by Jason Chappell
Fall, 1997
Jason Chappell was a lead clerk and was one of the main organizers at the World Trade Center store.
We have heard the consistent knee-jerk reaction for months that the book industry is not like other industries, in that BGI doesn't reserve the right to raise prices on the products we sell to increase labor costs (i.e. wages). Of course, that just about marks the beginning and end of the discourse on this subject, for if we look further into this argument, we can watch it dissolve like sugar in water.
In the book publishing industry, products are marked with a publisher-set price. Granted. Stores operate gross margins, therefore, on discount agreements set with each publisher or through book distributors. The standard BINC argument is that this fixed-pricing system of the book industry denies the company the ability to raise "labor costs." If The Gap wanted to do so, we are told, they could boost the price of each Tshirt 5% and then dole the extra money out in higher wages. THIS ARGUMENT IS A COMPLETE SHAM.
In the 1980's, The Gap and other retailers responded to growing competition not by raising prices, but by keeping prices low. How did they do this? They cut labor costs. They moved their production facilities to some of the most repressive areas of the world. By moving production plants to China, Indonesia, Vietnam, and other areas of southeast Asia, these companies fought each other in the market by keeping their T-shirts cheap at $19.99. Instead, however, they were able to boost profits by producing a twenty dollar garment at a labor cost of as low as 6 cents per shirt.
The next time you hear this inane argument presented, ask the person spouting it why it is that stores like The Gap have this amazing luxury of being able to raise their prices in order to pay their workers more, yet they have never, ever done so? The Gap operates in a competitive (yet conforming) market, just like Borders. The fact that both stores operate on profit margins is unchanged whether that margin comes from wholesale mark-up from a base price or wholesale discount from a set price. In addition, Borders and ~N~both enjoy the largest discounts in the industry, due to their size and market strength.
In fact, we as retail workers should be very glad for the publisher set price. For if Borders and B&N had the opportunity to alter book prices, what would the outcome most likely be? Does anyone really think Borders and B&N would compete for market-share by raising their prices so they could in turn raise their wages? Of course not. They would discount. Just like The Gap. And where would these lost revenues be offset? lower labor costs, just like The Gap. The issue here isn't about the ability to raise book prices. That is a classic instance of smoke and mirrors. The issue here is about distribution of revenues and irresponsibility during rapid expansion to those who make that expansion possible.
How does all of this relate to us?
We are seeing, or rather, participating, in one of the new trends of corporate structures throughout the world. In the old traditional corporate model, the sharpest division in the company rested between shareholders and everyone beneath them (everyone from the executive suite to the shop floor). One of the most important developments in recent years is that those on the executive level have been usurped into the upper category. Many CEO's and members of Upper (11Q) Management now work under formal employer contracts, and compensation has become more and more based on rapidly increasing long-term stock rewards (not that their salaries have suffered, however, for they haven't. Salaries for execs have skyrocketed in the past decade, while lower-worker's wages have been in steady decline when adjusted for inflation.)
The most dramatic result of this new trend is that workers on the bottom rung of the ladder now bear the brunt of market volatility more than upper management. This is the sad and frightening between the lines understatement when we hear "Look, if you don't like it here, you can always get another job. What's actually being said here is that you can always pullout and sell your labor elsewhere in the labor market. The saturated labor market in most urban areas (thanks to downsizing, high turnover, higher unemployment, lack of job security, and other "forces" in the labor market) is one of the biggest contributors to decreasing real wages. It's no coincidence that the unemployment rate in NYC is now twice that of the national average. It's also no coincidence that fast-food retailers in midwestern suburbs are beginning to pay higher wages and benefits than Borders in NYC.
So as we bookstore workers are forced to survive by competing in an ever-nastier labor market, the two tigers of the book industry, and their top brass and large shareholders, are thriving in a booming (yet still competitive, no doubt) book-superstore capital market. Through formal contracts, company executives (including our own) now enjoy fmancial protections against the risks of job loss and related risks associated with restructuring, as well as specifications in legal terms of exactly what is expected of them. This has given executives extraordinary financial stakes in the long term success of the organization and its bottom line - a bottom line that necessitates tightly controlled labor costs.
In Change At Work (ISBN 0-19-510327-0) author Peter Cappelli and other contributors go to great lengths in describing this new development in corporate structures. They conclude: "These new compensation arrangements do seem to be successful in ensuring the commitment of executives to the goals of shareholders. The downside is that they have created a new and important division within organizations. While there still may be tensions between front-line workers and supervisors, the real division now is between executives and everyone else. Employees clearly understand that their company's leadership is playing a very different game than they are, one with very different rules. It is difficult for the leadership to persuade employees that 'we are all in this together' and to motivate them to get behind the executive's goals for the company when the employees understand how different the stakes for meeting those goals are for them and for the brass."
We have seen this difficulty of persuasion a great deal recently at Borders. When you hear boasts to booksellers that employees now own 20% of BGI stock, don't forget to remind yourself that the top two executive officers are also Borders employees, and between the two of them alone fall a hefty portion of that 20%. This is not an employee~owned company and certainly never will be (especially on our wages, and even with petit-option grants), but that doesn't stop the tired old line that "we're all in this together." And with three dozen Borders stores on the "union critical" list today, the
cornpany's power of persuasion is being stretched to the limit. But Borders is not alone. Barnes & Noble is seeing it own "union critical" list grow all over the country as well. Watch for their own website soon.
What can unionizing do for you
As it stands now, we are the pawns in the growing bookstore war. It's easy for those at the top to define the battle-lines via "pride in the company" as us vs. the competition (B&N). In reality, this is a battle being played out like all economic conflicts - between those at the top and those at the bottom. When it comes to wages, job security, collective bargaining, and "at-will" clauses, we have everything in common with fellow wage earners (both at B&N and Borders) and very little indeed with those far fewer making millions from the work we do.
By unionizing, we can cover our tails both collectively and individually. And in doing so, we can say to those at the top: "Go ahead, fight it out. Just don't use us as the cannon-fodder." This "fodder-ization" can come in many forms. Whether it be an increase in workload without your approval, an outright unjust action taken against you, an unfair review based on vague and tenously defined work standards, consistently depressed wages, consistently less-affordable health care options, and more. Fortunately, we as workers still have rights in this country, and we have the union vote to change our situation and better our standing.
Unfortunately, we are seeing the standard response from those at the top when those at the bottom try to come together to protect their common interests. Divide and conquer. First, set those on the second-tier against those at the bottom. No, store management is not comprised of "corporate puppets." But I must ask, does any store manager do the required research (much less have the time to, as their workloads are increasing, too) to prepare them to carry out scare tactics like presenting out-of-context information on a union's LM financial report? Or is this information provided by company lawyers and Human Resources Dept's to fight off worker organization? The reasoning is very clear, and presented in a very straightforward manner in the Borders "Union Avoidance" Handbook distributed to all store management by the home office. To quote, "We must be consistent with our message, which can be difficult if you personally believe that unions are generally a good thing or if you tend to feel sympathy towards the reasons behind unionizing in our environment. ft is not inconsistent to explain that you may feel that unions serve a necessary and valuable role in society, but that they will not be compatible with our management style. Providing a consistent message that meshes with the general management principles of Borders reiterates our desire for open and unhindered communication between us and our employees." Open and unhindered communication, right from a document marked not to he seen by non-salaried employees. Three cheers for the internet.
By unionizing, the only individual right we give away is the right to be taken advantage of as isolated individuals at the bottom of a very tall hierarchy. We are curiously being told over and over that we will only be putting a straightjacket on our individual freedom. I still can't get over the absurdity of that argument. We all know what it is that rolls downhill, and what we are trying to do is erect an umbrella for protection from that unwelcomed substance.