Left Voice Demands 5 Things of UAW's Shawn Fain

UAW president Shawn Fain (Source)

Left Voice author James Dennis Hoff demonstrates his astonishing misunderstanding of the labor movement in an article entitled Five Things Shawn Fain and the UAW Could Do Instead of Campaigning for Harris and Walz. The author, a professor of English at City University of New York campus, seemingly has never met a workplace he didn't want to shut down, including his own employer. Had he succeeded in that misguided effort, 40,000 people would have been out of work and without paychecks for an indefinite (probably long) period.

The primary reason for his misunderstanding is Marxism, which on the subject of labor/company relations is completely wrong. In the Marxist world view, the sole goal of labor is to confiscate the capitalist's profit. Marxists see the very existence of profit as a great injustice. Of course they're wrong--capital will have to win a return no matter who owns the means of production. Profit can never be eliminated and the efforts to do so have all led to destruction. See, eg, Cuba, Venezuela, and the former Soviet Union.

But that's not the primary error we examine here. There are two ways to judge a company's success: one can measure total revenue, and/or one can measure total profit, which is some fraction of that revenue. Marxists somehow seem to forget about the revenue part. But it is revenue that is split between wages and profit, and without revenue neither the worker nor the capitalist will make any money.

For example, Walmart's net revenue for the year ending June 30th was $648 billion. The net profit was about $16.3 billion, or 2.34% of revenue. The remaining revenue went employee salaries, rents, utilities, etc. The workers can legitimately fight over Walmart's profit. If they got all of it they'd get a 2.34% raise (after which the company would promptly go bankrupt).

But the elephant in the room--the fact that Professor Hoff studiously ignores--is revenue. Increases in revenue--even small ones--will have a much larger effect on workers' well-being than chipping away at the profit margin. After all, the workers get the lion's share of that revenue.

So the workers and their bosses have one big task in common--maximizing revenue. This is very complicated problem, for it depends on the mix of products sold (keeping the optimal mix of products in stock), then pricing them at a level that optimizes revenue, and finally ensuring that the products are displayed attractively and can be purchased by consumers with minimal inconvenience. A given Walmart Super Center will carry approximately 120,000 stock-keeping units, each of which has to carried in proper quantity and priced optimally.

Both workers and capitalists have a strong interest in maximizing revenue. The capitalists certainly understand that--their profit is a fraction of total revenue. And workers understand that--the security of their employment along with the size of their wages ultimately depends on revenue. The union understands it most of all--the dollar value of union dues collected will depend only on revenue.

Which is why workers are not particularly interested in going on strike. Strikes do not enhance revenue. They hurt the company and union alike. Note that the recent UAW strike was structured in a way that minimized revenue losses.

But Marxists don't get it at all. They think it's all about quibbling over profit. Profit is a sideshow for the workers--it's the revenue that really counts. When it comes to revenue, the workers, the company and the union are all on the same side. Consumers are on the opposite side.

In that light, let's now consider Professor Hoff's five demands on Shawn Fain's union.

1: Build the Fight Against the Far Right

"It is a fool’s errand to believe that we can defeat the nationalist, misogynist, xenophobic, racist, and anti-queer politics of the Far Right by voting," says Professor Hoff. He is correct; it's likely that the "far right" is gonna win the election. Win or lose, any party that can get 70 million+ votes in an election can't really be called "far" or "extremist." They are, in fact, rather mainstream.

Then I'm not sure why you'd want to defeat the "far right." UAW workers manufacture a lot of pickup trucks. Who buys them? Does Professor Hoff own a pickup truck? Almost certainly not because he lives in New York City. The consumers who buy pickup trucks live in suburbs, exurbs and small-towns across America. They live in Trump Country. Indeed, I'll bet a lot more Trump voters own pickup trucks than voters in blue states. Why should the UAW leader purposely diss the majority of his customers? Picking a fight with Trump's voters is definitely not a way to maximize revenue. 

When it comes to maximizing revenue, staying out of politics altogether seems like the best bet.

2: Take the Struggle for a Free Palestine into the Workplaces

Surely you're joking, Professor Hoff? How can slaughtering the world's Jewry increase revenue? Even if you think Hamas doesn't intend to kill everybody, I still don't see how siding with a bunch of murderous, nihilist thugs helps make American workers richer. Siding with Israel also probably won't help any. So just stay out of it, which seems to be what Shawn Fain is doing as best he can. He's right.

3: Take Seriously the Fight for a 32-Hour Work Week and Other Progressive Demands 

You can take it as seriously as you want, but please remember that the company is already maximizing revenue. A 32 hour work week (with 40 hours pay) is a nice idea, but it's not something that's affordable on a 3% profit margin. Prices would have to go up--by a lot. Such a rise in prices will lower revenue, not raise it. The workers (and the company and consumers) will ultimately come out losers. This is a demand--from the textbook on Free Lunch Economics--that only an English PhD ignoramus could love.

4: Bring Back the Political Strike and Dismantle Taft-Hartley

As said, Professor Hoff has never seen a workplace he didn't want to shut down. And they should shut down for totally frivolous reasons. Eg,

But why shouldn’t nurses and teachers, for instance, be able to go on strike to support their brothers and sisters who drive the buses and trains, and why shouldn’t working people be able to strike collectively to demand basic human rights like access to healthcare, higher education, child care, and pensions?

Most teachers (and most nurses through Medicare & Medicaid) are public employees and get paid at the expense of other workers. It's workers, after all, who pay the majority of taxes that covers their salaries. As the professor admits, a solidarity strike by teachers serves only to stuff teachers' own pockets, especially his demand for more higher education funding. We have way more higher education in this country than we need, and I don't see why the average UAW member should be forced to pay for it. They each already pay thousands of dollars in taxes to support the professors' unions.

5. Break from the Two Parties of Capital and Build a Class Independent Union Movement

Spitting into the wind, Professor Hoff writes,

But more than anything else, the first and most important step that the UAW and every union in the country could take right now to strengthen its membership and prepare for the struggles ahead is to finally break with the two parties of capital once and for all.

Our Trotskyist friends and their predecessors have been demanding this ever since the publication of the Communist Manifesto in 1846. In America it's never happened, and that's because the Marxist model of capitalists and workers permanently locked in a zero-sum fight for profits is just plain wrong.  Workers know that. Workers (real ones--not fake ones like professors) understand that it's revenue that butters their bread, and they're not gonna do anything to stop the flow.

That's why Left Voice only numbers about 50 comrades, and not 50 million.

Further Reading:

• The UAW Strike
  
• The Professors' Congress: The International Situation
  
• Unions and Work From Home
  

Left Voice on the Economic Crisis

Graph of a crisis happening somewhere (Source)

Kudos to Left Voice author Jason Koslowski for a serious attempt to understand the modern economy, in an article entitled The Economics of Lesser Evilism. But Mr. Koslowski (who self-identifies as "a contingent college teacher and union organizer who lives in Philadelphia") suffers from two serious handicaps in his efforts: 1) he's a Marxist, which means he doesn't understand economics; and 2) he thinks everything is always and everywhere in a crisis.

For all that, Mr. Koslowski writes this paragraph:

Marx writes in Capital that in capitalism, the rate of profit — the rate of return on capitalist investment — tends to fall. That’s because profit only comes from human labor. Capitalists, though — in their endless competition with each other — try to ramp up the productivity of labor. That makes it cheaper to produce a commodity, and can temporarily ramp up profits too, while also reducing the amount of labor needed for production. That’s the problem: capitalism tends to rely more and more on labor-saving techniques and technology, but relatively less on human labor. But as competition drives other firms to adopt that same approach, the rate of profit tends to take a hit; the amount of profit-producing human labor relatively decreases.

This is a model of clarity and concision that is rare in Leftist writing, and which shows that our friend has some talent as a journalist.

Despite that, it's wrong--but let's blame Karl Marx rather than Mr. Koslowski. It's worth taking the paragraph apart.

The first sentence does represent confusion on the part of Mr. Koslowski. He confuses the rate of profit with the rate of return on investment. These are two different things. The "rate of profit" stands for operating profit--aka earnings. That is the percent of total sales revenue that can be counted as profit, which is what Marx meant by the word. Walmart, for example, famously sets this number to 3%. If operating profits rise above that then they lower prices. If they irredeemably fall below that, then they close the store. Thus Walmart--almost definitionally--can never experience a declining rate of profit. It's always 3%.

The rate of return on investment is something completely different: that depends on the stock price. It is calculated by the price/earnings (PE) ratio, namely the price of a share of Walmart stock divided by the (recent or projected) earnings (or profit) per share. Again, using Walmart as an example, the current price of the stock is about $73/share, while the earnings per share for the past year was $1.92. This yields a PE ratio of about 38--roughly typical for an S&P 500 company.

The rate of return on investment (the PE ratio) depends on many things: the marginal rate of return (aka profit), the stock price, current interest rates, and investors' assessment of the company's future. That number can never systematically decline--since if operating margins go down then the stock price will also go down. (Marx has a completely weird way of calculating capital that had nothing to do with the stock price. Nobody today knows how to do the Marxist calculation--not even Michael Roberts.)

The next sentence is also wrong. Profit does NOT come only from human labor, though that is certainly part of it. It's the consumer who sets the value of goods and services--not labor or any other cost of production.

For example, in my old age I prefer to fly business class, which means I'm paying 3x or 4x more than those in basic economy. Most people aren't willing to spend that much money on a plane ticket--and I can do it only because I don't fly all that often. Let's use my most recent trip as an example: RT from Newark to Chicago, my ticket cost $734. By comparison a basic economy seat costs $150 (though the real cost is higher coz they nickel and dime you for everything).

The following statements are true:

• The airline earns a profit on the basic economy seat--probably the margin is similar to Walmart's. Basic economy travel is a commodity, and prices go down as airlines become more efficient. Say the profit margin is 5%.
• My business class seat takes up about twice the space of a basic economy seat. So the business class cabin (which had 16 seats) could have fit 32 people if sold as economy seats. So effectively it costs the airline twice as much to fly me to Chicago than it does the economy passenger.
• More, the airline has to hire an additional flight attendant to take care of us business class folks. And we got "free" drinks. For a longer flight we would've gotten "free" and higher quality meals, but my flight was too short for meal service.
• I don't have to pay any baggage fees.
• All sixteen seats in the business cabin were occupied. That's 16 people who paid something like $700 for a RT ticket.

So an educated guess is that it costs the airline 3x more to fly me to Chicago than a basic economy passenger. Yet the price is 5x higher, or if you account for the nickels and dimes, perhaps only 4x higher. But that's an extra $150 that the airline can book as pure profit--in addition to the 5% they get from all the other seats.

That extra profit comes only because I'm willing to pay for it! And apparently 15 other people made the same choice. When considering my alternatives in making the reservation, I didn't take the cost of labor into account at all. All I considered was the relative value I got from spending an extra $500. What else would I have rather spent $500 on? Nothing, apparently, because I spent it on business class airfare.

The airline priced business class at a level that maximized their revenue. If they charged more, they wouldn't have filled all 16 seats. If they charged less they would have just left money sitting on the table. The cost of labor doesn't enter into their calculation either.

So the labor theory of value is wrong--except for commodities. And on this Mr. Koslowski is correct. The cost of labor (or, more accurately, the total cost of production) does determine the price of a commodity--that's the very definition of a commodity. An alternative definition is that commodities compete only on price--nothing else. Basic economy airfares are a commodity, which is why they cost almost the same independently of airline. Business class airfares are not commodities, which is why they vary widely in price depending on the airline. (Business class travel to East Asia varies from about $3500 to almost $10,000. You choose your comfort level accordingly.)

Mr. Koslowski's last few sentences are mostly correct. To increase their profits companies automate their processes (substituting capital for labor) and thereby lower their costs. But competition forces them to lower their prices, and so there is a declining rate of profit. (Again, this holds true only for commodity products.) But this is a good thing--because it lowers prices. Consumers are better off, and our standard of living improves. Indeed, the major beneficiary of capitalism is and always has been the consumer, which is why our standard of living has risen dramatically since the dawn of the industrial revolution.

Mr. Koslowski thinks the current economy is in a "crisis."

Both campaigns are pitched to win support, and money, from the ruling class. They are offering competing visions of how to return the economy to “normal” after the emergency of the pandemic crisis.

But “normal” is a crisis. The campaigns are funded by a ruling class trapped inside a global economy that’s struggled to grow and return profits for decades. That class’s hunt for profits, amid deep, decades-old contradictions of capitalism, keeps on fueling the danger of financial crisis — the recent market plunge is a sign of that danger — and ever-sharper imperialist conflicts. ... That’s the “order” Trump and Harris want to preserve.

Of course there always is a danger of a financial crisis--that's been true since ancient times. Even socialist heaven-states like Cuba, Venezuela and North Korea experience financial crises. So there is nothing capitalists or socialists or anybody can do about that. Other words here--imperialist, contradictions--are just meaningless Trotsky-talk, aka gobbledygook.

But the fact is We are not in a crisis! The long-predicted recession has still not happened. The financial markets have their ups and downs--Mr. Koslowski's article was written on a down day--but there don't seem to be too many bubbles there. Of course there are problems--inflation, housing--but that's all within the normal warp and woof of everyday events.

I will posit (and what follows is not original to me) that we're in stagnation--the complete opposite of crisis. Few people are getting laid off. Few people are hiring. Few people are quitting. The job market is pretty much frozen solid. That wasn't true last year--then there was a serious labor shortage. But in the interim we've admitted millions of new immigrants--quasi-Americans--who have eliminated the shortage (apart from some skilled labor categories).

It's because of quasi-Americans that inflation has gone down. It's because of quasi-Americans that unemployment has begun to tick upwards. Whatever new jobs have been created over the past year, it's quasi-Americans that have filled them. (Most of those new jobs have been in healthcare--disproportionately as home healthcare aides.)

There is no crisis--at least not today. There is no economic crisis. There is no climate crisis. There is no education crisis. There is no democracy crisis. There just isn't any crisis. I know that's a deep disappointment to our Trotskyist friends who are always and everywhere predicting a crisis here and a crisis there and a crisis everywhere.

But they're wrong. At least for now.

Further Reading:

• Cheapskate Consumers in China
  
• The Professors' Congress: The International Situation
  
• Three Militant Articles on the Economy
  

Amazon, Teamsters & Contract

Left Voice journalist and comrade Luigi Morris spent a season last year working in a UPS sorting facility. He did not enjoy the experience, writing,

I get up for work at 3 am, with intense back pain from working this job, and deeply exhausted from working at UPS and various additional gigs to make ends meet. With this contract, there is no substantive change in my life. It doesn’t feel historic. I get better pay, but not enough to make ends meet. I get two more sick days, which as I reflect on the pain in my back, I know isn’t enough. I can only imagine what it feels like for single parents who not only need to struggle to make ends meet for themselves, but also for their children. I think about the parents who can’t even pick up their kids due to back aches and who cannot take days off to care for kids when they get sick.

Which gives him some street cred for this week's article about the new Amazon Labor Union (ALU) and its impending merger with the Teamsters. The article is entitled Amazon Labor Union Affiliates With Teamsters: What Does This Mean for Amazon Workers and the Labor Movement? (with co-author Pola Posen).

Mr. Morris' reaction to warehouse work is not necessarily representative. Indeed.com posts reviews from people who work at Amazon, and they're all over the map: some rate the experience excellent (5), others horrible (1), and most others in between. Among the most positive reviews (as an antidote to Mr. Morris' bad experience) reads

Working at Amazon as a warehouse worker has been a fantastic experience for me. The pay is competitive, and the benefits package is comprehensive, including health insurance and stock options. The management is supportive and encourages career growth through training and advancement opportunities. The work environment is dynamic yet well-organized, ensuring efficient operations while maintaining a positive atmosphere. Overall, I am grateful for the opportunity to work at Amazon and would highly recommend it to anyone seeking a rewarding job with a reputable company.

Indeed.com reports that salaries for NYC Amazon warehouse workers are around $17/hr. It's obviously not for everybody.

Mr. Morris clearly knows a lot about unions. The  Amazon warehouse on Staten Island, NY, JFK8, was successfully unionized in 2022, due in large part to the efforts of Chris Smalls. For more I'll refer the reader to the excellent journalism of Left Voice authors Tatania Cozzarelli and James Dennis Hoff. My comments on their report are here.

Since the union vote, no contract has been signed with the company. To help speed the process along Mr. Smalls is resigning from any leadership role in the ALU, and has arranged (in Mr. Morris' opinion with some subterfuge) for the union to affiliate with the Teamsters--to be designated ALU-IBT Local 1. The idea is that negotiating a contract requires more and different experience than Mr. Smalls can offer--he being a charismatic and successful organizer, but not especially interested in the weeds of a contract negotiation. Presumably the Teamsters are better at negotiating.

I think it's going to be very difficult for any contract to be signed--especially now.

Mr. Morris--as is typical of Left Voice journalists--may know a lot about unions, but he knows nothing about economics. Even worse, he apparently never reads the business pages. For he surely should know (as I document here) that Amazon is actually three, largely independent businesses. By far the most profitable is Amazon Web Services (AWS), which competes in the cloud-computing space with Microsoft Azure and Google Cloud. By contrast, the Amazon Retail business is just barely profitable, and in 2021 was actually losing money. (The third business is Amazon Prime, which competes with Netflix, et al.)

Amazon retail goes head to head against Walmart, Aldi, Target and Dollar General, among many others. All of these businesses run on very thin margins--Walmart's margin is typically 3%, and we can assume that Amazon Retail's margin isn't any more than that. That means that if Amazon sacrificed its entire profit margin, the workers would get a 3% raise (after which the company would immediately go bankrupt).

3% hardly justifies Mr. Morris' descriptions as "hyper exploitation" and "unchecked exploitation." As a Marxist, Mr. Morris should understand this--Marxists keep yammering about the "declining rate of profit." In general this isn't true, but for commodities it is true--and Amazon and its competitors are very much in a commodity business. Profit margins are reduced to a minimum.

So there's not very much to negotiate for. If Amazon is forced to raise wages, then it will have to shrink the workforce and raise productivity. If Amazon raises prices it will lose market share and earn even less revenue. More, Amazon can't raise wages at JFK8 beyond what they pay at their other warehouses--that would be grossly unfair. There is no way Amazon can give workers any significant wage increase. (I mean in real terms. If inflation goes up then Amazon can raise wages with inflation--since prices and everything else will be going up simultaneously. But that doesn't increase anybody's standard of living.)

It gets worse. The Teamsters need to collect union dues. I'm not saying that's their only goal, but it certainly is essential to their business model. If union dues are 1% of a worker's paycheck, then a 1% raise will simply cover the dues. Given that there's only a 3% margin, letting the union get a third of that is probably a non-starter.

The only way this kind of works is if there is continued inflation. If inflation goes up 2.5%, then the union can negotiate a 2.5% wage increase. Of course this is phony, but they'll take credit for it anyway. And remember that the union is now gonna get its 1% cut, so in real terms the workers will be left worse off.

And it gets even worse than that! Even Mr. Morris should be aware that last Thursday and Friday the Dow Jones went down about 1200 points--3%. The reason is taken to be the weak labor report, showing only 114,000 new jobs were created in July, with unemployment edging up to 4.3%. This is commonly believed to auger the beginning of a recession. (Markets are not always right with their predictions.) Recessions are a terrible time to be asking for raises--indeed, Amazon is more likely to be laying people off.

Unionization efforts work best when there is a labor shortage, such as existed from 2021 into 2023, caused by the pandemic-inspired early retirement of about 4 million baby boomers. Those retirees have since been replaced by 8 million new immigrants--there is no longer a labor shortage, but possibly even a labor surplus. Unions do not do well in such an environment, and ALU-IBT Local 1 will be no exception.

I predict that no contract will be signed in the foreseeable future.

Further Reading:

• Unions and Work From Home
• Professor Wants to Shut Down CUNY
• Book Review: The Everything Store