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September 2, 2013 / Dale Melchin

Labor Day

History is complex.  Its complex because the people that make it up are complex.  There are many contingencies and variables as to what could have been.  History is often bloody and messy.
Complexity, bloody and messy hold true for Labor movement in the United States.  The Labor Movement has roots going all the way back to the mid 1600’s under English Common Law.  It is more widely known as coming to bear in the 1800’s to today.  From a big picture view, the movement is simple.
The Labor Movement boils down to a conflict between businesses protecting their interests and laborers protecting their interests.  Now let me start off by saying, nothing is particularly complex about protecting one’s interests.  However, through people into the equation, and that is where the complexity comes in.
The Labor movement brings us back to some ultimate questions.
  • Which takes precedence?
  • What is a fairness?
  • Who is responsible for whose well being?

I do not intend for this to be an exhaustive piece on Labor history, I intend to bring history back to principle and attempt to apply it to today’s context.

Capitalism: The American Economic System
According to Wikipedia,  Capitalism is:   an economic system in which capital assets are privately owned and goods and services are produced for profit in a market economy. In a capitalist economy, the parties to a transaction nominally determine the prices at which assets, goods, and services are exchanged. Central elements of capitalism include the process of capital accumulation, competitive markets and wage labor.
After being challenged by Communism during the Cold War Era, Capitalism has become the dominant economic system in the world.
This system incarnates itself in two primary formats.  I will not be treating cooperatives or other business formats in this post.
The Small Business Owner who is responsible to himself and his family for the success of the enterprise.  He is also responsible to his pay his taxes, his vendors and his workers what is owed to them.  The question of what is owed to the worker, will be discussed later.  The business owner is also responsible to obey all the laws cover his respective industry(s).  A small business can take many forms.
Owner of a small to medium large organization
They are dispersed across many industries.

The environment of working for a small business owner is much different than working in a larger corporation.  Depending upon the size and the involvement of the owner in the organization, things are more organic rather than mechanistic.  Depending upon the size of the organization, the owner may even know all of the people that work for him.  Small businesses aren’t always rainbows and butterflies, they still face the same concerns of other organizations.  The concerns are the life and survival of the organization as well as their own.

Now let us contrast that with “Big Business.”
The Medium to Large Corporation which may have several owners called shareholders who have a stake in the company and who elect leadership to govern a larger organization.  Management, headed by a CEO in this case is responsible to the board and the shareholders for the success of the enterprise here as well.  The corporation is also responsible for paying taxes, its vendors and its workers what is owed to them.
Management is further responsible to the Board and the Shareholders for ensuring that the company is profitable and that the companies stock is heading up and to the right.
As in the small business example the corporation and its constituents are responsible to obey all of the laws covering their respective industry(s).
In a large corporation things tend to be more mechanistic rather than organic.  These environments can also be very cold, or warm and friendly.
With those two scenarios laid out lets examine the people who make up the organization.
Enter The Workers:
Organizations are composed of people.  At our core we are all the same.  We are flesh and bone walking the earth.  We all have a brain and a body, skills, strengths and weakness and we all have roles to play in life and in work.
One point I do want to press here, everyone in an organization does work.  The kind work done is based upon the persons role in the organization.  The role is determined by the organizations perception of the persons skills, strengths and weaknesses, and positions open.  The pay in an organization is determined by the market value of the role and the cost to the organization of paying that person to be in the role, and the expected return on investment of that role.

People seek out paying work for a combination of the following reasons.  The need to pay bills, eat, pay for shelter, provide for self and family, etc.  For those of us who are thinking beyond the day to day, work is a means to actualize their vision.  For others its worse they are just trying to get a paycheck and nothing else.  There are other reasons, but I think this sums up the interests of all workers at all levels.
The problems was and continues to be where the perceived value of the work done does not match up in the eyes of the worker or the organization.  I think this is the core of the conflict.  Note the following example.
The worker being paid $10.00 an hour to move materials comes home exhausted.  He feels like he’s put in an honest days work and has done more than his fair share by being exhausted at the end of the day.  He asks his boss for a raise.
The boss replies that if you want to be paid more, you have to do more.  I.e. bring me more value and I’ll pay you more.  The worker and boss conclude their conversation and the worker is a bit frustrated.
The worker may be demanding more money for a variety of reasons.  Bottom line, he has money problems.  Now some of them are within his control.  He is not budgeting and he is spending his money frivolously.  He gives money to a family member that doesn’t pay him back.  He has previous debts that he needs to pay and he’s being harassed.
He may have some problems that are within his influence.  His wife may be a spend thrift.  He hasn’t disciplined his kids properly and they are spoiled, so he constantly capitulates to them.
And Some of them are out his control.  It could be health problems with a family member.  He may have had some emergency or an ongoing crisis.
As a result of some of these pressing problems. he feels frustrated and that he is not in control of his life.  He sees what his boss is making and wants a cut of it leading to envy, etc.  Or he may be despairing that he isn’t doing what he can for his family and doesn’t know what to do and is fearful.
I realize this illustration of the worker’s life maybe simplistic, but I think it gets the point.  Now we will move on to the organization.
The boss or the organization on the other hand from his standpoint may feel that his suggestion is perfectly in order because of his/their perception of the worker.
While the work may generally do their job, there seems to be an increasing cost of keeping him, cutting into his productivity. He may be taking longer breaks.  He may be working slower chronically as a result of hangovers.  He may be working slower to get back some of that perceived value he’s not getting from the organization.  As a result he is probably costing the company/boss money because of the slow down.
On another note, there may even be no real problem with the worker.  The worker is meeting the requirements, but there are those who are exceeding requirements as well and deserve the merit raise more.
Its also possible that there may be other organizational problems that the worker isn’t even aware of that’s causing the boss to be stingy.
It is also a possibility that the boss may in fact be stingy and it will never be enough and the worker has no hope of advancing.  Or he may work for a mechanistic organization where lots of criteria have to be met before getting raises or promotions.
Or it maybe one of those weird situations where more money is supposedly made from not developing employees.  Or the idea of investing in employee growth is nay sayed.  There are any number of factors, only one of them has to do with corporate greed, the rest seem to be perceived as such.
Now, this obviously wasn’t and isn’t an isolated problem.  Let that happen with millions of people across several organizations and eventually it will hit critical mass and lead to a labor movement.
During the days when the labor movement was on the rise, there was clear mistreatment and abuse of workers.  There were many people of small means at the mercy of would be tyrants who had previously earned money honestly by filling a need in the market place.  And that is the problem.  Preying upon the powerless.  So the workers created power by banding together.
Not all of the rich people were scumbags.  Many of them were simply trying to run efficient businesses.  Many times it may have been their subordinates that were overworking people to make their part of the organization look good and paper.  Jack London was a victim of this early on.
There is also the market to consider.  The presence of many people who lacked work was high, and as a result the cost of labor was lower.  If workers were more scarce, wages would go up.  I’m not recommending Scrooges approach and get rid of the surplus population.  I’m stating one of the realities of the capitalist system.  The law of supply and demand.  A business has to operate within that framework, or it is doomed to failure.  There is also a third alternative that has not been considered and that is the money made from creativity, but I digress.
As we can see from the previous this argument boils down the interests of business and the interests of the employer.  The questions we can ask is this.
Which takes precedence?
What is fair?
Who is responsible for whose well being?
Whose interest takes precedence?  The organization or business owner or the worker?
The correct answer is both. The relationship isn’t an either or relationship.  Its symbiotic.  The fates of both parties are tied together.Lets look at the Organizational Side of the equation.  If all the workers leave (strike), the business is going to incur costs of not selling product and making money.
Even if the organization manages to hire new workers, there are costs associated with training, rework, etc.  The organization may even gain a bad reputation for being a horrible place to work and be able to hire only the most desperate people to work their leading to other problems.
The Owner or Organization must treat his employees humanely and meet the workers demands as they are able.  Sometimes, depending upon the type of business, the demand for pay increases may be financially implausible, but other benefits maybe plausible.
If an employer or organization makes a conscious effort to operate within principles of fairness, respect, and equity, it will pay them back provided the workers reciprocate.  The employer must not become a door mat for the workers.  GM had this problem and it led them to be temporarily nationalized.  Yes, I went there.
Lets also look at Labor Side.  If the Owner or Organization shut the business down either because they didn’t want to be in that business, or simply because they decide to retire, the workers are screwed.
Even if the workers are able to line up other work, there may be a few days where they aren’t working and as a result have a shortfall in income.  The worker may even lose benefits causing problems for their health or the health of their family.  If a labor organization or just the individual worker wants more, more value must be added by the worker to the organization.  That is a principle that doesn’t go away.
As you can see, the fates of both parties are tied together.  Although, I will grant, that depending upon how responsible the worker(s) have been with their personal finances, the worker will stand to lose more if an organization shuts down, rather than the owners.  That may not always be true in the case of small business.  But in most cases the workers lose more.  This is why labor unions exist.
The leads us to the question of What is Fair? According to fair is being free from bias, dishonesty, or injustice: a fair decision; a fair judge. or something that is legitimately sought, pursued, done, given, etc.; proper under the rules: a fair fight.  We must consider this in the context of both parties.
Fairness to the worker entails the following.  The employer keeping promises.  There is nothing more dreadful than an employer that doesn’t keep promises.
Time paid for time worked (determined by a combination of market demand, merit, and negotiated scales if applicable).
Benefits paid if applicable.Boundaries in place where no more than 40 hours require to keep employment.
Now I understand in the upper levels of an organization and professional positions often require longer work hours.  Workers in those kind of positions need to take the initiative and enforce the boundaries.  When you are in a corporate position, the work often endless.  But that is why we have exempt and non-exempt status for employees depending upon their level in the organization.
Relatively stress free work environment.  Sometimes, work is hard.  That’s why its called work.  Bosses and organizations can take steps to make the environment less stressful, even if the organization is in a stressful business.
Now lets look at the organizational or employer side of things.
Fairness to the Employer entails the following.
The time paid for was productive.  As workers we are paid to do a job.  Did the job get done in a way that was efficient and cost effective for the employer?
Employee doesn’t take extended breaks.  Now I understand some of us will fight to come into work even if we don’t feel well, and we aren’t at our A game.  The question is did we do our best at the level we are at.
Management, especially front line management will understand this even if they don’t have the power to change the circumstances.  Another area of fairness is attendance.  Is the employee is in on time and working at the time agreed upon? Another point of fairness is that the employee doesn’t steal in other ways.
I’m sure there are other points we could hit on and I’m confident that this discussion will be ongoing.
As we come to the end of the post the final question is raised.  Who is responsible for whose well being?
The Owner Scenario
The Owner is ultimately responsible to himself, and his family for the well being of his organization within ethical and legal guidelines.  I mean, seriously the man or woman is in business to establish a living for himself.  If an owner could advance their mission without employees I’m sure they would, and their is nothing wrong with that.
The concerns of workers are secondary to his responsibility to himself and his family.  I know this is going to make a lot of people angry.  As nice as an employer may be, he’s not in it for his workers.
He may care about them and try to help them on a human level.  The role of a worker in an employment situation is to serve the needs of the organization.  Now, with that said, the employer may personally choose to keep the business going for as long as possible if it is a crisis situation, but he is not morally obligated to do so.  I will say this though, the employers that go above and beyond for their employees are often the best ones to work for.
Without going into two much detail I will say the Law is third, vendors are fourth.  I say this because money paid that is devoted to operational life, must be paid immediately.  Money for debts and other items not related to survival can always be paid later.  With that said there may be some blurred lines between the bottom four, but that is how I have structured them.The Corporate Scenario
Management is responsible to the Board of Directors who are accountable to the Shareholders for the well being of the Organization with ethical and legal guidelines.  The company is responsible to obey the law.  The company is responsible to pay fairly, and treat its workers well,  the company must pay its vendors.  Beyond the scope of the other parameters the organization doesn’t have any responsibility, beyond that although some organizations are choosing to be more socially responsible.In both cases, the first responsibility is to the center, not to the external.
For the worker

The Worker, regardless of level in the organization or covered under union contract is responsible for his own well being.  That includes playing the hand you are dealt.
If you’ve spent most of your life in low paying work and continue to choose to do so, be grateful, and don’t expect anything better unless you decide to get more training.
Controlling your expenses and saving.  People are no different from organizations.  People have to budget and spend wisely like business do or pay the consequences.  If working at the level you are at right now is so bad, asking yourself, what steps can you take to qualify for higher paying work.
Possibilities include:

  • Going back to school to learn a set of skills that pay more in the market place
  • Perhaps you have already a unique skill that you can market as a self-owned business opportunity
  • This also includes finding your calling and passion.  What matters to you?  What problems do you want to solve?  It is our responsibility to find our purpose in life.  It is inside of us.  And we must use the principles of proactivity to bring it out.

And if any of that seems like “too much work” then one must learn the art of contentment.  The entitlement you are developing is part of the problem in this country.  You are not being fair to yourself, your colleagues, your boss or anyone if you think that it is right to get more for the same or less.  I know I am being harsh, but the attitude of the problem being out there is old.

When are we going to wake up and evolve?  The answer is when we all realize that we must be responsible.

With that being said about responsibility.  It is also the responsibility of both parties to have the courage, maturity, goodwill and willingness to be able to find a win-win solution, where everyone wins.
This involves each side listening with a level of detachment, genuine empathy, restating by the “opposing” party what is wanted by the other and then finding creative ways of meeting those needs, so that everyone gets what they want.  If you think scarce it will be scarce.  I truly hope that both management and labor in every organization will learn to take the 7 Habits approach that I have just stated here.  So that way we can put our old conflicts aside, everyone gets what they want and need.

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