Economics 101: Black Friday, unionism and the changing face of employment

From the front page of The Philadelphia Inquirer:

Culprit in early store hours?

Maria Panaritis, Philadelphia Inquirer Staff Writer | Posted: Friday, November 23, 2012, 5:19 AM

In the rush to assign blame for the Christmas shopping frenzy that is taking hold earlier than ever — detractors assailed Target, Toys R Us, and Walmart for planned Thanksgiving openings this year — one must follow the fingertips of American shoppers.

Because the bogeyman boils down to this: online, online, online.

For decades, retailers made a bundle on Black Friday by packing stores with sale goods, filling Thanksgiving Day newspapers with advertisements, and reveling in revenue as customers rolled in the next day en masse.

Then came the Internet. And the old model crumbled like a Jenga tower at a holiday party. Retailers that open their doors at ungodly hours on and after Thanksgiving are competing with an online shopping realm where the doors never close.

Much more at the link; THE WALL STREET JOURNAL had a similar story. Turn to the interior pages of the Inquirer,1 and you’ll find this story from The Los Angeles Times, (also cited by Donald Douglas)

Unions, buoyed by election results, are taking a stand

Thousands of workers across the U.S. are striking and walking out of jobs rather than accept pay and benefit changes. Victories of pro-labor candidates give them hope.

By Alana Semuels, Los Angeles Times | November 21, 2012, 4:10 p.m.

They’re fed up and they’re not going to take it anymore.

That’s the case for thousands of employees across the country who are striking and walking out of jobs rather than accept changes to their pay and benefits. It might be a shot in the arm for a labor movement that had been left for dead but saw big gains in the November election as voters elected pro-labor candidates.

The number of union-related work stoppages involving more than 1,000 workers, which reached an all-time low of just five in 2009, rose to 13 this year as of October. And unions aren’t done yet.

Nurses are striking this week at hospitals operated by Sutter Health in California; workers voted against concessions at Hostess Brands Inc., forcing the company’s hand; pilots at American Airlines are wreaking havoc on the airline’s schedule as it tries to cut pension and other benefits.

The story continues to note — which is why your Editor is tying these two stories together in the first place — that a group called Our Walmart is asking Walmart employees to strike at the company’s stores nationwide during the busiest shopping time of the year. It’s a matter of perception and opportunity. Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California at Santa Barbara, is quoted as stating that as the economy get better and employees feel more secure in their jobs, they’re often more willing to take risks, saying, “Insofar as there’s an uptick in employment, workers can think, ‘If I get fired, I can maybe find another job.’”

Given that California’s state unemployment rate of 10.1% in October was third highest in the nation,2 your Editor wonders just how a professor in California can talk about workers being more confident about holding their jobs. He may, however, have been thinking more about the nurses at Sutter than the employees at WalMart; registered nurses can find jobs reasonably easily. For WalMart workers, or workers in any retail store, the Christmas shopping season provides them with the greatest ability to negatively impact their company’s profits, but for a company like WalMart, with a high unemployment rate and positions which require relatively little training, the ability to replace easily workers who walk off the job is fairly high. Couple that with a possible loss of market to online retailers, and brick-and-mortar stores might not need as many employees in the future anyway.

Let’s go further in the Inquirer, to page A-29 in the OpEd section:

Soda tax foes reek of tobacco

By Jonathan Zimmerman

Taxes won’t reduce consumption. They violate Americans’ “right to choose.” And they put a disproportionate burden on racial minorities.

Those were the claims deployed by the beverage industry to defeat proposed soda taxes in Philadelphia in 2010 and 2011. They also surfaced during the past election season in California, where two cities rejected taxes on sugary soft drinks.

But the forefather of these arguments is the cigarette industry, which used almost exactly the same rhetoric for a half-century to resist taxation and regulation. The cigarette companies were wrong then – just as the soda apologists are wrong now.

Consider Philadelphia’s recent good news on smoking, which has plummeted 15 percent since 2008. Smoking rates declined across the country as well. The main reason is – you guessed it – higher taxes on cigarettes.

Shortly after he took office, President Obama signed the biggest hike in the federal cigarette tax in history: from 39 cents to $1.01 per pack. Overnight, cigarette prices went up an average of 22 percent. Two years later, three million fewer Americans were smoking.

It’s happened before. After Ronald Reagan signed a cigarette tax in 1982 to compensate for tax cuts in other areas, smoking went down. The rate also dipped after the 1992 election of Bill Clinton, who made the White House smoke-free for the first time – and tripled federal cigarette levies.

More at the link. In the article, Mr Zimmerman argues for higher taxes on sugary drinks, as a means to fight obesity. The question of whether this is any of the government’s business is neither asked nor answered, other than to say:

Would the soda tax interfere with personal choice? Of course. Most laws and regulations limit individual choice in some way in an effort to serve the collective good.

Setting aside the question of whether your weight is part of the collective good, your Editor found the article interesting in that it was in the same section with three others which concerned the economic of employment. Mr Zimmerman cited University of Chicago economist Lisa Powell, who claims that raising the price of soda by 10¢ reduces consumption by 8 to 12%. If soda consumption is reduced by 8 to 12%, won’t that mean a substantial loss of jobs for the people who work in the various soda bottling plants? In today’s economy, is that something that workers can afford?

Three stories from the Inquirer, all of which touch on the same subject, though it’s not always mentioned: employment, the job market, and the continuing advantage employers have in the high-unemployment Obama economy. The Democrats and the unions may feel empowered due to the election results, and perhaps that is part of what emboldened the bakers’ union to strike against Hostess. But it has to be remembered: that strike didn’t turn out so well for them, and the trends in the economy do not favor worker action at the moment.

  1. Page A-22
  2. Lower only than Nevada’s 11.5% and Rhode Island’s 10.4%. Preliminary figures from the Bureau of Labor Statistics. Information at this link is subject to revision, but was current upon the publication date of this article.