Light On Dark Water

Something Wrong and Something Right

This is a followup to that post of a few weeks ago, What's Wrong, about the exclusion of the workers in a corporation from a share in its prosperity.  Having such a share would imply a share in its un-prosperity as well, but in too many cases workers get the latter without the former.

I noted that a major part of the problem is that "The workers are considered no more than a cost of doing business, their wages no different from the price of steel." Apropos that mentality, someone sent me a link to this Washington Post story which rejects the idea that "maximizing shareholder value" is the only thing the managers of a company should worry about it, and calls for a return to a way of thinking in which all the "stakeholders" of an enterprise, a group which includes workers as well as shareholders, should be considered in decisions. Sounds right to me, especially when you consider that the term "shareholders" often, maybe most often, signifies not people who put money into an enterprise in the belief that it will succeed but those who are gambling on short-term fluctuations in the stock price.

And, related: I found out the other day (from a Facebook post) that the Publix supermarket chain is employee-owned, and is doing very well. I was surprised to hear that they are employee-owned, but not that they are doing well. A Publix store opened in my town a year or two ago, and immediately became very popular. Its prices are a little higher than others', but not dramatically higher, and the store is more pleasant than most, within the limits of the fact that it's a supermarket. I don't mind going there (they have Marmite!).The employees are unusually friendly and helpful, which I cynically took to be a manner forced upon them by their corporate masters as part of the justification for higher prices, wider selection, and nicer environment. But knowing that the company is owned by the employees, and that they have a very immediate stake in its success, makes it look a bit different. I believe this is an example of what is know in the business world as "incentive." Maybe there's something to it.

 

Maclin Horton
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32 responses to “Something Wrong and Something Right”

  1. Rob G

    I don’t think we have Publix around here yet, but I’ve heard similar things about Costco, the “warehouse” store. I remember reading somewhere that its founder/owner was a practicing Catholic and tried to run the business accordingly. I’m not a Costco member but my dad was, and the few times I went there with him I was impressed with both the prices and the friendliness/helpfulness of the staff. It struck me as almost a sort of anti-Wal*Mart.

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  2. workerbee

    “Having such a share would imply a share in its un-prosperity as well, but in too many cases workers get the latter without the former.”
    Yeah, workers never get laid off or have their hours reduced when a company is doing poorly (or even when the company is doing well).

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  3. Mac

    Publix is Florida-based, and apparently has only expanded regionally so far.
    Coincidentally, I was having a similar conversation about Costco and WalMart with one of my children, and the next day happened across a piece by Megan McArdle on the same topic. She’s pretty sensible, I find–not too ideological. And she said that the business models of the two are actually pretty different, and have more to do with the difference in wages. Here’s that piece. That doesn’t rule out that the founder/owner’s Catholicism is a factor; I hope it is. We don’t have Costco here so I have no experience of it.

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  4. Craig

    I’ve been to Costco a few times; it’s quite popular around here, especially with families. It’s a great place to buy 15 gallon barrels of mustard and 50 lb jars of pickles, and that sort of thing. Prices are low, which is the big draw.
    I’ve been mulling over a membership (one has to buy an annual membership), but I’ve yet to do so — as much as I like pickles and all. I didn’t know the founder was a Catholic.

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  5. Mac

    I’m not entirely sure what point you’re making, workerbee, but just in case mine needs clarification: what I meant in that sentence is that employee ownership has an obvious potential theoretical downside in that the employee’s fortunes are more directly tied to those of the company, but that in practice, especially for non-unionized employees, they are in that situation anyway. That is, they have the risks but not the rewards.

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  6. Mac

    Is there truly a 50lb jar of pickles?! That would probably meet my pickle needs for any likely number of years remaining to me.

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  7. Rob G

    Costco “specializes” in bulk products, but they have pretty good prices on other things as well. If you shop there a lot you make up the membership fee fairly quickly in savings, esp. if you have a family.

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  8. Mac

    Sounds more like Sam’s Club than WalMart. Not that I think Sam’s Club (a WalMart subsidiary) employees’s wages are any better than WalMart employees’.

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  9. Craig

    50 lb of pickles is perhaps an exaggeration. I just remember that everything was BIG, and I wondered where people had the space to store it all once they got it home.

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  10. Mac

    I am relieved to hear it. Personally I find lifting and carrying 50 pounds of anything somewhat taxing, and was trying to imagine a jar that heavy. And the mess that would be created if you dropped it.

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  11. Robert Gotcher

    “I wondered where people had the space to store it all once they got it home.” You apparently didn’t see their jumbo frig that requires a cathedral ceiling. 🙂

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  12. Marianne

    Very interested in any discussion of pickles because here in New Zealand there are no regular or kosher dill pickles to be found, just sweet gherkins. Can’t tell you what a deprivation this is for me. 😦
    Anyway, just went to the Sam’s Club website and there I see you can buy 5 gallons of dill pickles. In a plastic bucket, not a jar. Would that be somewhere around 40 pounds?

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  13. Marianne

    Thanks for the link to that McArdle piece, Mac. I especially like this part:

    …it’s no accident that the high-wage favorites cited by activists tend to serve the affluent; lower income households can’t afford to pay extra for top-notch service. If it really matters to you whether you pay 50 cents a loaf less for generic bread, you’re not going to go to the specialty store where the organic produce is super-cheap and the clerk gave a cookie to your kid. Every time I write about Wal-Mart (or McDonald’s, or [insert store here]), several people will e-mail, or tweet, or come into the comments to say they’d be happy to pay 25 percent more for their Big Mac or their Wal-Mart goods if it means that the workers are well paid. I have taken to asking them how often they go to Wal-Mart or McDonald’s. So far, no one has reported going as often as once a week; the modal answer is a sudden disappearance from the conversation. If I had to guess, I’d estimate that most of the people making such statements go to Wal-Mart or McDonald’s only on road trips.
    However, there are people for whom the McDonald’s Dollar Menu is a bit of a splurge, and Wal-Mart’s prices mean an extra pair of shoes for the kids.

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  14. Mac

    You’re welcome. I like her because although she comes from a somewhat right-leaning libertarian-ish view she seems to really make an effort to look at the actual facts rather than filtering them through her preconceptions.
    I’m sure that last bit is true, especially here, which is historically a poorer part of the country. But you have to wonder what the net effect of WalMart is–how does the disadvantage to the people whose income is reduced compare to the advantage of those whose money goes further?

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  15. Mac

    Your first comment was stuck in the spam filter. It’s weird and annoying the way it goes days without doing that, then does.
    A gallon of water weighs about 8 pounds, so 40 should be somewhere close. I guess pickles don’t float? therefore are heavier than equal volume of water.
    I’m not a great lover of pickles, but I don’t like sweet ones at all, so I have some sympathy. The question presents itself: what is wrong with New Zealand?

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  16. Marianne

    But you have to wonder what the net effect of Wal-Mart is–how does the disadvantage to the people whose income is reduced compare to the advantage of those whose money goes further?
    Yeah, definitely a dilemma. Plus there’s also the question of the need for jobs in areas with high unemployment and lack of available options.
    For instance, Wal-Mart just recently opened two stores in Washington, D.C., and there were huge demands for them to offer a higher wage but the mayor backed down. From an article in the Washington Post :

    Mayor Vincent C. Gray’s decision this week to veto a law requiring Wal-Mart to offer higher pay pitted support for a “living wage” against a desire to spur investment and job growth in the city.

    and

    The mayor said the measure would have harmed District residents, depriving them of access to Wal-Mart’s inexpensive groceries and other sale items. He said it would have blocked hundreds of jobs planned for Wal-Mart’s new stores — and turned off other retail chains that might have decided the cost of doing business in the District was too high.

    According to Wal-Mart, there were 23,000 applications to work at those two stores. Wow.

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  17. Mac

    That ratio of applicants to available jobs is not unusual when any big new business opens up. It ought to give pause to those on the right who are way too glib in asserting that there are a lot of people who simply don’t want to work. There may be, but I’m willing to bet that there are a whole lot more who want work and can’t find it.
    As it happens, I saw one of those DC WalMarts a few weeks ago. It was rather unusual in occupying two (I think) floors of a building that also housed other businesses (I think). I had wondered where they would put the typically sprawling WalMart complex in DC.

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  18. Will

    Costco is basically the same as Sam’s Club, maybe a little more high-end. It only works if you have a family or you’re a hoarder. I went one time about 7 years ago, and only just recently threw out the rest of a gigantic bag of sun-dried tomatoes I’d bought then. I think my other purchase was an entire salmon (their smallest portion).
    Re the DC city council opposition to Wal-Mart, the whole thing was just a ridiculous publicity stunt for some of the council members since the bill would have required only Wal-Mart to pay a higher wage, not the other large retailers that are already here (e.g. Target).

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  19. Mac

    Ha. I can’t imagine that that would have held up legally.

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  20. Anne-Marie

    I’d be interested in a comparison of Costco to other warehouse stores such as BJ’s or Sam’s Club–especially Sam’s club, because it’s owned by Walmart. I do have a large family, and I joined BJ’s because I calculated that their low price on butter would save me more than the membership fee. However, it turns out to be less frugal in other ways. The large packages do tend to have lower unit costs, but the large packages lead us to eat the contents faster.
    Re: lower wages vs. lower costs, I suppose that sometimes it may not be a tradeoff at all. For those (among the 23,000 applicants) who didn’t have a job, even a Walmart wage is an increase.
    I have to admit that, although I rarely shop at Walmart myself, I have a knee-jerk reaction against Walmart opponents, because I assume that they’re actually full of contempt for Walmart customers.

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  21. Mac

    That seems pretty clear (your last sentence). It’s a characteristic of much of the contemporary left to be officially in sympathy with the common folk but in fact disgusted by them. I don’t think it was always that way but the tendency really grew after the ’60s, when the revolution became more concerned with “lifestyle” (generally meaning sex) than economics.
    Regarding that tradeoff, I was thinking of the bigger picture–people getting cheap stuff in one part of the country means people losing jobs in another part. Or meant–I’m not sure that process is still active. Seems like most things that could be made cheaply in other countries already are.

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  22. Rob G

    I read a good book last year about that phenomenon — Cheap by Ellen Ruppel Shell. I got it out of the library and read it quickly, and meant to buy a copy and reread it more attentively, but I never did. Consequently, I don’t remember much of the detail. But she did make some very good points.
    I have a lot of issues with WalMart but the last straw for me was last year, when they were the ONLY store in our area that remained open on Easter Sunday. The malls were closed, the supermarkets had very limited hours, but there’s WM open as if Easter Sunday were just another day. Haven’t been in one since.

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  23. Mac

    I can’t remember whether they were open on Christmas Day here or not. I sorta think not, but Easter Sunday doesn’t surprise me in the least. I would almost be surprised if they did close. After all, Easter is “sectarian.” I would think Christmas closings would survive longer than Easter and Sundays in general. I’ve been wondering how long those kinds of religously-connected closings would last. I think most big chains now stay open on Sundays. There is absolutely no secular argument for making Sunday special in any way, but I guess the concept of the weekend will survive for everybody outside of retail stores. In many parts of Europe Christian holidays like Ascension Day are still holidays though almost nobody has the least thought of their original significance. But Europeans aren’t in general as aggressively commercial as we are.

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  24. Rob G

    Well, Christmas and Thanksgiving have become completely commercialized. Easter still retains some of its religious identity. The fact that everyone else was closed but W*M chose to stay open was what bugged me. If they were all open it wouldn’t seem as much of a slight (although imo it would be more damning of the culture overall).

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  25. Mac

    Interesting that everything else was closed. A little surprising, actually. I really don’t know if most places close here on Easter Sunday or not–I guess I never had occasion to notice.

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  26. Marianne

    New Zealand may not have dill pickles, but it does actually pretty much close down not just on Christmas Day but also Good Friday and Easter Sunday. Only a very few shops and I think restaurants can stay open. Retailers keep pushing for changes, though.

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  27. Mac

    Good Friday closing? That’s amazing.

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  28. Marianne

    I know. It really surprised me when I moved here. It’s not as if everyone flocks to churches, though. I think nowadays it mostly makes for a long Easter weekend.

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  29. Louise

    Good Friday and Christmas Day are still non-trading days in Tasmania.
    Somehow I had missed this post, Maclin, I’ll have to come back and read it when I have some more time.

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  30. Mac

    Was Australia historically as predominantly evangelical-anabaptist as the U.S.? It occurs to me that those traditions, which pretty much abandoned the church calendar apart from Easter and Christmas (I think), account to some degree for the absence of other traditional Christian holidays in the secular calendar.

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  31. Louise

    Australia was predominantly Anglican I think – low church I guess?

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  32. Mac

    That fits, I guess. I would think that even low-church Anglicans would still have some sense of the liturgical calendar.

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