business news in context, analysis with attitude

We had a story on Friday that about a fascinating new development in the area of labor relations - the creation of a new organization by the A.F.L.-C.I.O. that is designed expressly for nonunion workers who agree with the labor movement on many issues and want to campaign alongside labor on those issues. The organization is to be called "Working America," and the A.F.L.-C.I.O. hopes to attract more than a million members to its ranks - presumably from the employment rolls of assiduously non-union companies like Wal-Mart - to campaign and lobby on issues such as increasing the minimum wage and preventing the privatization of Social Security.

In our commentary, we said that it will be interesting to see if there is any sort of organized effort to persuade employees that they don't want to be affiliated with Working America…and then, any sort of backlash against employees who do join. We think that the battle between anti-union companies and organized labor will only get more intense over the next couple of years, fueled, perhaps, by 2004 presidential election politics.

Along this lines, we referenced a Washington Post Op-Ed piece by Harold Meyerson, who framed the argument by noting that in 1913, Henry Ford opened his new Model-T plant, he announced that "he'd pay his workers a stunning $5 a day on the revolutionary theory that the men who built cars should make enough money to buy them."

Contrast that, Meyerson wrote, to 2003, when Wal-Mart is the nation's largest employer, with 3,200 outlets in the United States and sales revenue of $245 billion last year (which, considered on a global scale, makes it the world's 19th largest economy), doesn't pay its workers "enough to buy decent cars, let alone homes. According to a study by Forbes, Wal-Mart employees earn an average hourly wage of $7.50 and, annually, a princely $18,000."

It is, Meyerson added, "one thing to live in a nation where the largest employer wants workers to make enough to afford its cars; quite another to wake up in an America where the largest employer wants workers to make so little they'll be compelled to buy low-end goods in a discount chain."

MNB user James Curley responded:

I don't think it's only the famed 'business cycle' that is cyclical. It appears that issues like the dignity of work, fair pay for labor, fair treatment of employees, etc. come to the fore when there is significant abuse of employees by management or the perception of it among average people working for a living. Clearly, many, many corporations treat people well and fairly and as a result, union membership has declined in recent years. Also, many more people work in 'white collar' professions (management) than was the case 30 years ago. These professions are rarely represented by labor unions.

At the turn of the century, when labor unions began to flower in this country, the actions of the 'robber barons' created a climate where Americans believed that corporations had more rights than citizens and that the situation was fundamentally unjust. Though the issues then were child labor, workday length, and so on, most people agreed that some standards must be created and enforced. I think a new cycle is beginning. Both corporations and unions (which have become corporations, even if 'non-profit') have high profile instances of corruption, abuse and mistreatment of average folk. On the corporate side, the spectacular plundering of 'average joe' shareholders, especially pension plan investors, by executives at Enron and Worldcom, has created a new image of 'robber barons'. Mis-management debacles (like Fleming and Kmart in our industry, United Airlines, etc.) have lowered general confidence in management to look out for worker's interests. On the union side, proven infiltration of organized crime into unions and a strongarm approach to dues collection and membership retention has created a distrust of 'big labor' as well.

The AFL-CIO's initiative is intriguing in that it may represent a new approach to influencing legislation regarding labor without requiring union membership. Being a natural skeptic, I will wait and see to be sure it's not just a 'pre-union' membership scam but I hold out the hope that it may actually signal a new era in the relationship between workers and the corporations who employ them. It's possible the AFL-CIO has discerned the difference between the workplace of 30 - 40 years ago and the workplace now, and is moving to accept and address the new reality. Let's wait and see.

MNB user John B. Moss chimed in:

You describe an awkward situation - Wal-Mart is the nation's largest employer [and] doesn't pay its workers "enough to buy decent cars, let alone homes. According to a study by Forbes, Wal-Mart employees earn an average hourly wage of $7.50 and, annually, a princely $18,000."

Hey! Safeway terminated me (an experienced IT programmer/project leader) in favor of going Offshore where salaries are 1/10th of what I earned. In fact, $18,000 looks a lot better to me now than zero.

I wasn't given the option of continued employment, nor do I understand how $18,000 can be considered 'princely'. I just know I'm not alone, and that tens of thousands of professionals like myself are scratching our heads in disbelief...

There was an amazing piece in The New York Times on Sunday about the unusual lengths that people are going to in order to get hired after months, sometimes years, of being unable to land a job. In turn, companies are coming up with unusual ways to screen the plethora of job candidates.

In one case, a New York advertising company decided to set up a "Survivor" style contest, with 10 people chosen to compete over a 10-day period, doing a variety of tasks - all so one of them (the last one standing) can have an entry-level job. The agency CEO says that "we're not going to denigrate or degrade people," but adds, "somebody else's idea of humiliation isn’t the same as mine."

All this seems to run counter to the positive economic signs that we keep hearing about.

MNB user David J. Livingston had a different perspective:

For $16 I would join it. Just for the fun of it.

Everyone in labor is always bitching about how Wal-Mart doesn't pay well. Of course if you are a cashier or a door greeter you are not going to make big bucks. But I think those in management do very well. The low level jobs at Wal-Mart are not supposed to be family supporting wages. It's just a fun kind of job - something you do in your spare time. If you want to earn a living - work somewhere else. No one has a gun to your head that says you have to work for Wal-Mart.

We have to disagree with you here…on a number of points.

For many people, Wal-Mart is the only way to make a living and has to provide the wage on which one has to support a family - simply because it may be the largest employer in a community, or may be the only place where one can work and still live up to the responsibilities of being a single parent, or maybe is the only place to work where specific skills aren't required.. And sometime there is a gun up against people's heads - the gun of reality.

Furthermore, we think it is pretty easy to describe working at Wal-Mart as "just a fun kind of job - something you do in your spare time" when you aren't the one who has to do it.

We continue to get email on the role of self-checkouts in the shopping experience. One MNB user wrote:

Self Checkouts have helped retailers to give customers another alternative to standing in lines. Interestingly though, at a local supermarket, I have seen lines at the Self Checkouts when there were cashiers with far fewer customers. Unfortunately, there is one glaring problem with the new checkouts. Customers have figured out how to scam on coupons. They will scan the coupon and either not put it into the coupon slot or put in a blank piece of paper. Retailers have had to post signs telling the customers that they must go to the podium to redeem their coupons. It was costing retailers a lot of money in lost coupon dollars. It really has taken away the ability to go smoothly through the checkout with no human intervention. This is definitely an opportunity to use the electronic clearing process for coupons.

Regarding our stories and commentaries about consumer concerns regarding biotechnology and genetically modified ingredients in food, one MNB user wrote:

I'm still wondering to whom all these "consumers" are expressing their growing GMO concerns? I keep hearing about this issue from media sources but rarely - if ever - get so much as a question from a real live customer.

We would agree that most of the concerns seem to emanate from Europe and, according to recent reports, Canada…but not much from the US at the moment. There's no way to know when, where and how, but we suspect that will change, and that US consumers will become sensitized to the issue. Which is why we think that a policy of being up front about the issue and its implications is, in the long run, smart business.

We had a story on Friday about a tentative agreement reached by the International Brotherhood of Teamsters union and Costco that the union said will keep "Costco workers the highest-paid workers in the retail industry." We noted that the phrase "highest-paid workers in the retail industry," isn't one that necessarily resonates well with industry observers and analysts, especially because Costco is facing rejuvenated competition from a revived and aggressive Sam's Club.

In our commentary, we expressed concern that Costco would focus too much on the costs, and too little on its customers. Costco, which always has had an eclectic approach to the business, focused on unusual products, great wine selections, and a greater emphasis on quality, may be facing an economic pinch because of what some perceive as being a cost structure - especially in the area of health care and compensation - that puts it at a disadvantage.

If Sam's Club gets even more aggressive on prices, that could force a price-driven response from Costco, which would put pressure on its already slim margins. Sam's also has tight margins, but it has the advantage of being a division of Wal-Mart, which allows it some flexibility that Costco may not have.

These are shareholder issues rather than customer issues…because at least from this consumer's point of view, Costco's offering seems vastly superior that of Sam's.

We hope that Costco is able to keep its eye on the ball, remembering that the real customers that matter are the ones in the stores, not the people on Wall Street. Satisfy us when we walk into the store, and everything else should fall into place.

One MNB user was skeptical about our logic:

How long will (customer satisfaction) occur when they start raising prices???????

We almost always are satisfied by Costco…and it has little to do with its prices. (Though they help…) And when price matters, it usually is in comparison with supermarkets and other retail outlets, and never in comparison with Sam's or BJ's.

We had a story on Friday about Dunkin' Donuts aggressive strategy for growth, which includes opening as many as 2,000 new stores around the country, some of them in new markets for the company that include Atlanta, Cleveland and Detroit; development of new menu items to compete with Starbucks at a lower price point, including espresso-based drinks scheduled to launch in October, low-fat muffins, scones, frozen yogurt smoothies and low-fat coolattas; and seeking out nontraditional venues for Dunkin' Donuts outlets, such as colleges, hospitals and stadiums, and even having a Dunkin' Donuts truck that would to go to Little League games and community events and sell (products) off the back of the truck.

One MNB user wrote:

If the Dunkin’ Donuts truck makes customers chase it for a quarter mile before stopping, they could market that they’re doing something about the obesity problem! They’d be market leaders in this concept…

Great idea!

And another MNB user wrote:

Tell them to add Columbus on their list and get 'em here fast. I can almost taste that ice coffee on this "dog day" of summer.

There were two stories on Friday to which we received a number of responses.

One was our piece on Jancis Robinson's wine column about the burgeoning Australian wine industry, pointing up both its strengths and weaknesses.

According to the column, the American market for Australian wine is still in its at its nascent stages of development, and in fact Americans probably are paying inflated prices for Australian wines that are overrated. This contrasts with the UK, where the British at first embraced name-brand Australian vintages, then turned against them…seemingly just on principle. In essence, Australian wines seem to be broken into two categories - overpriced vintages coming from small but overrated vineyards, and "big, bad brands" that are simply undistinguished.

"But the really interesting wines of Australia fall into neither of these categories," Robinson writes. "They are valid expressions of the particular place they are grown, made by devoted craftspeople the same way as the finest wines of anywhere else are. Most of them are produced by smaller wineries but some of them are made by much larger organizations. In general terms they are likely to be found in Australia's cooler wine regions because subtlety commonly results from a longer growing season -- but that is a horrible generalization trounced by the unique magnificence of a Chambers Rutherglen Rare Muscat, the gentle subtlety of a Henschke Hill of Grace or a passionate innovation such as Primo Estate's Joseph Sparkling Red….

"It is up to the importers of Australian wines around the world to get off their backsides and make sure their customers are exposed to the best that this extraordinary and varied country has to offer…"

One MNB user wrote:

I think the terms overpriced and overrated is a bit harsh -- most of the wines from Oz available here in the Sunshine State are neither.

We were at a birthday party some months back that was BYOB. (First sign you're getting old -- BYOB results in 1.5-litre bottles of decent wine, not a 6-pack of the cheapest suds you can find...!)

EVERY BOTTLE that appeared was an Australian Shiraz of some label or another. None were knock-your-socks-off, but wine wasn't the point of the evening, either -- celebrating a birthday was. Some were better than others, no doubt -- but every one of them was very, very drinkable. And every one was purchased for less than $10 (for the 1.5-litre).

A product that lots of people like, available where lots of people shop, for a price that lots of people are willing to pay. Isn't this what you were talking about?

Hey, you'll get no argument from us. We had a fabulous Australian wine over the weekend…but we'll have more about that on Friday.

MNB user Ron Rash wrote:

Interestingly I just read an article in the Economist wherein that publication generally credited the burgeoning Australian wine industry to the fact that Australia agreed some years ago to quit naming their wines after European appellations (Chablis, etc.) and to begin using their own, unique names. Apparently the wines began to sell on their own merits (or mystique).

The article claims that the Aussie wines now out sell French wines in America.

And finally, it was simply amazing how many people wrote in about the question that one MNB user posed about whether a Twinkie would explode when placed in a microwave.

Literally dozens of you wrote in to tell us that there is a website that has all this information:

According to this site. "T.W.I.N.K.I.E.S. stands for Tests With Inorganic Noxious Kakes In Extreme Situations.

"T.W.I.N.K.I.E.S. is a series of experiments conducted during finals week, 1995, at Rice University. The tests were designed to determine the properties of that incredible food, the Twinkie."

And dozens of MNB users knew about it.

Which makes us prouder than you can possibly know…
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