Wednesday, April 13, 2011

Living Wages and the besmirching of a beloved brand - Ikea.

A while back I posted a comment on Orthonomics to someone who was incredulous that I would suggest that it now takes 3 adult incomes to meet an average household's expenses. Here come the statistics:
Household Income Short of $68K? Welcome To the New Poverty
by Ken Layne

...A new study proves that a family of four needs $67,920 a year (pre-tax) to survive in America. And that’s basic: no vacations, no fancy dinners...

...The median household income in the United States is $52,029 — nearly $16,000 shy of what it actually costs to keep your head above water if you’ve got a two-income two-child household.

The DC-based nonprofit Wider Opportunities For Women has been compiling the numbers for exactly what it takes to have basic economic security in this country — housing, food, transportation, child care if you have little kids, utilities, and a tiny contribution to savings for your old age — and the numbers are more than triple the ridiculous official poverty levels:

A single worker with two young children needs an annual income of $57,756, or just over $27 an hour, to attain economic stability, and a family with two working parents and two young children needs to earn $67,920 a year, or about $16 an hour per worker...And they’re still a few paychecks away from disaster at $50,000 or $60,000 a year.

...As for you single people, the government says anything beyond $10,830 means you’re not in poverty. This new study gives a more realistic number, based on the actual cost of basic shelter and food and electricity and getting to your [bleep!] job if you’re lucky enough to have a [bleep!] job: $30,012 a year.

...So we are now officially living in a country where more than 60% of households are not making enough money for a basic household — the bottom three quintiles of American household income top out at $62,000.

As I told the person in the comments section, when you add up all the baseline expenses that Americans must pay - median housing costs, median transportation costs, median food prices, etc., etc. it tallies up to more than the median household income of 2 working adult households. That means they either rack up the credit card debt to meet the shortfall, or do without essentials such as health insurance.

This is why multi-generational and multi-family living arrangements (in single family homes) are becoming more and more common - it's the only way to make ends meet.

Why? Weakened unions means American workers no longer receive living wages and reasonable benefits for their workday, even though our productivity is far above that of other nations. American companies and even overseas companies operating in America take advantage of our own weak wage and labour laws (compared to Europe's) and exploit American workers. For example:

Los Angeles Times Online
Ikea's U.S. factory churns out unhappy workers

Reporting from Danville, Va.— When home furnishing giant Ikea selected this fraying blue-collar city to build its first U.S. factory, residents couldn't believe their good fortune...But three years after the massive facility opened here, excitement has waned...Workers complain of eliminated raises, a frenzied pace and mandatory overtime. Several said it's common to find out on Friday evening that they'll have to pull a weekend shift, with disciplinary action for those who can' up.

...The dust-up has garnered little attention in the U.S. But it's front-page news in Sweden, where much of the labor force is unionized and Ikea is a cherished institution. Per-Olaf Sjoo, the head of the Swedish union in Swedwood factories, said he was baffled by the friction in Danville. Ikea's code of conduct, known as IWAY, guarantees workers the right to organize and stipulates that all overtime be voluntary.

...Laborers in Swedwood plants in Sweden produce bookcases and tables similar to those manufactured in Danville. The big difference is that the Europeans enjoy a minimum wage of about $19 an hour and a government-mandated five weeks of paid vacation. Full-time employees in Danville start at $8 an hour with 12 vacation days — eight of them on dates determined by the company.

What's more, as many as one-third of the workers at the Danville plant have been drawn from local temporary-staffing agencies. These workers receive even lower wages and no benefits, employees said...

..."It's ironic that Ikea looks on the U.S. and Danville the way that most people in the U.S. look at Mexico," [union organizer] Street said.

...Low prices have helped Ikea weather the economic downturn. The company made 2.7 billion euros in profit last year, up 6.1% from 2009, according to its most recent financial statements.

Still, last fall, [Ikea's American manager] eliminated regularly scheduled raises and made cuts to some pay packages in Danville. Starting pay in the packing department, for example, was reduced to $8 an hour from $9.75...The median hourly wage in the Danville area is $15.48, according to the Virginia Employment Commission...

So the median wage in the area is close, but not quite, good enough to support an American household as long as BOTH parents are making that wage. But the workers at this plant aren't. They're part of the new wave of American sweatshops - with substandard mcwally-wort wages, no benefits, and draconian hours.

With Billions-with-a-B in Euros in profit in their last reported year, Ikea can hardly say they're paying American workers less because they are losing money. They're JUST doing it ONLY because American workers don't have the same wage and labour unionized protections as their European workers. They didn't come to America because they want to get rid of higher priced European workers, either. According to the management:

[Ikea's American manager]says it chose Danville to cut shipping costs to its U.S. stores.

Shipping costs - peak oil, not European wages - are the reason for localizing production to this target market: Americans. It was about relocalization and sustainable transportation of goods. Get that, class? There's nothing wrong with European living wages as far as Ikea's Swedish managers are concerned.

Only their American partners - the Robber Barons in the US - think that.

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