By: UFCW Local 1500 Member from King Kullen, Anthony Portesy
Santa owns the North Pole and he makes millions a year delivering toys to children all over the world, collecting fees from parents for his services. Santa, to keep costs low, has 20 full time workers year round and right before Thanksgiving, he hires thousands of part-time elves from nearby areas to deal with ever increasing demand for his services. The elves are glad for the work because other employers have packed up and left the North Pole in recent years. One town in particular, Elvesville, a town 50 miles from Santa’s factory, recently lost a tire factory and had an unemployment rate of 30%. Santa knows this and has lowered the wage from $10/hr to $8/hr to maximize his business profits. Every year, Santa hires the three best part time workers to full time positions in his company where they get a wage of $15/hr and two weeks unpaid vacation.
Santa and Mrs. Claus had gone through a nasty divorce three years prior and as a result, Mrs. Claus was entitled to half of the North Pole, but not of his business because the judge didn’t find she actively contributed to the Christmas gift business. She was sick and tired of Mr. Claus being the only gift business in town and that he was exploiting the worker elves. So, she decided to start her own business to compete with Santa Claus. She would open up in the town next to Santaville, a town known as Reindeerville.
Unfortunately, the market showed no interest in her business because Santa is well known and established all over the world. So, in order to compete, she offered the elves double their rate of pay to defect from Santa’s factory, as well as vacation, sick personal time, and a union, the United Elves Workers (UEW). Half of Santa’s full time crew and half of Santa’s part time transient workforce defected to Mrs. Claus’ company. Given Santa’s new logistical problems from the loss of staff, customers were placing orders with Mrs. Claus’ new company.
Santa was faced with a huge workforce hole. If he raised the wages to compete with Mrs. Claus, he could get his workforce back and keep up with production demand, but that would hurt his profits. But, this would set a dangerous precedent because the workers would always want higher pay year after year, putting his business in danger.
Santa decided that his only course of action was to lower his delivery prices. Rather than pay the workers more money for the same production to compete with Mrs. Claus, he would lower the prices below Mrs. Claus’ prices to entice customers to spend more on his business. Further, Santa decided to bus in workers from Elvesville to fill the labor hole left by the departures to Mrs. Claus’ business for $8/hr.
Santa’s business started booming again and Mrs. Claus’ business was suffering huge losses. Mrs. Claus’ workforce was losing shifts, and hours were being cut. A decision had to be made. Mrs. Claus could match Santa’s prices, but with her higher labor costs, she would either have to layoff half of the staff, or go out of business. Instead of laying off the workforce, she decided she would cut her prices 25% and ask her workers to take a 25% pay cut with the promise of bonuses of $1500 per worker if the company reached a sales number. She was upfront and honest with her workforce in stating the bonus was almost certainly not going to happen given how bad the company was struggling. Mrs. Claus’ workforce is represented by the United Elves Workers, (UEW) the last union left in the North Pole.
The union had taken bad press for causing the tire factory to leave Elvesville because they failed to agree to concessions. The union brought the contract to the membership and the membership got angry.
“Why are you making us take a wage cut? You’re supposed to represent us, not management!”, the elves yelled. “Some job is better than no job”, other elves yelled. After a long meeting, the proposal was brought to a vote, and the membership voted for the proposal by a 5 vote margin. Now this caused animosity within the membership with some members angry at a “raw deal” with other members thankful to not be on the unemployment line or worse working in Santa’s factory for $8/hr.
Meanwhile, Santa’s factory was having trouble keeping up with orders. His cheap, bussed in workforce was used to making tires, not gifts. However, customers were willing to deal with the long lag time for deliveries because of his very cheap prices for delivery.
The workers of Elvesville worked hard because they hadn’t had jobs in months and were thankful for a paycheck, however small. Santa realizing this, staged a worker appreciation day, where he provided a huge banquet for the workers and played a video about how the UEW destroyed the tire factory jobs that once paid $15-$20/hr. “You see fellas, if you work hard for me, I will always take care of you,” Santa bellowed. “You will always have a job if you work hard and are motivated.” The Elvesville workers were angered by the video and Santa used that as leverage to make them work harder. Santa knew that he didn’t have to pay them more money and took advantage.
Mrs. Claus’ business picked up, but not to the sustainable level needed. She needed another wage cut. At this point the workers took a 25% wage cut and were making $11.25/hr, only $3.25 more than Santa’s counterparts. She asked for another 20% wage cut, but increased the bonus to $3,000 if the company reached $3 million in sales. $3 million would allow a profit of $1 million and allow Mrs. Claus to pay the bonus and invest in business for the next year. The membership was pissed. Now, they would make a mere $8.96, only .96 cents more than working in Santa’s factory! The UEW brought it to a vote and it was soundly rejected.
Mrs. Claus and the union negotiated for a few days. Mrs. Claus agreed to reinstate the $11.25 wage AFTER the holiday season, if the workers agreed to take one less week of vacation, the rest of the language for the bonus would remain the same. Mrs. Claus told the membership she needed the wage cut in order to provide operating cash flow for the loan on the materials needed to make the gifts. The bank mandated a $50,000 payment to secure the loan. After a tension filled membership meeting, the new offer was ratified, but passed only by 2 votes.
It’s a week before Christmas and Mrs. Claus has stolen business from Santa. She is on pace to do $3.5 million in business sales, and was able to make the loan payment to the bank. Santa, a much larger operation, was on pace for a $50 million dollar sales year, with an even larger profit margin since he paid his workers only $8/hr. Santa’s company took home $43 million in profits after the holiday season. Santa kept all the profits for himself and his stockholders.
Mrs. Claus was ecstatic, she had surpassed her business projections and as per the contract, she gave every worker a $3,000 bonus. She even bumped up the wage from $11.25 to $12/hr. Even though the workers were not at the $15 they started, they helped save the business, received a bonus, and only lost a week’s vacation.
The workers spent their bonuses lavishly on gifts, dinners, clothes, and other goods. The economy of Reindeerville was booming! All of the spending led to higher sales tax for the town resulting in improvements to roads and infrastructure. Meanwhile, Santaville was a dilapidated mess. The only people who could afford anything were Santa and his stockholders. The workforce from Elvesville was spending it’s wages on rent and food. Santa had led Santaville down a road to ruin, all in the quest to maximize his own personal gain, whereby Mrs. Claus had a thriving business that was the result of a partnership of the workforce and business.
The Elvesville workers have been protesting outside Santa’s business to extract the same wage that the workers in Mrs. Claus factory make. They want to make a living. Meanwhile, Mrs. Claus’ business hums along with no worker unrest.
Mrs. Claus’ business is what the United States used to be about. You’re never going to get rich punching a clock for someone else, but there was always an opportunity to make a decent living. WalMart a.k.a Santa, destroyed the dream for millions of Americans under the guise of free market capitalism. Capitalism is not about the selfish pursuit of self-gain, but the exchange of values, goods, and services, that provide our society with wealth. The business owners should always get the bulk of the gains because they put forth the risk to build the business. But, if we leave workers out in the cold, the economy can’t grow since people aren’t making enough to get by. The “crisis of aggregate demand” will continue without a worker renaissance in this country.