California Legislature Votes to Award Overtime Pay to Farm Workers

“These are the men and women who every day ensure that we have fruit, vegetables and wine on our tables”

3_2_4_c                                                                                        Dorothea Lange

It seems so long ago when we read The Grapes of Wrath and bristled at the inhumanity of California fruit growers. It was in 1962 that Cesar Chavez established the United Farm Workers  and began his ultimately successful struggle with the growers.

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And yet it is only today, 77 years after the publication of Steinbeck’s shocker, that California fruit and vegetable growers may finally actually have to pay their workers in a manner comparable to other workers in the state (and that, after stiff resistance). The bill is currently on the governor’s desk to sign.

Our blog drew on an article in today’s Los Angeles Times written by Jasmine  Ulloa and Sophia Bollag. 

In a historic win for farmworkers, California lawmakers on Monday passed legislation that would expand overtime pay for more than 825,000 laborers who bring produce to stores and tables across the state. . .

Arturo Rodriguez, president of the United Farm Workers of America, which sponsored the measure, lauded the workers who came to the Capitol, losing a day of work, to, as he put it, “be able to witness history.”

“These are the men and women who every day ensure that we have fruit, vegetables and wine on our tables,” he said.

During what was an emotional debate, supporters of the bill framed the legislation as a matter of human rights and dignity of work, saying farm laborers deserved the same protections as the vast majority of workers.

Assemblyman Jose Medina (D-Riverside) called the vote an opportunity to correct a wrong against a subset of workers that would do more to honor Cesar Chavez than any ceremony, walk or statue.

Assemblyman Tony Thurmond (D-Richmond) said it was about a simple equation: “A fair day’s pay for a fair day’s work.”

“This is not an attack on those who employ farmworkers,” Thurmond said. “But this is in fact what farmworkers have asked us to do. They have asked us to give them dignity, and we have the opportunity to make history today—history that has been 80 years in the making. . .”

The issue of farmworker overtime festered in recent weeks into one of the most contentious at the end of a two-year session that has been marked by major internal Democratic strife, with rifts growing between those members aligned with business interests and those allied with labor. . .

United Farm Workers argued it corrected an injustice farmworkers have lived with since they were first exempted from federal minimum wage and overtime standards nearly eight decades ago.

But prominent business groups, led by the California Farm Bureau Federation and a coalition of agricultural producers, countered its provisions further burdened farmworkers already dealing with increased regulations and an ongoing water crisis. . .

California Assembly Speaker Anthony Rendon (D-Paramount), who rose to the floor in support of the bill and last week promised to do everything in his power to get it passed, said he spent the weekend having conversations and going over wage data with lawmakers who held concerns.

Of the final vote, he said he felt “a tremendous sense of history, a tremendous sense of us doing something right.”

 

 

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Retraining Coal Miners and Tobacco Farmers for the Climate Change Era – Part 2

This is the conclusion of an article by Coral Davenport of the New York Times 

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Porterfield Highway illustrates the region’s economic reality with billboards advertising high-speed broadband services, and rural aid programs to feed hungry children. In the tiny, largely boarded-up town of Sun, Va., Roger Bentley, a retired miner, recalled that more than a decade ago, Reynolds Metals Company built a factory here, lured by tax incentives to bring in non-tobacco companies. “But after the tax breaks run out,” he said, “they left.”

William M. Shobe, the director of the Center for Economic and Policy Studies at the University of Virginia, said that as tobacco and coal decline, the best option for workers might simply be to leave.

“Retraining is fine, but without mobility, much of the value of that retraining will be lost,” he said. “You will have coal miners retrained in computer skills, but working in retail or not working at all.”

The tobacco commission did have some successes, Mr. Chafin said. The problem, he said, is that many of the college-educated workers at Northrop Grumman are not local. And the new call center jobs pay about $12 an hour — far less than a coal miner’s annual salary of $60,000 to $80,000.

“It’s hard to think of what other kind of retraining you give to coal miners,” he said. “There just isn’t enough here — and it’s dubious to say that broadband will save us.”

A 2015 study by the left-leaning Economic Policy Institute on the employment effects of President Obama’s climate change policies found that over all, the initiatives would cut jobs in industries like coal mining, but increase jobs in industries like wind and solar development, leading to a net gain of 24,342 jobs by 2030.

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But that number, the study showed, includes a loss of 202,238 jobs associated with coal mining and coal-fired power generation in regions where they might not be replaced by the 256,177 new jobs associated with the manufacture of energy-efficient lighting and heating and cooling systems.

“It’s not going to be easy,” Mr. Houser said. “The green shoots of diversified growth are showing up a lot more slowly than the rapid decline of coal. You’re not going to flip a switch and suddenly have a robust diversified economy in southwest Virginia.”

In Wise, Va., a few miles from Kentucky, Jack Kennedy, a circuit court official and a technophile who campaigns for the town’s economic development, is optimistic that the region could rebound as a center for technology. He is working to bring in companies that specialize in cybersecurity and drone technology. At least one firm, he said, has already flown a cargo drone from the town’s Lonesome Pine Airport.

“This is the perfect place for industries like drones and cybersecurity, because we’re so remote,” Mr. Kennedy said. “The drone industry is new. We can grow with it.”

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OptaFuel lab. Photo by Mike Belleme

Mr. Kennedy also pointed to OptaFuel, a lab that is researching and developing biofuels made from sawdust. The company started the lab in Wise because of tax breaks offered by the tobacco commission — and it brought highly educated employees like Vrusank Patil, an engineer who grew up in India, and Clint Ivey, a production manager who grew up in Georgia.

“If it wasn’t for the tobacco commission,” Mr. Ivey said, “we wouldn’t be here.”

About half of the team of 35 chemists, many dressed in skinny jeans and lab coats, are recent graduates of the University of Virginia’s small campus in Wise, he said. OptaFuel also employs a few former coal miners as security guards.

But, he conceded, “for the research jobs, you need a bachelor’s degree” — something most former coal miners do not have.

Retraining Coal Miners and Tobacco Farmers for the Climate Change Era – Part 1

There has been much talk and certainly a great need to retrain the men and women formerly engaged in the production of tobacco and coal who have lost their jobs to the new “green” economy so that they may become useful participants once again in our society.

 What has been done and how effective has their retraining been in outfitting them for the new economy? This article in today’s New York Times by Coral Davenport  tells us and that it is insufficient. More needs to be done.

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LEBANON, Va. — As Kevin Widener was growing up on his family’s tobacco farm in the rolling hills of southwest Virginia in the 1990s, lawmakers and lawyers in Washington were waging a war on smoking.

In 2006, as part of a larger program to help failing tobacco farmers, the federal government purchased the Widener homestead, and a separate legal settlement with the tobacco industry paid for Mr. Widener to attend community college, the start of a successful transition to nursing.

His mother, Sheila Snapp, now unemployed and surviving on government disability payments, was not so successful. “The tobacco money made a big difference for my son,” Ms. Snapp said while waiting for her clothes to dry at the Lost Sock Coin Laundry. “But it didn’t change anything for the rest of us.”

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Now Washington is gunning for the second pillar of the Appalachian economy, coal, and again a politician, Hillary Clinton, is promising to help — with $30 billion over 10 years to revitalize coal country.

As in the case of tobacco, the idea is not to save the old economy, but to create a new one by retraining miners, investing in infrastructure and technology, and luring new industries.

Residents here are skeptical, and with good reason, some economists say. Much of the tobacco rescue came from a 1998 settlement between tobacco companies and more than 40 states, requiring the companies to pay more than $200 billion over 25 years to help the victims of tobacco — both those afflicted by cancer and lung disease, and those hurt economically by the decline of the industry.

In turn, lawmakers in Virginia created the Tobacco Region Revitalization Commission, which has spent nearly $1 billion.

The commission and similar programs helped send some young people like Mr. Widener to college. It also spent money on projects similar to what Mrs. Clinton proposes: building broadband networks and retraining in fields such as computer repair. It lured a major government contractor, Northrop Grumman, to build an office here, and built call centers for Verizon and TurboTax.

But southwest Virginia is still suffering.

“The government can’t really help Appalachia,” said Gary Lambert, a retired coal machinist who also sold his tobacco farm to the federal government. “The tobacco settlement was a rip-off. They ripped us up one side and down the other.”

The settlement did pay for one of his sons, Thad, to go to college and become a teacher at the local high school. Another son, Brad, is back in the firing line: He’s a coal miner.

“I guess if you want to survive, you have to change,” Mr. Lambert said outside Pat’s Kountry Diner in Lebanon. He said things had gotten so bad that methamphetamine was so cheap that no one even made moonshine anymore.

Some senior coal country Republicans, including Senator Mitch McConnell of Kentucky, the majority leader, and Representative Harold Rogers of Kentucky, chairman of the House Appropriations Committee, have also teamed up with Democrats to support their states’ economies.

But residents of southwest Virginia, 19 percent of whom live in poverty, can be forgiven for their skepticism.

“We have great broadband, we’ve gotten some call centers. That’s helped us,” said Terry Kilgore, chairman of the state’s Tobacco Region Revitalization Commission. “But it wasn’t enough to replace tobacco, and it’s not enough to replace coal.”

It also seems to be far too little for the scale of the problem.

“I’m a lawyer. I rarely get offended by an offering of money to redress a wrong,” said State Senator Ben Chafin, a Republican, who watched the decline of his father’s tobacco farm. “But $3 billion a year won’t even be enough to buy everyone a custard cone.”

To be continued

 

A Venture Capitalist Speaks Up

440px-NYSESecurity                                                                                                                   The New York Stock Exchange

This article which appeared in the Opinion section of today’s New York Times will truly warm your hearts as it did ours when we discovered it. There is still a sense of decency and idealism left in the American people. We have not sold out entirely to the bottom line. Alan J. Patricof, a venture capitalist (co-founder and managing director of Greycraft, a venture capital firm) proposes that he and all others in his position should be paying their fair share of taxes and forcibly gives the reason why. “Most important, it comes back to a question of fairness,” he writes. Perhaps the way back from the edge of the inequality precipice begins here.

My fellow venture capitalists and private equity investors are paying close attention to the heated election-year rhetoric about the future of “carried interest,” which is the performance fee we charge to manage other people’s money. Carried interest is the fund manager’s share of the earnings from a profitable investment, normally paid on top of a much smaller management fee.

It’s also a subject of increasing political disfavor. Over the past year, every major presidential candidate — from Jeb Bush and Donald J. Trump to Hillary Clinton and Bernie Sanders — has called for an end to a tax loophole that exists for carried interest. Mrs. Clinton has vowed that if Congress does not close the loophole, as president she would ask the Treasury Department to use its regulatory authority to do so.

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Ultimately, the controversy has to do with tax fairness, or the lack thereof. Instead of being taxed as wages or commissions earned, carried interest is currently taxed as if it were a personal investment, or capital gains. This gives us a significant tax advantage since the capital gains tax rate is about 50 percent lower than the top rate on ordinary income.

When I started my first fund, Alan Patricof Associates, in 1970, I vividly remember my accountant telling me about my first sale of an investment: “We’re going to treat this as capital gain, but sooner or later, it will be characterized as ordinary income.”

That was 46 years ago — and virtually nothing has changed.

Other countries have taken action: Britain recently recognized the wisdom of doing away with the special tax treatment of carried interest by maintaining a much higher tax rate on such income. But not the United States.

It is past time for that to change, and for fund managers like myself to accept the reality: We should not be receiving a tax break meant for investors when our work does not involve the risk of our own investment of capital.

As the former Treasury secretary Larry Summers once said of carried interest, “Rarely has a policy existed so long with such weak arguments in its favor.”

The capital gains tax benefit was originally created for people who invested with their own capital at risk. It was established as an incentive for investors to take greater risk than they would with their ordinary income. But because of the nature of our work, carried interest does not merit that incentive.
To the extent that venture capitalists and private equity investors have their own capital invested in their own or any funds, they deserve capital gains treatment, just as any other limited partner does. But the same does not hold true for a general partner.

The general partner is managing the funds of others and rarely puts his own money into the initial investment. The risk he takes is that his ultimate payout is not guaranteed unless the venture is profitable — which is very different from the investor who is putting his own money at stake.

And there is a cost. According to the Congressional Joint Committee on Taxation, carried interest costs the American people nearly $2 billion in tax receipts every year. While eliminating the carried interest advantage would make only a small dent in the national debt, it would send a meaningful message to the American people.

Most important, it comes back to a question of fairness. Our current political and cultural environment is marred by a toxic belief that the country’s economic order is rigged against ordinary Americans — that the world of high finance unjustly supersedes their rights, needs and wants.

A new report by Gallup found that 86 percent of Americans agreed that members of Congress paid too much attention to what their major financial contributors wanted them to do. It feeds the cynicism that is fraying our democracy.

“Congress’s harshest critics,” Gallup reported, “feel more strongly about the undue influence that donors and lobbyists have on Congress than they do about any other major criticism of the institution.”

For that reason alone, my fellow venture capitalists and private equity investors should support the closing of the carried interest loophole: It would carry great symbolic weight.

There needs to be a more realistic attitude from those of us who have benefited from the carried interest loophole for too many years.

We need to demonstrate a little more patriotism, and a greater sense of fairness, even if it affects our pocketbooks.

Good News–Pay Increases at the Bottom of the Ladder

In an article in today’s Wall Street Journal by Erich Morath and Julie Jargon, raises for lowest-paid workers are not only seen as good business but possibly hint at a corporate shift toward more profit-sharing.    

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. . . For Americans in the bottom quarter of the income scale, who were left behind for much of the expansion, pay is rising at the fastest rate since the recession.

The gains appear to be driven by more competition for workers, minimum-wage increases and initiatives by companies from McDonald’s Corp. to Nationwide Mutual Insurance Co. to J.P. Morgan Chase & Co., who have proudly declared that they would give their lowest-paid workers a boost. . . 

. . . The raises aren’t being quietly slipped into paychecks. Instead, large employers are setting a public example, putting pressure on competitors to follow suit and reaping ancillary benefits in the form of good will from employees, customers and investors.

J.P. Morgan Chase Chief Executive Jamie Dimon used an op-ed piece in the New York Times last month to announce that his company would increase minimum pay for 18,000 workers to at least $12 an hour.

Starbucks Corp. Chief Executive Howard Schultz used a recent letter to employees—published on the company’s public website—to tell workers about a minimum 5% raise this year. McDonald’s, Wal-Mart Stores Inc. and Gap Inc. have made similar moves in recent years.

Nationwide said last September that it was increasing the minimum wage for its lowest-paid workers to $15 an hour from $10.50. About 900 workers at call centers in Des Moines, Iowa, and San Antonio got raises.

Competitive pressures and low unemployment in those cities was a factor, said Gale King, Nationwide’s chief administrative officer. . .

. . . The companies say increasing pay at the bottom of the scale can be a smart financial decision, leading to a more a stable employment base and lower hiring and training costs. It can also be a wise public-relations move.

“Baristas, bank tellers, these are people customers see as the face of the brand,” said Kirsten Davidson, head of employer brand at job-rating website Glassdoor. “If a company is not talking about pay raises for those employees, that’s a huge lost opportunity.”

Such pay increases also hint at a corporate shift toward more profit-sharing, said Princeton economist Alan Krueger, a former economic adviser to President Barack Obama.

“It shows company wage policy is not fully dictated by the market,” said Mr. Krueger. “That’s one of those myths that the labor market is purely set by supply and demand.” A solely market-driven company would set different wages in every city, not announce nationwide raises, he said. . .

. . . Raises for lower-paid workers can make customers, and even investors, feel better about a company. That can be especially important for businesses targeted by protesters demanding a $15-an-hour national minimum wage.

Weekly wages in the leisure and hospitality industries, including restaurants, are advancing at nearly the same rate as for information workers, who earn three times as much, Labor Department statistics show. . .

End of article

Black Support for Charter Schools

Perhaps we should take another look at charter schools before writing them off. In an article in The Wall Street Journal today by Jason. L. Riley we discovered the following surprising endorsements from African-Americans.

577fb43bb995c6e2139f6a08ca42e801“A Flower for the Teacher” by Winslow Homer

. . . Charter schools are among the best public schools in the country. It isn’t uncommon for a charter located in an inner-city ghetto to outperform affluent white suburban schools on standardized tests. Last year in New York City, the nation’s most populous public-school system, the charter schools outperformed all other schools in the state by an average of 18 points in reading, and charters were half of the city’s top 10 schools in math proficiency. It’s no surprise that the wait list for charter schools in many cities is thousands of children long—more than 42,000 students are wait-listed in New York City—and that blacks have the most to lose from the moratorium advocated by the NAACP. . .

. . . According to the latest Education Next national survey figures from Harvard’s Paul Peterson, black support for alternatives to traditional public schools is as robust as it’s ever been. Black respondents backed charter schools by two-to-one. Black support for means-tested vouchers was a similarly strong 66%. . .

Mr. Riley, a Manhattan Institute senior fellow and Journal contributor, is the author of “Please Stop Helping Us: How Liberals Make It Harder for Blacks to Succeed” (Encounter Books, 2014).

 

Kimberly-Clark and the New Performance Culture, Part 2

This is the conclusion of a two-part article on the Kimberly-Clark manufacturing company and its adaptation to a new management system focused on worker performance. The original, much more extensive article appeared in the August 22 Wall Street Journal and was written by Lauren Weber.

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Engineers in 1948 worked on product development at 
a company mill in Neenah, Wis. PHOTO: KIMBERLY-CLARK

Performance management shifts companies away from backward-looking, once-a-year reviews framed largely as compliance requirements—a paper trail for potential job cuts and salary decisions—to a process that is real-time, continuous and focused on helping people meet ambitious goals, or move out of the company faster.

The last recession led many employers to rethink the nearly automatic merit raises they had been doling out, forcing them to do a better job identifying high and low performers when giving raises and bonuses. Millennial workers, meanwhile, demand more feedback, more coaching and a stronger sense of their career path.

Companies spend $14 billion a year on products to help manage employees, including human-resources software from Workday Inc., SAP SE ’s SuccessFactors and Cornerstone onDemand Inc., with about $2 billion of that dedicated to performance management, according to human-resources advisers Bersin by Deloitte.

Those systems let managers track workers’ progress via dashboards that display their goals, accomplishments, attendance, peer feedback and other data. Executives’ use of phrases like “performance culture” in conference calls with analysts and investors has doubled in the past five years, according to a review of transcripts in the Factiva news database.

Firms that set goals and hold workers accountable “clearly outperform,” said Nicholas Bloom, an economist at Stanford University and co-author of a recent paper that used Census data to examine more than 32,000 U.S. manufacturing plants. He said they have faster growth, higher profitability and are less likely to go bankrupt.

In 2008, with the company’s shares stagnant, few innovations in the pipeline and a belief that costs were bloated, the CEO added human-resources executives to the team putting together the firm’s long-term business plan for the first time.

Holding workers close through good times and bad is “not sustainable” any more, said Liz Gottung, the company’s human-resources chief. “If you look at when we started implementing the big pieces of the company’s people strategy, when you map that to our stock price and our business results, you can see the clear correlation.” Since 2009 Kimberly-Clark has laid off around 2,900 mostly salaried workers world-wide, some of the first big cuts in the company’s 144-year history. It currently employs about 43,000.

Remaining employees are expected to work “smarter” and meet regularly raised targets. “We have to routinely shuffle the resources and say, what’s the most important thing we need to do today, this week, this month, to drive this objective?” said Stephanie Martin, an engineer who analyzes new product ideas.

In 2015, Kimberly-Clark retained 95% of its top performers. Among the employees whose work was rated “unacceptable” or “inconsistent,” 44% left the company voluntarily or were let go. Ms. Gottung said she is “pretty pleased” that low-performer turnover has been rising.

These days, leadership has communicated to employees that turnover is a good thing, said Chris Luettgen, a senior research manager who left in 2014 to join the engineering faculty of Georgia Tech. “I saw it as a good move in that we could get some new thinking and innovation into our pipeline,” he said.

Regular “culture of accountability” sessions train employees in giving and receiving difficult feedback. When a colleague suggests improvements, “the proper response was ‘thank you for the feedback,’ not defensiveness,” Mr. Luettgen said. Employees also practice reinforcing positive behaviors, such as praising a colleague who had given up a weekend to solve a customer complaint.

The Verdict?

Dave Bernd, a 33-year veteran whose father was a senior executive at the company, said that when he walked on the Roswell, Ga., corporate campus a few months ago he found the old warmth missing. “It doesn’t feel like the family it once was.”

The former manufacturing director, who retired in 2013, said a decade ago, “whether you knew anyone or not,” employees said hello in the parking lot and engaged in camaraderie typical of a smaller company. Even so, he said he approves of the recent management changes.

One of the firm’s core values is still “caring,” said Ms. Gottung, who joined Kimberly-Clark in 1981. “When I started with the company, we were very conflict-averse, very oriented towards consensus,” she said. “And now it’s ‘I care enough about you to tell you the truth.’ ”

One former employee said he was initially glad that the company was identifying those who weren’t pulling their weight. Then, after earning top reviews over his decades long career, he said he was given a low rating and placed on a performance-improvement plan after missing a project deadline. After that, “no one would talk to me” about other positions, he said. He said the situation eventually improved with a new supervisor, but he still decided to leave the company last year.

In that instance, “did the system work or not? I don’t know,” said Ms. Gottung. With thousands of performance reviews happening every year, “I wish we had 100% satisfaction, but that’s unrealistic. Overall, our employees think this is a fair and equitable process.”

End of article

 

 

Kimberly-Clark and the New Performance Culture, Part 1

This is an article about the new “performance culture” being instituted in industry to create a greater turnover in employment (which is intended to be beneficial to both employees and management alike) and introduce higher productivity. Specifically, it is about an older traditional manufacturing company, Kimberly-Clark, producers of such everyday commodities as Scott Paper Towels and Kleenex, and how they and their employees have adapted to the new efficiency. If this sounds like a latter-day version of what used to be called “Taylorism,” it could very well be, though perhaps more kindly. Whether it is equally successful among the workers as it is with management, we will let you be the judges.

 The original article, from which this was extracted, appeared in the August 22 Wall Street Journal and was written by Lauren Weber.  Because of its length we will publish it in two parts.

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Making paper for Scott paper towels at the company’s 
Chester, Pa. mill in 1917. PHOTO: KIMBERLY-CLARK

For generations, having a job at Kimberly-Clark meant having a job for life. The maker of household products such as Huggies and Kleenex paid its employees above-market salaries and avoided layoffs. Even low performers rarely felt pressure. “A lot of people could and would hide in the weeds,” said Rick Herbert, a sales director who retired in 2014 after more than three decades with Kimberly-Clark.

That’s over. One of the company’s goals now is “managing out dead wood,” aided by performance-management software that helps track and evaluate salaried workers’ progress and quickly expose laggards. Turnover is now about twice as high it was a decade ago, with approximately 10% of U.S. employees leaving annually, voluntarily or not, the company said.

Armed with personalized goals for employees and large quantities of data, Kimberly-Clark said it expects employees to keep improving—or else. “People can’t duck and hide in the same way they could in the past,” said Mr. Boston, who oversees talent management globally for the firm. It has been a steep climb for a company that once resisted conflict and fostered a paternalistic culture that inspired devotion from its workers.

The last recession led many employers to rethink the nearly automatic merit raises they had been doling out, forcing them to do a better job identifying high and low performers when giving raises and bonuses. Millennial workers, meanwhile, demand more feedback, more coaching and a stronger sense of their career path.

Companies spend $14 billion a year on products to help manage employees, including human-resources software from Workday Inc., SAP SE ’s SuccessFactors and Cornerstone onDemand Inc., with about $2 billion of that dedicated to performance management, according to human-resources advisers Bersin by Deloitte. Those systems let managers track workers’ progress via dashboards that display their goals, accomplishments, attendance, peer feedback and other data.

Executives’ use of phrases like “performance culture” in conference calls with analysts and investors has doubled in the past five years, according to a review of transcripts in the Factiva news database. Firms that set goals and hold workers accountable “clearly outperform,” said Nicholas Bloom, an economist at Stanford University and co-author of a recent paper that used Census data to examine more than 32,000 U.S. manufacturing plants. He said they have faster growth, higher profitability and are less likely to go bankrupt.

In 2008, with the company’s shares stagnant, few innovations in the pipeline and a belief that costs were bloated, the CEO added human-resources executives to the team putting together the firm’s long-term business plan for the first time.

Holding workers close through good times and bad is “not sustainable” any more, said Liz Gottung, the company’s human-resources chief. “If you look at when we started implementing the big pieces of the company’s people strategy, when you map that to our stock price and our business results, you can see the clear correlation.” Shares closed at a high of $138.13 in April, and its quarterly dividend, which it has raised every year for more than four decades, hit a high of 92 cents a share in February. The share price has more than doubled since 2008.

Not long ago, when Kimberly-Clark Corp. employees gathered for interdepartmental meetings, they prefaced their comments with their names and years of service at the company. These days, “no one cares,” said Scott Boston, vice president of human resources. The attitude in meetings is “ ‘let’s get moving,’ ” he said.

For generations, having a job at Kimberly-Clark meant having a job for life. The maker of household products such as Huggies and Kleenex paid its employees above-market salaries and avoided layoffs. Even low performers rarely felt pressure. “A lot of people could and would hide in the weeds,” said Rick Herbert, a sales director who retired in 2014 after more than three decades with Kimberly-Clark.

That’s over. One of the company’s goals now is “managing out dead wood,” aided by performance-management software that helps track and evaluate salaried workers’ progress and quickly expose laggards. Turnover is now about twice as high it was a decade ago, with approximately 10% of U.S. employees leaving annually, voluntarily or not, the company said.

To be continued

War with China?

thediplomat_2014-08-27_13-23-48-386x289WASHINGTON (Aug. 19, 2014) An armed Chinese fighter jet flies near a U.S. Navy P-8 Poseidon patrol aircraft over the South China Sea about 135 miles east of Hainan Island in international airspace.
Image Credit: U.S. Navy Press 

 

Just as we were posting the article on China trade, this back page piece by Andrew Browne about a new RAND Corp study caught our attention, so we posted it as an addendum. War with China? Is it possible? 

. . . as China flexes its muscles in the South China Sea and East China Sea, the risks of an inadvertent clash on the water or in the air are growing by the day.

A new RAND Corp study says that a Sino-U. S. war as a result of such a crisis “cannot be considered implausible.”

Violence could ignite quickly, the report warns. That is because each side has deployed precision-guided munitions, as well as cyber and space technologies, able to inflict devastating damage on the other’s military assets, including Chinese land-based missile batteries and American aircraft carriers. Thus they have a strong incentive to launch massive strikes first as part of a “use it or lose it” calculation.

Once out of control, fighting could be prolonged, although it is unlikely to go nuclear, according to the RAND study sponsored by the U.S. Army. Both nations possess the military, industrial and demographic resources to absorb heavy losses and slog on. As in Korea, there would likely be no clear victor.

Washington and Beijing “need to contemplate the possibility of a severe, lengthy, uncontrollable and devastating, yet indecisive, conflict,” the RAND paper asserts.

The China Trade

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There seems to be almost universal agreement that trade with China over the past few decades has been disastrous for U. S. economy as this extract from an article by William A. Galston in today’s (August 17) Wall Street Journal confirms:

Between the start of 1989 and the end of 1992, manufacturing employment fell from 18.1 million to 16.8 million, according to estimates from the Bureau of Labor Statistics. But then it stabilized. During President Bill Clinton’s two terms, growth in output was more than enough to compensate for rising imports and productivity. By the time Mr. Clinton left office, manufacturing employment had increased to 17.1 million.

Then the roof fell in. Between January 2001 and December 2007, the official beginning of the Great Recession, manufacturing employment fell by 3.4 million. During the next two years, it fell another 2.2 million. By January of 2010, the figure was 11.5 million, down 5.6 million—nearly 33%—in less than a decade. Since then it has inched up by 800,000 jobs to 12.3 million.

What was China’s contribution to this calamity? In 2013 the economists David Autor, David Dorn, and Gordon Hanson published their pathbreaking study “The China Syndrome.” Competition from imports, they concluded, explains about one quarter of the aggregate decline in U.S. manufacturing employment between 1990 and 2007. In the most affected regions, public expenditures ballooned for unemployment, disability, retirement and health-care benefits, compounding the economic damage.

“Theory suggests that trade with China yields aggregate gains for the US economy,” the authors wrote, but in practice the effects were more mixed. Workers and communities struggled to adjust to the trade shock. Their difficulties doing so worsened inequality. The labor market is anything but the frictionless process that theory typically posits.
The three economists returned to the fray this year, joined by Daron Acemoglu and Brendan Price. In “Import Competition and the Great US Employment Sag of the 2000s,” they conclude that the flood of imports was a major force behind not only declining manufacturing employment but also weak overall job growth between 1999 and 2011. During this period, they estimate, competition from Chinese imports caused job losses in the range of 2 million to 2.4 million, enough to cut overall employment gains by about half.

Two more economists, Justin Pierce and Peter Schott, added an article pungently titled “The Surprisingly Swift Decline of U.S. Manufacturing Employment,” which they trace to China’s accession to the WTO. The most exposed industrial sectors experienced the largest increase in Chinese imports and the greatest losses of employment. Adding to the effect on workers, many American plants responded by investing in labor-saving production methods while increasing their reliance on offshore production.

Messrs. Autor, Dorn and Hanson speculated in their 2013 paper that the consequences of the surge in Chinese imports “may contribute to public ambivalence toward globalization and specific anxiety about increasing trade with China.” The past three years amply confirmed this prediction, as the hardest-hit communities tacked toward populism and economic nationalism.

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