Why You Should Earn Less: the Company’s Argument

Stephen Franklin

Tom Michaud is no bargaining expert. He is an applesauce cook, earning $21.80 an hour after working 15 years at the Mott’s apple juice plant in Williamson, N.Y.

But he sensed a problem from what he heard about the way contract talks were going with his company, Texas-based Dr. Pepper Snapple Group Inc. You could see something building,” he recalled. He was right.

But what was ahead was something that union officials say they had not expected. The giant conglomerate offered a rationale for tough bargaining that you rarely hear from companies today: We’re losing money. We’re being eaten by the foreign competition. Our technology is terribly behind and we need to put the money into keeping the plant up to date.

These are the explanations companies usually offer whenever they say they need to slash wages and benefits. (Watch the recent PBS program above to hear the company’s explanation.)

Mott’s talked about the plant’s inefficiency, but it also said that it wanted to bring the plant’s costs in line with local and industry standards,’” according to a New York Times report.

This is the first time a very profitable company has come to us and asked for concessions, and I’ve been with the union for 23 years,” says Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union (RWDSU), an affiliate of the United Food and Commercial Workers union.

As union officials point out, Dr. Pepper Snapple, has been rolling in the money lately. The leading producer of flavored beverages in North America and the Caribbean, as the company describes itself, it recorded $550 million in net income last year, up from a $312 million last the previous year.

So, too, Larry D. Young, its CEO and president, earned $2.7 million in cash and another $3.8 million in non-cash compensation, according to news reports.

Before the workers walked out after rejecting the company’s offer, the company was asking for a $1.50 an hour pay cut, a pension freeze and other benefits cutbacks, according to news reports and company statements.

So let’s take the company’s rationale and expand it across the board. This is what would happen:

Wherever unionized workers earn more than the local folks, there would be a leveling off and the union workers are ones who will have to give up.

It means the new income level for the working class will be the lowest level, the level set in nonunion workplaces where already low wages have been dropping the last few years.

And most importantly, it means that in hard-hit communities where unemployment is high and wages are low, the few unionized or higher-paying companies will have good reason to bring everyone down to the same level.

But there is something more worrisome here.

It’s the thought that all factory job work is the same and that nobody deserves extra rewards regardless of how complex their job is.

At the Mott’s plant, many of the union’s 305 workers are high level machinists or electricians, says Audra Makuch, a union official. And their jobs are quite specialized, she adds.

They are not the kinds of folks you pick up off the street for nine bucks an hour, which, according to the union, is what the company is paying most of the replacement workers who are now running the plant.

For sure, Tom Michaud knows that cooking applesauce is not an easy job, or one that he can easily find in his upstate New York community.

But, as the company might say, he is just a factory worker after all.

Stephen Franklin is a former labor and workplace reporter for the Chicago Tribune, was until recently the ethnic media project director with Public Narrative in Chicago. He is the author of Three Strikes: Labor’s Heartland Losses and What They Mean for Working Americans (2002), and has reported throughout the United States and the Middle East.

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