is what the NLRA creates. There are certainly understandable and appealing reasons for requiring exclusive bargaining rights in the collective bargaining context, but the flip side of it is that it acts to make unpredictable wildcat-type strikes very difficult, if not impossible regardless of any laws prohibiting them.

        This is not an argument for repealing the entire NLRA and saying that unions will be better off without it. As the first of my two links shows, there was actually quite a bit of regulation of unions prior to the NLRA, which was on the whole certainly an attempt to remedy the problems that largely stemmed out of government’s longstanding cooperation with anti-unionism. But because of how it formalized everything, it also left unions more of a sitting duck in the long run from a strategic standpoint if/when anti-union legislation was ultimately passed.

        Labor’s greatest leverage in the long run, particularly in the private sector, is its ability to throw management a curveball and be unpredictable. For all the advantages that the NLRA provided labor, it of necessity undermined this leverage by making labor more predictable and an easier target to hit. Whether that tradeoff was ultimately worth it is a separate question, but the point for our purposes here is just that the tradeoff exists, and the specific type of tactics that Market Basket employees used here would not be available in the context of a post-1935 union environment.Report

      • Avatar Saul Degraw in reply to North
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        says:

        @mark-thompson

        Your point rests on a legal decision that you conceded was bizarre. If courts went the other way (and you indicate that this would have been reasonable), we would see corporations using the Clayton Act against Unions left and right.

        Market Anarchy is one of those phrases that libertarians can use and be strident about while seemingly being unable to see why people might be highly unattractive to people on both the labor and corporate side.*

        I think the NRLA was really what legitimized unions. Before then, people were able to see unions as illegitimate and unions were often seen as illegitimate for the same reasons that some libertarians rail against them today about.

        The Battle of the Overpass happened after the NRLA was passed but it was only the law that recognized the right to Unionized, that caused Ford to admit it was in the wrong and finally sign a contract with the UAW in 1940.

        I think corporations would never recognize unions unless required to.Report

      • Avatar Tod Kelly in reply to North
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        says:

        “the theory that unionism is dying at least partially due to it being regulated to death”

        This seems a weird theory on so many levels.Report

      • Avatar Saul Degraw in reply to North
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        says:

        @tod-kelly

        Perhaps it is a #slatepitchReport

      • Avatar LeeEsq in reply to North
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        says:

        There is some merit to the idea that unionism is dying because of regulation. In the days before the Wagner Labor Relations Act or Taft-Hartley, you could form a union by having a bunch of people coming together and agreeing to create one. Hash out a mission statement and organization agreement at John’s after work. You can’t do this these days because the laws on union-forming have been formalized by law. The problem was that while it might have been easier to form a union, it was also easier for employers to ignore, not deal with, or even destroy a union back than by calling in the Pinkertons or even the Feds. While forming a union might have been easier, getting results through the Union was much much difficult. If there were laws regarding union formation, we might find more employees creating unions but the success rates of these ventures would be less than that of a really risky business venture.Report

      • Avatar Mark Thompson in reply to North
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        says:

        @saul-degraw For the specific purpose of the Market Basket issue, that decision is irrelevant. It is the NLRA that makes wildcatting illegal or at least damn near impossible in the context of a unionized employer.

        As for the rest, the numbers don’t lie – prior to the NLRA, the private sector unionization rate in the US was more than double its current rate. Now I concede that the NLRA itself increased labor’s power for the 15 years or so it was in effect before Taft-Hartley really kicked in, but my point is that formalizing unions in the way that the NLRA did, while providing a massive short-term boost to unions, also provided a stable target for management to shoot once it regained the upper political hand. And it was inevitable that management would eventually regain the upper hand politically.

        The NLRA plus Taft-Hartley, say the numbers, is at least arguably worse than having neither, even if the NLRA alone would have generally been good for labor, and even if the regulatory regime that existed prior to the NLRA explicitly disfavored unions. The problem is that once the NLRA created a static target, it was just a matter of time before we were no longer dealing with the “NLRA alone.”

        But that point isn’t what’s relevant for purposes of this thread. What’s relevant for now is only the recognition that there is in fact a tradeoff involved in the NLRA, which I don’t even think is debatable – there are tradeoffs involved in almost all legislation anyways.

        Market Anarchy is one of those phrases that libertarians can use and be strident about while seemingly being unable to see why people might be highly unattractive to people on both the labor and corporate side.*

        Oh, I get why it’s unattractive, particularly on the corporate side (and again, I have to reemphasize that this is beyond the scope of my point in this specific thread, which is only that the type of action in the Market Basket case would be illegal in a unionized environment because of the NLRA). I’ll even be the first to acknowledge that outright market anarchy across the board would be very bad for GDP, amongst other things.

        But it’s close to being tautologically true that anarchy in labor markets favors labor over management. After all, the tactics that labor has just about always used as negotiating leverage are tactics that attempt to either exploit or introduce chaos or uncertainty into management’s business – indeed, that’s the entire strategy underlying a strike or a secondary boycott or whatever.

        If you say “we’re all going on strike a year from now if you don’t give us what we want,” then management has a full year to plan for you being on strike: getting scabs lined up, making plans for outsourcing, building up a reserve, etc., etc. But suddenly have a significant part of management’s workforce walk out on strike without notice, though, or act in other ways that allow you to be a moving rather than a static target, and management’s in deep shit and has little choice but to negotiate and cooperate.

        And I’ll just add that none of this means that it’s inconceivable for there to be a regulatory regime that would in the long run be beneficial to labor. But for such a regime to be effective, it has to change the entire paradigm in which labor and management are set up as adversaries and instead sets them up as partners.Report

      • Avatar Saul Degraw in reply to North
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        says:

        @mark-thompson

        I concede that you and my brother have points about how it was much easier to form a union pre-NRLA. My brother is right though that it was easier to form a union, it was just as easy for management to ignore or bust unions and they often did. How many labor strikes and other tactics ended well for unions pre-NRLA? I can think of the dispute meditated by Teddy Roosevelt involving Pennsylvania miners but no others. This does not mean that they don’t exist but my understanding is that pre-NRLA, most strikes ended in victories for management and often brutal losses for labor. This includes: The Pullman strike, The railroad strike organized by Eugene Victor Debs, various conflicts out West which resulted in trials for labor leaders for murder, acquittal for the owners in Triangle Shirtwaist, etc.

        I think the decline in unionism has to do with Taft-Hartley, increased people entering the white collar work-force, and the fact that the post-War period might have been an economic freak incident if Pinkerty is right. Maybe the rise of the service and gig economies will see more people being inclined towards labor unions. Millennials are supposed to favor them more than older Generation Xers. The fast food industry seems like it will be a place for labor to get good victories and on the brainier side, adjuncts are starting to unionize.

        Anarchy can be good for labor. Wages and freedom for workers did rise after the Black Death in England. This was quickly oppressed by Edward III though. Can you think of a system that sees management and labor as partners instead of antagonists? Maybe Germany but nowhere else as far as I can tell. I think some or a lot of the antagonism could be innate. Hence snide talk about being “job creators”Report

      • Avatar Mark Thompson in reply to North
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        We probably need more data, but keep in mind that a lot of those pre-NLRA losses are going to be largely/primarily attributable either to:
        1. The government actively intervening against the unions, sometimes in brutal ways (the Pullman strike is exhibit A1 here); and
        2. Courts issuing injunctions under anti-trust laws.

        Part of my argument acknowledges that pre-NLRA was hardly an anarchist utopia for labor, and a remedial action of some sort was necessary. But I’d argue that much of it should have been to forbid government intervention in various disputes entirely.

        Again, though, it’s almost tautological that labor is at its strongest negotiating power relative to management in more anarchic conditions. The word “management” is synonymous with imposing control over a situation, ie, making the situation predictable in order to make it profitable. Unpredictability and chaos are the antithesis of management.Report

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