Guardians Of The Old Economic Order Must Change Or Die

Posted: Apr 19, 2019 10:42 AM
Guardians Of The Old Economic Order Must Change Or Die

Source: AP Photo/Susan Walsh

The stories of the collapse of the American retail industry are as ubiquitous as they are unfortunate. Online shopping has spread beyond books and movies to everyday consumer products and specialty items. Consumers have caught on to the fact there’s no need to run to the corner store when a few clicks on the computer get you what you need, probably cheaper and delivered too.

It’s a purchasers’ paradise. For business though, it’s not so good. The established economic order built up over decades after the end of World War II is changing more rapidly than the firms that comprise it can adapt. They missed the cues and are dealing with the consequences.

We’ve seen the shakeout in heavy industry. Those jobs have gone overseas or been eliminated by robotics and other changes that have produced productivity gains at lower cost. The U.S. auto industry retrenched during the 80s and again during the Obama years. It likely survives but in a very different form, producing very different products than what they and we are used to.

Retail is changing too, from clothing salons and jewelry emporiums to garden centers and grocery stores, goods of all kinds at every price point can be purchased online. Groceries especially are in danger of elimination from the competition coming from companies that send prepared meals you fix at home through the mail. It’s the kind of situation that calls for collaboration from management, labor, and customers if the American way of shopping is to survive.

Whether it will or not may depend on the outcome of a labor dispute currently underway in Connecticut, Massachusetts, and Rhode Island. Unable to come to an agreement with Stop and Shop, one of the last remaining unionized companies in what used to be an industry rife with them, the United Food and Commercial Workers’ union told the supermarket’s 31,000 employees in these three states to go home until further notice.

It’s one of the largest strikes to hit the grocery industry in 15 years. They’re arguing over the usual things – pay, benefits, overtime, pensions. The company’s offer is generous considering prevailing market conditions. It’s already agreed to the continuation of the 100 percent company-funded defined benefit pension plan, something that’s become a rarity in corporate America. And nearly all its associates would receive wage rate increases, suggesting the economic boom sparked by the Trump tax cuts really is reaching workers despite what its detractors continually say.

The realities imposed by competition unimagined even a decade ago require everyone to be flexible, but union leaders are standing firm in what may be their last stand. There are plenty of grocery chains that used to get my patronage that don’t any longer because they’re not there. They were killed, not purely by competition but by the refusal of the union to bend to the new reality.

It’s no wonder efforts to organize workers in places where union membership is optional are being rebuffed time and again. The private sector unions have for years been losing members at what must seem to their leadership to be an alarming rate. They’re not needed anymore, especially when so many of the members have private pension accounts and other benefits made possible by economic growth. They don’t need an intermediary with muscle any longer to represent them in fights with management. Owners and workers cooperating to improve the corporate bottom line are, more and more, the norm rather than the exception – especially since reforms in state and federal labor law made such things possible.

This, of course, leaves the unions mostly out in the cold. The adversarial relationship they encouraged between workers and management for so many years was an innovative way to ensure their continued usefulness, but that game has played out. All that’s left is for them to prove they matter is, occasionally, to call a strike, close a business, and hope everyone else gets the message.

Let’s hope that’s not what’s going on with Stop and Shop and the UFCW. Let’s hope they both come back to the table and find a way to make a deal. The job market is good right now. Unemployment, especially among women and minorities, is at or near all-time lows. But 31,000 people is a lot to absorb at one time, especially people with expertise in an industry that is changing as rapidly as the grocery industry is.

If unions in the private sector want to prove they continue to have value in the American economy they should be leading the way in getting to “Yes” when it comes time to renegotiate a contract rather than getting the workers to walk, putting their jobs in jeopardy.