Retailers Discover That Labor Isn't Just a Cost
For the past couple of decades, retailing in the U.S. has -- with some notable exceptions -- been a vast experiment in minimizing labor costs.
At the 2009 annual...
For the past couple of decades, retailing in the U.S. has -- with some notable exceptions -- been a vast experiment in minimizing labor costs.
At the 2009 annual convention of the National Retail Federation, though, Charles DeWitt noticed the beginnings of a shift. "Retailers started coming up to me and saying, 'We can't get any more out of this cost stone,'" recounted DeWitt, vice president of business development at workforce-management-software maker Kronos.
Since then, this change in attitude has become the stuff of business headlines. Most notably, Wal-Mart, the retailer that set the cost-cutting tone in the 1990s, has been raising wages and spending more on training. There's surely a cyclical element at work here -- as the unemployment rate drops, it's harder for retailers to find workers. There's also a political element -- bad press and minimum-wage campaigns must have some effect on corporate behavior.
But the really intriguing possibility is that retailers, in their technology-driven rush to optimize operations during the past two decades ("rocket science retailing," one Wharton School operations expert dubbed it) were actually failing to optimize labor. Their systems measured it only as a cost, and didn't track the impact of low wages, part-time work and unpredictable work schedules on sales and profits. Now some retailers are trying to fix that.
One big set of targets are the scheduling systems that have allowed retailers to ever-more-closely match staffing to customer traffic, but in the process wrought havoc with many workers' lives by making their schedules so unpredictable. Jodi Kantor gave a face to this last year with a compelling New York Times account of the chaotic life of a single-mom Starbucks barista.
Kronos supplies Starbucks' scheduling software, and DeWitt was quoted in the Times article describing its workings as "like magic." So it was a little surprising to see him on stage last week at O'Reilly Media's Next:Economy conference, nodding pleasantly and occasionally chiming in as a Starbucks barista, a labor activist and a journalist described the horrors inflicted by scheduling software.
When I told him afterward that I was surprised he wasn't more defensive, DeWitt said, "I'm more of a math guy, an optimization guy. This is a parameter to be optimized." It's also a business opportunity. "We are in early-stage investigations with very big customers," DeWitt went on. "The plan is to go in and suck all these things out of the database and work with them to customize metrics."
The idea is to figure out how dynamic scheduling and other labor practices affect metrics such as absenteeism, turnover and sales. Right now a lot of retailers just don't know. Carrie Gleason, director of the Fair Workweek Initiative at the Center for Popular Democracy and the labor activist who shared the stage with DeWitt, recalled a conversation she had with an executive at a big retailer at last year's National Retail Federation convention. "I said, 'These schedules cost you in terms of turnover.' She said, 'I’m in operations. That’s HR.'"
That's not true everywhere. Here's Stuart B. Burgdoerfer, chief financial officer of L Brands, the retailer that includes the Victoria's Secret and Bath & Body Works chains, speaking at the company'sannual investor day this month:
As we looked at the data, we just had too many people working too few hours per week. And the trouble with that or the opportunity with that is how well can they really know your business, how invested are they in us, or we in them, if they're only working a few hours per week and their turnover rate is very high?
And so we see the opportunity to have a more knowledgeable, more engaged, more effective and productive associate. When she's working, typically she is working more hours per week. So that's the opportunity. And we think it's a significant one. Really do.
Recent academic work backs this up, to a point. Researchers such as University of Chicago social psychologists Susan Lambert and Julia Henly and Pennsylvania State University labor economist Lonnie Golden have been documenting the extent and social costs of irregular scheduling. Meanwhile, operations experts at business schools have been trying to identify labor practices that maximize sales and profits.
The best known of these is probably the "good jobs strategy" outlined by Zeynep Ton of the Massachusetts Institute of Technology, first in a2012 Harvard Business Review article and then in a 2014 book. Ton studied low-cost, high-wage retailers such as Costco, Trader Joe's, Oklahoma-based convenience-store chain QuikTrip and Spanish supermarket chain Mercadona and concluded that they operated in a virtuous cycle in which highly trained, autonomous, full-time employees working with a limited selection of products drove high performance.
There's a tendency, upon hearing accounts such as Ton's (she also spoke at the Next:Economy conference), to wonder why every retailer doesn’t do that. One reason is that the limited-selection approach can't work for everybody. Another is that, as my Bloomberg View colleague Megan McArdle wrote last year, if every retailer paid like Costco, many of Costco's labor advantages would disappear. And finally, while some retailers surely have hurt themselves in their zeal to optimize labor, the move away from full-time retail jobs and toward staffing that's closely matched to customer demand hasn't been totally irrational.
In one recent study, Saravanan Kesavan, Bradley R. Staats and Wendell Gilland of the University of North Carolina looked at labor practices at a large (unidentified) retail chain. Their hypothesis was that the use of temporary and part-time workers would be linked with per-store sales in an inverted U-shaped curve -- with sales at first rising as the percentage of temps and part-timers rose, but eventually falling.
The data backed them up. To maximize sales, the optimal share of temp workers was 13 percent and part-timers 44 percent. But those percentages were both higher than the retailer's current averages of 7 percent and 32 percent. Overall, hiring more part-timers and more temps was likely to lead to higher sales.
The data-driven reexamination of labor practices by big retailers will surely lead to some improvements in how workers are treated and paid. I don't get the impression that, by itself, it will lead to all retail jobs becoming good jobs.
Source: Bloomberg
Latinos make up majority of fatal falls at construction sites in NY
Al Jazeera America – October 24, 2013, by Dexter Mullins and Roxana Saberi -
Latino and immigrant workers are at a disproportionate risk of dying from construction-site accidents in New...
Al Jazeera America – October 24, 2013, by Dexter Mullins and Roxana Saberi -
Latino and immigrant workers are at a disproportionate risk of dying from construction-site accidents in New York, according to a new report conducted by the Center for Popular Democracy.
The report, “Fatal Inequality: Workplace Safety Eludes Construction Workers of Color in New York State,” is based on investigations from the Occupational Safety and Health Administration (OSHA) from 2003 to 2011 that analyze fatalities from falls at construction sites.
According to the findings, 60 percent of the 136 fall-related fatalities in New York state were Latinos or immigrants. In New York City, the number was 74 percent. Queens and Brooklyn were the two most dangerous boroughs to work in during the years studied. In Queens 88 percent of those who died were Latinos or immigrants, and in Brooklyn 87 percent of those who fell were Latinos or immigrants.
Latinos comprise only about 35 percent of all construction workers in New York City.
“Latino workers are the most vulnerable workers in the nation, and we’ve been talking about this for a number of years,” Hector Sanchez of the Labor Council for Latin American Advancement told Al Jazeera. “This report is a reminder of what is happening and why Latino workers are the ones who suffer the most from deaths and injuries in the workplace. It’s important to understand what the consequences of this are and why they are happening.”
The vast majority, 86 percent, of the Latino or immigrant workers’ deaths were at sites run by nonunion employers, where workers often are reluctant to report safety violations out of fear of retaliation from contractors. The report also says that Latinos are more likely to work at nonunion sites, which have more safety violations.
A New York state law requires contractors and construction company owners to provide all necessary equipment to keep workers on site safe or be held fully liable if lack of safety measures result in the injury or death of a worker. According to the report, construction and insurance companies are trying to have the law amended so that workplace safety would be the responsibility of the workers.
OSHA, which is tasked with inspecting work sites, has 113 inspectors in New York state. According to the report, if OSHA were to inspect every construction site in the state, it would take the workers 107 years to visit each site once. At 85 percent of sites where a worker fell and died, OSHA found there was a “serious, gravity 10″ violation of workplace safety standards.
The Center for Popular Democracy is pushing for construction companies to do more to improve worker safety and has also called on OSHA to hire and train more inspectors and stiffen penalties for safety violations.
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Immigration Advocates on SB 4: We’re Resisting in Texas
Grassroots leaders and local officials wasted little time organizing a coordinated campaign to fight SB 4, a new Texas law that targets cities, towns and sheriffs that don’t cooperate with federal...
Grassroots leaders and local officials wasted little time organizing a coordinated campaign to fight SB 4, a new Texas law that targets cities, towns and sheriffs that don’t cooperate with federal immigration enforcement.
Only nine days after Texas Republican Gov. Greg Abbott signed the legislation, formally known as Senate Bill 4, into law, grassroots advocates announced a “Summer of Resistance” campaign May 16. The statute allows police officers, sheriff deputies and Texas state troopers to ask about a person’s immigration status – whether they are here legally – during a routine stop.
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Influence, the power to change
Influence, the power to change
Clad in a “Stand With Black Women” shirt, Mercedes Fulbright, the Texas State Coordinator at Local Progress, commanded attention during her engagement entitled, Deserving and Entitled; Engaging in...
Clad in a “Stand With Black Women” shirt, Mercedes Fulbright, the Texas State Coordinator at Local Progress, commanded attention during her engagement entitled, Deserving and Entitled; Engaging in Public Policy to Empower People, as part of the annual Speaking Truth To Power community activism seminar at Friendship West Baptist Church, June 29.
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Richmond Fed Names McKinsey's Thomas Barkin as Its President
Richmond Fed Names McKinsey's Thomas Barkin as Its President
Directors at the Federal Reserve Bank of Richmond confirmed Monday they had chosen Thomas Barkin, a senior executive at global consulting firm McKinsey & Co., as the institution’s next...
Directors at the Federal Reserve Bank of Richmond confirmed Monday they had chosen Thomas Barkin, a senior executive at global consulting firm McKinsey & Co., as the institution’s next president.
“We are fortunate to have found an extremely well-qualified individual to serve the Federal Reserve’s Fifth District and the American people,” Margaret Lewis, chair of the Richmond board of directors, said in a statement.
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Republicans Are Scrambling To Save An Arizona House Seat In GOP Territory
Republicans Are Scrambling To Save An Arizona House Seat In GOP Territory
Tipirneni's biggest individual national booster may be Ady Barkan, an ALS-stricken activist who leads the progressive Center for Popular Democracy Action. Barkan, who played a lead role in Capitol...
Tipirneni's biggest individual national booster may be Ady Barkan, an ALS-stricken activist who leads the progressive Center for Popular Democracy Action. Barkan, who played a lead role in Capitol Hill protests against the GOP tax cuts, traveled to the district to campaign for Tipirneni ― and press Lesko about her stances on cutting major social insurance programs.
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Why Is My Bank Teller Trying to Sell Me a Credit Card I Don't Want?
Mother Jones - April 9, 2015, by Josh Harkinson - Until recently, your typical banker was someone whose main job was to accept deposits, cash checks, and dispense basic financial advice. But now...
Mother Jones - April 9, 2015, by Josh Harkinson - Until recently, your typical banker was someone whose main job was to accept deposits, cash checks, and dispense basic financial advice. But now that job hardly exists anymore—at least not as we once knew it. Today's front-line bank workers—tellers, loan interviewers, and customer-service reps—earn far too little money to be considered "bankers" in the traditional sense of the word. And though they still collect and dispense money, their main job involves hawking credit cards and loans you probably don't need.
Many rank and file bank workers are seeing lower wages and more pressure to hawk financial products.Rank-and-file bank workers are both causes and symptoms of America's widening economic divide, says Aditi Sen, the author of Big Banks and the Dismantling of the Middle Class, a report released today by the Center for Popular Democracy. Based on union organizer interviews with hundreds of workers in the industry, Sen found that front-line bank workers often face quotas for hawking potentially exploitive financial products, often to low-income customers, even though the workers themselves barely qualify as middle class. "We can definitely see bank workers as part of the same continuum of issues facing all low-wage workers," she says.
Banks are, of course, notorious for squeezing profits from their employees and customers. In 2011, the Federal Reserve Board fined Wells Fargo $85 million for forcing workers to sell expensive subprime mortgages to prime borrowers. And in late 2013, a judge slapped Bank of America with a $1.27 billion penalty for its "Hustle Program," which rewarded employees for producing more loans and eliminating controls on the loans' quality.
Yet, by some accounts, these sorts of practices are getting worse. In a 2013 study by the union-backed Committee for Better Banks, 35 percent of low-level bank workers surveyed reported increased sales pressure since 2008, and nearly 38 percent stated that there was no real avenue in the workplace to oppose such practices. One HSBC bank employee, according to the study, reported that workers who failed to meet their sales goals had the difference taken out of their paychecks.
The increasing sales pressure comes at a time when the fortunes of the banks and their low-level workers have diverged widely. Bank profits and CEO pay have rebounded to near record levels while wages for front-line workers are stuck in the gutter.
And that's not all. Nearly a quarter of bank workers surveyed in 2013 reported that their benefits had been cut since 2008, and 44 percent reported that their medical and life insurance was inadequate. A recent University of California-Berkeley study found that 31 percent of bank tellers' families rely on public assistance at an annual cost of $900 million to taxpayers.
There are several factors in all of these woes. Mergers and consolidation have led some retail banks to shutter branches and lay people off. Many banks have outsourced customer-service jobs to overseas call centers, and the rise of internet and smartphone banking has further slashed demand for flesh-and-blood tellers. In other words, it's basically the same mix of foreign and technological competition that has concentrated wealth and depressed middle-class wages throughout the economy. And it means that banks can get away with paying people less, and demanding more in return.
But now the Committee for Better Banks is trying to cultivate common cause between low-level bank workers and the customers they're forced to target. The interviews featured in the new report show that many bank workers strongly oppose the sales quotas as unfair and exploitive. For instance:
A teller at a top-five bank reports that she is subject to stringent individual goals on a daily basis: If she does not make three sales-points (selling someone a new checking, savings, or debit card account) each day in a month, she gets written up.
Customer service representatives at a call center for another major bank report that each individual has to make 40 percent of the sales of the top seller to avoid being written up. Selling credit cards counts more towards sales goals than helping someone open up a checking account or savings account, thereby crafting skewed incentives based on the profitability of a product sold, not on how well it matched the needs of a customer.
"There was one guy who had three credit cards and I ended up pushing a fourth on him, even though I knew that was not good for him.""A lot of time people would call and already have one, two, or three credit cards with us," says Liz, a member of the Committee for Better Banks who worked in a Bank of America call center for five years and did not want to give her last name. "They might have a situation where they are low on funds and we end up pushing another credit card on them. There was one guy who had three credit cards and I ended up pushing a fourth on him, even though I knew that was not good for him; he would just be in more debt. But if didn't, I would end up being put in a reprimand."
On Monday, members of the Committee for Better Banks will converge in Minnesota's Twin Cities to deliver a petition to bank offices demanding better pay and more stable work hours for rank-and-file workers, and an end to sales goals that "push unnecessary products on our customers."
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Three Labels Control 80% Of The U.S. Music Industry. What Responsibility Comes With That Power?
Three Labels Control 80% Of The U.S. Music Industry. What Responsibility Comes With That Power?
In recent months, the music media has responded to the political climate by zooming in on artist behavior: Have or haven’t they condemned Trump? Where do they stand? What do they suggest we do to...
In recent months, the music media has responded to the political climate by zooming in on artist behavior: Have or haven’t they condemned Trump? Where do they stand? What do they suggest we do to resist? Publications including The FADER have increasingly looked to celebrities to provide a moral compass, to demonstrate what large-scale compassion looks like, and to show their peers what they’re doing wrong.
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The elevator moment: when to speak up, when to stay quiet, and the power of both
The elevator moment: when to speak up, when to stay quiet, and the power of both
Anger, pain, and courage.
That was what the moment was about.
Two women and their pain.
A U.S. Senator in an elevator, literally trapped and torn.
Frozen by their...
Anger, pain, and courage.
That was what the moment was about.
Two women and their pain.
A U.S. Senator in an elevator, literally trapped and torn.
Frozen by their escalating anger and anguish over what he had just announced.
A yes vote for Brett Kavanaugh to join the Supreme Court.
Read the article and watch the video here.
Fed Up Coalition Complains About Jackson Hole Room Cancellations
Fed Up Coalition Complains About Jackson Hole Room Cancellations
A group of activists planning to attend the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyo., has filed a complaint with the National Park Service, the...
A group of activists planning to attend the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyo., has filed a complaint with the National Park Service, the Department of the Interior’s Inspector General’s Office and the Justice Department after the conference hotel canceled the group’s room reservations.
The Center for Popular Democracy’s Fed Up Coalition said in an Aug. 9 letter that it booked 13 rooms in May at the Jackson Lake Lodge for its members for the nights of Aug. 24, 25 and 26. Last month, the lodge informed the group that their reservations had been canceled because of a “computer glitch,” according to the letter.
But the lodge didn’t cancel the reservations for other guests who booked after Fed Up did, said the letter written by Ady Barkan, campaign director of Fed Up, a left-leaning group that has lobbied for more diversity among Fed officials and more openness about the selection of regional Fed bank presidents.
“It is very hard for me to interpret the Company’s actions as anything other than a specific targeting of the Fed Up coalition,” he wrote in the letter.
Mr. Barkan said the group booked rooms at other hotels farther away from the conference, which will make it difficult for activists to attend events.
The Jackson Hole conference draws central-bank officials and economists from around the world who gather near the Grand Tetons to discuss monetary policy.
Fed Up members have been attending the conference for the past two years to urge Fed officials to hold off on raising interest rates, arguing that higher borrowing costs will slow economic growth and hurt low-income households. The group’s members often hold events and rallies near Fed events, wearing their signature green T-shirts.
A spokesperson for the Jackson Lake Lodge didn’t return a call for comment. Kathy Kupper, a spokeswoman for the National Parks Service said the lodges are run by independent contractors who are responsible for their day-to-day operations.
Mr. Barkan said he was writing the letter “to file a formal complaint regarding improper and potentially illegal behavior,” by the company.
By David Harrison
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