Wednesday, August 01, 2007

The Rest of the Story

Eric Alterman had a terrifically well-written piece in Media Matters on Monday regarding income inequality. The role that government, of both parties, has played in that growing problem is horrifying.

…Harry Truman, would use the phrase "economic freedom" in his 1950 State of the Union address to mean "a fundamental economic freedom for labor." But by the time of Ronald Reagan's second inaugural, the same phrase had come to imply not the right to organize or achieve economic security and independence, but deregulation, tax cuts, and an attack on unions on behalf of powerful corporations and their wealthy owners and investors.

Politicians and “powerful corporations and their wealthy owners” will tell you that the collective bargaining power held by labor unions drives up costs and raises the prices you pay for goods and services.

In the immortal words of Paul Harvey, here’s “The Rest of the Story.”

The grocery workers union and the three major grocery stores in San Diego recently signed a new contract after six months of negotiations. Unions hailed it as a big victory, as it included significant wage gains and health care benefits, and I was happy for them and for the community that there was no strike.

There was an article in the San Diego Union-Tribune a week or so later that confirmed that the new agreement would mean price increases, but that they would probably not occur for several months and that the impact would be very small, likely pretty much not even noticeable.

I talked with the manager of the store where I shop who, as the media is fond of saying, requested anonymity since he is not authorized to speak on the subject. I like to cook with fresh stuff and I’m retired, so I go to the store several times a week, and this manager and I are to some degree acquainted. He was, by the way, as happy with the new agreement as his workers were. He confirmed that selling prices would be very minor, doubted that they would exceed 1% or so.

So how can a new contract that has a major effect for the workers have such a minor effect on the consumer? Because there are 65,000 workers, but there are millions of customers. The dollar amount that is being divided between a handful of workers, where it has a major effect, is being spread out over a vast pool of consumers, where it is barely a ripple.

That’s what the “powerful corporations and their wealthy owners and investors” don’t mention, because the part that can't be passed on to the consumer affects an even smaller pool that is them. And the effect on their profit looks to them like a tidal wave.

What I see, though, as the outcome of labor union accomplishment is that I will pay a small premium for my groceries; one that I probably won’t even notice. In return for that 65,000 grocery workers will be able to maintain a better standard of living and be able to provide healthcare for themselves and their children. I can definitely live with that.

And now you know the rest of the story.

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