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Greg Worden

Entrepreneur and Adjunct Professor of Sustainable Business, Worden Associates

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Are unions in the US still relevant?

Hostess is closing eliminating 18.500 jobs due, in part, to 5,000 bakery union members striking while the Teamsters had already accepted a deal. True, the company had been mismanaged but this appears to be an example of a union cutting off its nose despite its face. The US has some of the best worker-protection laws in the world. Is this an example of good union leadership or is it an example of unions acting as though it was still 1905? Are unions still relevant in the US today?

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    Nov 17 2012: I have a BIG problem with unions among public employees. If you want to be part of a union, work in the private sector. I don't care of you are a teacher or a fire fighter or a police officer. I'm tired of being held hostage by public workers.

    As to private sector unions, I think that many of them are prone to hard-line extremism among inadequately educated members. If you can't read balance sheets or understand business management, you shouldn't be voting to strike.

    But that's not the whole problem. The disparity of wealth between rich and poor also disincentivises owners when it comes to compromise or even explaining reality clearly to workers. At some point, you are so wealthy that it is no huge loss to simply close and start anew with something else if manufacturing is more profitable than other ways to produce an iincome.

    Example of how this can be: Back when Ross Perot walked away from his bid for the presidency, he wanted to improve his reputation. So there was a lot of hoopala about his giving 350 million to build a youth center in Texas. At first I was impressed, but then I realized that for such a wealthy multi-billionaire, it was only peanuts. So I compared his billions to my net worth at the time and realized that he gave the equivalent of my 8 cents. And when I compared his tax-free income (his income was from tax-free bonds) to my small taxed income, it was considerably less than 8 cents. Still, the papers were lauding him and singing his charitable praises.

    We need to even out the imbalance of wealth in the USA. If that means capping salaries and bonuses, and evening out the tax load, so be it. And if that means a hefty property tax on the multi-billionairs, so be that too - as long as the money is used to get rid of the deficit. But you won't see that because the wealthy are the ones that are buying our politicians.
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      Nov 20 2012: My son was doing a project for his social studies class and he was asking me why Ronald Regan fired so many air traffic controllers. I explained it in just about the same words you started out with, "being held hostage by public workers."

      Your point about relative wealth is also very correct. I was reading a story about a man who phoned Mercedes Benz for a new limousine and they asked if he wanted the new sports car too. He said, "sure throw that in too." That's unthinkable for me but if you're a multibillionaire it's peanuts, as you say. Kudos, for your critical thinking!
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        Nov 20 2012: There has always been and always will be financial inequality. The correct thing to look at is economic mobility.

        This meme was started by politicians who influenced people through this propaganda as they are ignorant on this subject.

        One of the fun facts that they use is household income has gone down for 30 years. But if you use them as your educational source you don't find out that the reason this is true is that divorce rate changed dramatically, every time there is a divorce the household income is divided in half.

        Another fun fact that does not get relayed to the people who buy into this trope is that upper income people suddenly are increasing their income over the last 30 years. What they don't realize is that due to changes in the tax law high income earners started paying their income tax as personal income through Sub-chapter S or a LLC instead of a chapter C corporation. It only appeared like their income changed.

        Another thing is you will not get a job from a poor man. Like it or not the reason for the anemic (think albino) "recovery" is that this equality crap along with the other crap has driven entrepreneurs off shore or into a cave.
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          Gail . 50+

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          Nov 21 2012: Yes, the divorce rate has changed considerably over time. The 70s had the highest divorce rate. They have been dramatically reduced every decade since. They are now at their lowest since the 70s. Your suggestion that divorce is reason for the decline in income is provably not true. You also seem to forget that most divorcees remarry.

          The major difference between a Sub-chapter S, a d/b/a, and a C Corp is how many tax filings one has to make. There is nothing stopping a C Corp from paying all its profits out as owner's salary. My husband's business was S corp. Mine was a C corp. I can say with certainty that your claim doesn't meet reality. In 1990, the typical CEO made 5 times more than the typical production worker. By 2,000, the typical CEO made over 400 times more than the typical production worker, whose relative income actually dropped because of inflation. This alone is proof that you are mistaken.

          The way to measure economic disparity is not by the type of company they own or work for. It is by measuring net worth - house, stock, toys, etc. value.

          As to economic mobility, The US ranks very low compared to other developed nations. The United States has about 1/3 the ratio of mobility of Denmark and less than half that of Canada, Finland and Norway. France, Germany, Sweden, also had higher mobility. All studies show that the idea of economic mobility is part of the US cultural myth.

          As to your "equality crap", statistics do not bear you out. 97% of all business owners are in the middle class. You have fallen for the myth that the rich are the job creators. That's just not true - provably. The middle class start businesses and if there is popular support for the product or service, the business can grow if the owner wants it to. Some are then sold for mega bucks.

          I understand that you feel strongly about some things, but if you would verify what you hear on Fox News, you will be amazed by how many lies you are being told.
        • Nov 23 2012: "The correct thing to look at is economic mobility."

          Which is quite low in the United States, compared to other developed nations.

          "But if you use them as your educational source you don't find out that the reason this is true is that divorce rate changed dramatically"

          It changed alright, but not in the direction you're thinking, it has been decreasing since 1981.

          "Another fun fact that does not get relayed to the people who buy into this trope is that upper income people suddenly are increasing their income over the last 30 years. What they don't realize is that due to changes in the tax law high income earners started paying their income tax as personal income through Sub-chapter S or a LLC instead of a chapter C corporation. It only appeared like their income changed."

          The top 1% are usually executives and businessmen, not business owners. TED lover's CEO pay statistic is striking.

          "Another thing is you will not get a job from a poor man."

          You don't need a rich man to give you a job either, any tiny business can give you a job and any business you start can be invested in by pension funds and banks. Anyway, supply needs demand needs supply needs demand needs supply... A circle has no beginning.
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        Nov 21 2012: I don't know the numbers on remarrying do you have them? But when they remarry they will have half the assets they had.

        What you fail to realize is that C corps pay 35% and S corps pay 28% if your accountant did not tell you this maybe you should look for a new one. The owner has the choice to file either way and naturally as law has changed since 83 people have changed the way they file. Notice that was about 30 years ago.

        How do you arrive at the income mobility number? Certainly it has changed recently? Just from a common sense perspective I look at how the U.S. has changed the standard of living of the world over the last 100 years or so. I also go by this index:

        http://www.heritage.org/index/

        Who ever said all business owners are in the middle class?

        I don't have time to dig out the numbers about business investment creating jobs right now but if you insist I will. For right now suffice to say when ever taxes have gone down (only a couple of times in the last 100 years) investment has gone up and employment has gone up. Something the current administration and you fail to realize. This is absolute fact the sun may or may not come up tomorrow but investment creates jobs.

        The equality trope says that demand creates jobs this just isn't so supply creates demand. Maybe Krisztian can indicate the truth on this?

        You pointed out the fallacies in the history around Lincoln (which I bet does not get mentioned in the Spielberg movie) you did this by doing your homework in the Anti Federalist papers and I listened. The same thing is true in economics you have to do your homework it is not learned by sound bytes.
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          Nov 21 2012: "The same thing is true in economics you have to do your homework it is not learned by sound bytes."

          Wisely said, and it's fun also.
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        Nov 21 2012: Fritzie

        I wonder if you realize that I do not speak from sound bytes about economics? It may surprise you and others that I do have a working knowledge of this subject? based on quite a few books and discussions and videos and operating in the business world for over 3 decades.

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