Working Worries

April 11, 2021

by Steve Stofka

Early Saturday morning came the news that Amazon workers at the Bessemer, Alabama plant had rejected a union by more than 2-1. The strength of the rejection surprised analysts and advocates. Companies who offer competitive wages and generous benefit packages often win against union adoption elections.

Amazon workers at Bessemer start at $15 an hour; adjusted for relative cost of living, it is $17.30, slightly below the national median warehouse wage of $17.77. In addition, Amazon offers comparatively generous medical benefits. In a 2020 study, Antonios Chantziaras at the Durham University Business School and two professors at Greek business colleges found that auditing fees are higher for U.S. companies that have unions, an indication of the complexity of union work rules (2020). It makes economic sense for companies to pay workers enough to dissuade any organizing efforts.

The Amazon workers who would be receptive to union organizing are those in Los Angeles, where the starting pay is the same $15 hour. According to the BEA, the cost of living in L.A. is 40% higher than in Bessemer. The starting pay of $15 is above California’s minimum wage of $14, but indexed to the nation as a whole, that $15 per hour in L.A. is worth only $11 per hour.

Bernie Sanders and others campaigned in Bessemer to show support for union organizers. Instead of trying to organize where workers would be motivated to join a union, workers in Amazon’s 230 warehouses have been waiting to see the results of the Bessemer election. Why does organized labor and the politicians who support them campaign with the most effort in those geographic areas that are the least likely to succeed?

According to many analysts the economy is on a coiled spring, ready for explosive growth. There are many positive signs but the contradictions are puzzling. For two consecutive weeks, initial jobless claims have risen. However, the Bureau of Labor Statistics reports that the 4-week average of unemployment claims has not risen (FRED Series CC4WSA). The past two weeks may be data noise or a seasonal shift in the workforce, but that is not the sign of an economy poised to leap into action. In March, the 4-week average of claims was almost double the number of claims in March 2020, as the nation went into lockdown.

The Covid pandemic has uncovered startling disparities in our economy. According to the Bureau of Labor Statistics, those who kept their jobs this past year have seen a 4% increase in weekly wages (FRED Series CES0500000011). The other half of that story is ugly. Those service businesses who are open may offer jobs at lower wages. With many businesses still closed, job applicants have what economists call low bargaining power and are willing to take less pay.

The Relief Act and the recent stimulus checks have helped many. Let’s hope that these worrying signs are just noise and that the country is back to full recovery.

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Photo by Christopher Burns on Unsplash

BEA. (2019). Cost of living calculator. Retrieved April 11, 2021, from https://research.stlouisfed.org/publications/cost-of-living/calculator

Chantziaras, A., Dedoulis, E., & Leventis, S. (2020). The impact of labor unionization on monitoring costs. European Management Journal, 38(2), 288-307. doi:10.1016/j.emj.2019.09.004. Retrieved from https://www.sciencedirect.com/science/article/pii/S0263237319301100#!

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