Employees Working With Corporations To Stop Corruption And Overreach Of Unions

It should be of no surprise that companies are now starting to “weaponize” their own employees to try and keep the corruption and price gouging of unions out of their respective places of business.

Unionization has not only resulted in the lack of free market price discovery for labor, but it is also been recently found to be extraordinarily corrupt. As we pointed out in a January 2018 article:

…a new report from the U.S. Department of Labor (DOL), obtained by the Detroit Free Press, proves that the corruption inside of union offices around the country is far more rampant than you ever imagined.  As the Free Press notes, in the past two years alone, more than 300 union locations have discovered embezzlement of union funds totaling millions of dollars…and that’s just counting the people who got caught.

Even though the UAW is the poster child of union corruption, cases reported by the DOL involved unions representing nurses, aerospace engineers, firefighters, teachers, film and TV artists, air traffic controllers, musicians, bus inspectors, bakery workers, roofers, postal workers, machinists, ironworkers, steelworkers, dairy workers, plasterers, train operators, plumbers, stagehands, engineers, electricians, heat insulators, missile range workers and bricklayers.  Meanwhile, the various cases involve embezzlement and fraud ranging from $1,051 up to nearly $6.5 million.

So it was no surprise when today, on Bloomberg it was reported that U-Haul workers were lobbying for the Trump administration to tackle rules that would make it tougher for unions to organize:

The men, along with dozens of other people working for U-Haul, the self-storage company, seem to have taken an outsized role in the debate over whether the Trump administration should revisit the rule. They’ve been doing this by flooding the National Labor Relations Board with very similar comments. While at least one employee said workers got together on their own, labor experts contend that the campaign has all the hallmarks of a company-influenced effort. U-Haul agreed, saying that while it didn’t compel workers to take part, it did provide the language for them to use.

Over the past few months, the NLRB received at least 100 similarly worded submissions urging it to throw out the policy that shortens the time between when some employees decide to unionize and when a vote is held. More than 60—roughly one out of every 25 comments submitted so far—used names matching people who work at the self-storage and rental giant, according to a review of LinkedIn pages and recent company announcements. More than a dozen additional comments appear to come from people who worked for the company in the past. 

U-Haul was profiled as a company that is encouraging its employees to stand up for the same free market price discovery that allows their business to function, and ultimately pay them. Imagine the shock!

The article continues, noting that the practice has “seen a renaissance” in recent years:

The volume and similarity of comments raise questions as to whether there was a coordinated effort, said Paul Secunda, who directs the labor and employment law program at Marquette University. “These U-Haul employee comments to the NLRB smack of employee mobilization by the company itself,” he said, though encouraging employees to comment on proposed rulemaking is perfectly legal. That companies urge employees to take part in campaigns for or against government regulations isn’t novel, but the tactic has enjoyed a renaissance of late. Employers and the business lobby have recently urged workers to fight various corporate
taxes and support the recent tax legislation. Alexander Hertel-Fernandez, a political scientist at Columbia University who just wrote a book on the topic, recounted how a lobbyist bragged of helping a financial company get 100,000 letters opposing the fiduciary rule—the now-endangered conflict-of-interest regulation for financial advisers. Hertel-Fernandez said a telecommunications company interested in shaping a different debate established an internet portal for workers, providing letter templates they could tweak before sending.

Unionizing, and the forced labor rules and regulations that accompany it by the government does little to help free market price discovery. Instead, it is yet one additional method for government to stick their nose not only into the economy, but also into the world of both private and public businesses. Free market price discovery in the labor market means that individuals should be compensated by their skill set, productivity and what they bring to the table as employees, not by what the government has pre-arranged in as a deal for them or by what unions can embezzle.

It should come as no surprise that once these labor unions are granted power via regulation through the government that they can become extremely large, corrupt and powerful and often times associated with additional corruption and foul play outside of the workplace as we wrote about in January.

Of course, the biggest and most highly publicized union embezzlement scheme of 2017 involves multiple Fiat Chrysler and UAW employees who stole millions of dollars intended for worker training…

Jerome Durden, a former financial analyst in corporate accounting at Fiat Chrysler and former Controller of the UAW-Chrysler National Training Center, pleaded guilty in August 2017 after preparing and filing tax returns that concealed millions of dollars in prohibited payments directed to others in 2009-15. His sentencing is scheduled for Jan. 23.

Alphons Iacobelli, former vice president at FCA, was charged in July 2017 with conspiracy and delivering more than $1.2 million in prohibited payments and things of value to the late General Holiefield, former vice president of the UAW, Holiefield’s wife and other UAW officials. His trial is scheduled for March 19.

Monica Morgan, wife of Holiefield, was charged in July 2017 with tax evasion and conspiracy stemming from her family’s receipt of more than $1.2 million from the former vice president of FCA between 2009 and 2014. Her trial is scheduled for March 19.

Virdell King, a former assistant director of the UAW-Chrysler National Training Center, pleaded guilty in August 2017 to receiving more than $40,000 in prohibited payments and things of value from the former vice president of FCA and “others acting in the interest of FCA.” Payments received between 2012 and 2015 included purchases of clothing, jewelry, luggage, golf equipment, concert tickets and theme park tickets. She is scheduled to be sentenced May 1.

If not anything else, the employees of U-Haul are getting taught a lesson to not  “bite the hand that feeds them” and hopefully more companies moving forward will actively employ the same strategies to help keep free market price discovery in the labor market as ever present as they can, outside the confines of an already overly regulated economy and job market.

“I Can’t Pay My Bills” – McDonald’s Employees Furious As Company Renegs On Wage Hikes

When the initiative was first announced, McDonald’s decision to raise its employees’ wages to $1 above minimum wage (albeit only at corporate-owned stores, a minority of the company’s total count) was hailed as a radical example of corporate accountability – a direct repudiation of the far-left notion that “quarterly capitalism” and employers accepting responsibility for their employees were mutually exclusive.

As any steely eyed realist might’ve expected, McDonald’s widely lauded “wage hike” was little more than a publicity stunt. In the three years since McDonald’s announced the wage hike in 2015, the firm has essentially frozen employee wages, often leaving them just a few cents above minimum wage, as Bloomberg has discovered.

McDonalds

But the company doesn’t expect to experience any blowback from this decision: After all, McDonald’s never said it was pegging employees’ wages to $1 above minimum wage. The company, it appears, deliberately equivocated during its initial announced – and what’s worse, nobody in the media has called the company out.

Until now, that is.

In Milpitas, California, north of San Jose, where the local minimum wage rose to $12 an hour on Jan. 1, several workers’ February paychecks show they received $12.35 or $12.45. In Los Angeles, where the minimum wage for large employers has been $12 since July, some checks show hourly pay of $12.69 or less.

Employees and members of the “Fight for $15” coalition – which had successfully pressured McDonald’s to assent to the wage hike (or so we had thought) – are understandably angry at the company, possibly having planned to receive higher wages in the near future, and based some major financial decisions on that.

“They need to give us the dollar that they promised us,” said one of those employees, Fanny Velazquez, who’s worked for the corporation for a decade. “I can’t pay my rent or my bills.”

The Service Employees International Union – most likely the initial anonymous source who brought the story to Bloomberg – blasted the company in an on-the-record statement. It’s also organizing workers to organize and exert whatever pressure they can.

The Fight For $15, a 6-year-old effort by the Service Employees International Union to organize fast food workers and secure more stringent wage laws, seized on the paychecks as evidence that the McDonald’s 2015 announcement was a “publicity stunt.”

“If McDonald’s wants to play semantics with its workers and continue to drive a race to the bottom instead of giving us real raises, it is going to continue losing workers to the growing number of employers who are leading the way to a better economy for all,” said Betty Douglas, a McDonald’s worker in St. Louis, in a statement on behalf of the Fight for $15.

Fight For $15 criticized McDonald’s pay announcement from the start, because it didn’t apply to the majority of the chain’s stores, which are owned by franchisees, and didn’t meet the group’s signature demand of $15 hourly pay.

The group plans to launch a hotline Monday that workers can call to report their wages, and will hold rallies in three cities on Tuesday to press its case that workers need a union in order to hold the company accountable.

What’s worse than McDonald’s not following through with the wage hike, employees say, is that recent changes to McDonald’s menu – primarily the “Experience the Future” suite of customizable menu options – have made the job harder.

Burger chains like McDonald’s are facing record-high turnover as workers depart for better jobs options in a tightening labor market. Last year, McDonald’s lagged behind peers like Wendy’s and Burger King in average drive-through times. Some employees complain that the chain’s “Experience of the Future,” a suite of changes to menus, technology and food delivery, has meant performing more tasks without commensurate staffing expansions or pay increases.

“It’s going to get increasingly challenging to attract the talent you want into your business,” Easterbrook said earlier this year, “and then you’ve got to work really hard through training and development to retain them.”

Of course, that McDonald’s did this shouldn’t come as a surprise to any long-time Zero Hedge readers. The company has been rapidly adopting kiosks in its dining rooms that allow customers to order without interacting with a cashier. Analysts believe these machines will eventually lead to the disappearance of hundreds of thousands of fast-food service jobs.

As we’ve said before, McDonald’s employees, while you’re agitating for a $15 minimum wage, don’t forget to thank your corporate overlords when they fire you and your comrades and replace you with this guy…

John5

 

New Book Slams “Toxic Geek Masculinity” In ‘The Big Bang Theory’

Authored by Toni Airaksinen via Campus Reform,

Two professors are warning in a new book that TV shows like The Big Bang Theory are emblematic of a worrying trend they call “toxic geek masculinity.” 

The new book Toxic Geek Masculinity in Media: Sexism, Trolling, and Identity Politics was written by Bridget Blodgett, a professor at the University of Maryland, and Anastasia Salter, who teaches classes on digital culture at the University of Central Florida.

Though computer geeks are often depicted as marginalized due to their social exclusion, Blodgett and Salter argue that the opposite is actually true, asserting that geeks are aligned “with a type of toxic straight white masculinity that is rooted deeply in current cultural struggles.”

“Geek masculinity, with its absence of hypermasculine qualities and apparent association with ‘un-masculine’ traits, is often cast in popular culture as a marginalized masculinity,” the professors note, but they make clear that they do not buy this interpretation.

“The dichotomy is false: geek masculinity is not marginalized,” they contend.

“It is instead an inevitable evolution of hegemonic masculinity in a culture where dominance and technical mastery are increasingly interwoven.”

Their book traces a number of TV shows and cultural struggles—including #Gamergate—to illustrate just how this toxic geek masculinity operates, citing The Big Bang Theory as but one example. 

Referencing an episode called “The Contractual Obligation Implementation,” in which three geeky male scientists visit a local high school to tout STEM careers to teens, the professors claim that the storyline is actually an example of “empty feminism” because the plot does not address gender disparities in STEM fields.

“The characters are deeply lacking in self-awareness regarding their roles in a sexist workplace, and this same lack of understanding is constantly played for humor,” Blodgett and Salter write.

Later in the episode, the male scientists bring two female scientists with them to chat with the high-schoolers, but the professors insist that the feminist ethos of these female scientists is actually “undermined” because they wear makeup and dress “ultra-feminine.”

Ultimately, Blodgett and Salter worry that the “the episode’s message about women geeks ends with their reduction to objects for the masculine gaze.”

The book concludes by arguing that toxic geek masculinity is just an inevitable evolution of hegemonic masculinity more generally. 

“Much like the break within the Democratic Party along racial lines in the 1948 election, more traditionally presenting geeks, white, middle-class, educated men are being pulled towards supporting the traditional power structure,” the professors write, asserting that this ultimately reflects an ongoing “cultural shift” whereby “geek masculinity has become part of hegemonic, white, male masculinity.”

Campus Reform reached out to Salter and Blodgett for comment for their new book, but neither responded in time for publication. 

These Companies Are Most Vulnerable To The Surge In LIBOR

Over the weekend, we looked at the notional amount of non-financial Libor-linked debt (so excluding the roughly $200 trillion in floating-rate derivatives which have little practical impact on the real world until there is a Lehman-like collateral chain break, of course at which point everyone is on the hook), to see what the real-world impact of the recent blow out in 3M USD Libor is on the business and household sector.

To this end, JPM calculated that based on Fed data, there is a little under $8 trillion in pure Libor-related debt…

and that a 35bps widening in the LIBOR-OIS spread could raise the business sector interest burden by $21 billion. As we wondered previously, “whether or not that modest amount in monetary tightening is enough to “break” the market remains to be seen.”

In other words, unless the Fed – and JPMorgan – have massively miscalculated how much floating-rate debt is outstanding, and how much more interest expense the rising LIBOR will prompt, the ongoing surge in Libor and Libor-OIS, should not have a systemic impact on the financial system, or economy.

What about at the corporate borrower level?

In an analysis released on Monday afternoon, Goldman’s Ben Snider writes that while for equities in aggregate, rising borrowing costs pose only a modest headwind, “stocks with high variable rate debt have recently lagged in response to the move in borrowing costs.”

Goldman cautions that these stocks should struggle if borrowing costs continue to climb – which they will unless the Fed completely reverses course on its tightening strategy – amid a backdrop of elevated corporate leverage and tightening financial conditions.

Indeed, while various macro Polyannas have said to ignore the blowout in both Libor and Libor-OIS because, drumroll, they are based on “technicals” and thus not a system risk to the banking sector (former Fed Chair Alan Greenspan once called the Libor-OIS “a barometer of fears of bank insolvency”), what they forget, and what Goldman demonstrates is what many traders already know well: the share prices of companies with high floating rate debt has mirrored the sharp fluctuation in short-term borrowing costs. This is shown below in the chart of 50 S&P 500 companies with floating rate bond debt (i.e. linked to Libor) amounting to more than 5% of total.

Here are some details on how Goldman constructed the screen:

We exclude Financials and Real Estate, and the screen captures stocks from every remaining sector except for Telecommunication Services. So far in 2018, as short-term rates have climbed, these stocks have lagged the S&P 500 by 320 bp (-4% vs. -1%). The group now trades at a 10% P/E multiple discount to the median S&P 500 stock (16.0x vs. 17.6x). These stocks should struggle if borrowing costs continue to climb, but may present a tactical value opportunity for investors who expect a reversion in spreads. The tightening in late March of the forward-looking FRA/OIS spread has been accompanied by a rebound of floating rate debt stocks and suggests investors expect some mean-reversion in borrowing costs.

Goldman also notes that small-caps generally carry a larger share of floating rate debt than do large-caps, which may lead to a higher beta for the data set due to size considerations.

In any event, the inverse correlation between tighter funding conditions (higher Libor spreads) and the stock underperformance of floating debt-heavy companies is unmistakable.

Finally, traders who wish to hedge rising Libor by shorting those companies whose interest expense will keep rising alongside 3M USD Libor, in the process impairing their equity value, here is a list of the most vulnerable names.