So DID Mitt Romney Really “Create Jobs” At Staples?

Did Mitt Romney really “create 100,000 jobs” with Staples? Simple answer: only if no one else was selling office supplies, stationery, etc. before Staples came along. What Staples did was force many competing stationery, office supply and computer stores out of business, probably shifting their employees into lower-wage jobs. Staples was just one more part of the Wal-Martization of our economy in the last few decades. In our system the wealthy few have the power to lay people off or force pay cuts and then pocket the difference for themselves. We have to come to grips with that, and fix the system.

Job Creator?

Mitt Romney says he should be President because he and his company Bain Capital created 100,000 jobs at Staples and “created jobs” at other companies that Bain took over. So … did Mitt Romney really “create jobs” at Staples? Or did he and Bain really just follow the Wal-Mart model, using the advantages that come with having large, national chains, putting a number of local, smaller businesses out of business, while shifting a lot of people into lower-paying jobs? Understanding the difference is important because Romney says he will help the country “create jobs” the way he helped “create jobs” at Staples.
He says his experience is just what is needed to solve our national jobs emergency. He wants to apply the methods that “created 100,000 jobs at Staples” to the entire country. He says he will cut regulations and cut government and make the country more “business-friendly.” This means we should take a good look at Staples and the rest of the companies Mitt Romney and Bain Capital and others like them operated, and decide if this is really the way We, the People want to go.

Staples

Staples grew into a major chain because they consolidated what different kinds of stores sold, offering a one-stop-shop for stationery products, office supplies, office-furniture, computers, etc. They also were able to be competitive because of the advantages of scale as they grew into a national chain, centralizing functions like accounting, purchasing, legal, marketing, etc. And never underestimate the power of having a ton of cash at your disposal. This is all just smart business, well executed.
As Staples grew it overtook competing chains like Businessland and others. In other words, Staples took business from other, existing stores — often local retailers. Staples did not “create” jobs, it shifted office-supply jobs from local stores, etc., probably to lower-paying jobs. (The former owners of local businesses certainly were worse off from this.) They likely even lowered overall office-supply, stationery, etc. employment in the larger economy.

Low Wages?

How do these”Romney job creator” jobs stack up against other jobs? Average Staples salaries for job postings nationwide are 51% lower than average salaries for all job postings. The pay at Staples appears to be around $8-10 an hour. That’s $16-20,000 a year, certainly not enough to support a family, or even pay rent in many areas, never mind buying food. (The 2012 poverty guideline for family of four is $23,050.)

Wal-Martization

Big, national chain stores like Wal-Mart have tremendous advantages over local businesses because they are able to take advantage of scale. They buy from manufacturers and distributors in mass quantities, which means they can demand lower prices from them, and offer lower prices to customers. They can centralize accounting, HR and other management functions and employ these people in-house instead of contracting with local accounting firms, etc., also enabling them to offer lower prices.
And when they are big enough they can squeeze, and squeeze and squeeze their workers for lower wages and fewer benefits, their suppliers for discounts and other concessions, and even their customers by reducing support and staff, again enabling them to offer lower prices.
This is just the kind of “job creation” that makes a few people really wealthy at the expense of the rest of us, “hollowing out” the middle class.
(Here’s an industry secret –those multi-page advertising supplements that come in the Sunday paper are profit centers for the chains, not an advertising expense. The market power of these big chains enables them to demand “market development” payments from product manufacturers and distributors before they can gain shelf space, effectively making the newspaper and other advertising into profit centers instead of advertising costs.)

The Effect On America

I wrote about the impact of this “squeeze them all” business model on the American landscape in Lorain, OH Keep It Made In America Town Hall Meeting:

As you drive from town to town in Michigan and Ohio you see one after another a ring of the “big box” stores and national chain stores around each city. You also see the “brownfields” of rusted-out, closed factories, empty, falling-down buildings. Then you go to the downtown and you see boarded up houses, empty storefronts, deteriorating and deteriorated communities, idle people standing on corners. As you drive into these towns you can just see what is happening in a nutshell.
You used to hear about how Wal-Mart was predatory, how it would show up in an area and after a while the downtowns would dry up, local business-owners would go broke, local business employees would be laid off, and the local people would have to work for low wages at Wal-Mart, while the region’s spending money would go off to the wealthy few who run these things.
Well a juicy story of devastation like that one gets around, and there are those who hear it and say, “Hey, that’s a great idea, I wanna get me some of that.” So the Wal-Mart business model has taken off and now there are any number of these vultures, ringing the cities and towns around the country, so often private-equity owned. They are draining away the lifeblood of the downtowns, fighting off the unions to keep wages down, even demanding tax breaks to move in and “create jobs.” You see all the same stores circling every town now, running all of the local and regional businesses unto the ground.

Restructuring?

The changes in our economy that are hollowing out the middle class come from the restructuring that Wal-Martization represents. (And bad trade deals, never forget that.) Big, national chains have natural advantages over small, local businesses. And when they are big enough they have the power to squeeze employees, suppliers and even customers. The same kinds of advantages also hold for other industries.
Big, multinational corporations have advantages of scale over smaller companies. Etc., throughout our system. And big companies have tremendous power to squeeze workers, making them accept lower pay and benefits. They have the power to squeeze suppliers and customers as well.
These giant companies even have the power to squeeze communities and even states, demanding tax concessions with the threat of relocation. This has put our tax base in a downward spiral along with our wages.
These giant businesses have the wealth and power to force changes that move the benefits of business and our economy entirely to a few at the very top.

The Playing Field

As I wrote above, this is all just smart business, well executed. Business are just neutral bundles of contracts that operating on a playing field of laws and regulations. They only do what we let them do with the laws and regulations that we set out there for them to operate under, and those that do that the best and smartest win the game.
But why would We, the People allow businesses to do things the way Wal-Mart and the rest do them with the terrible results we see all around us? Don’t we want businesses that benefit all of us? Isn’t that the point of having a We, the People country? Don’t we want businesses that pay good wages, provide good products and services, and pay us back with taxes that enable us to have good infrastructure, internal improvements, and public structures like good schools, universities, courts, police, firefighters, health care, retirement and a fair share of all the other benefits of modern society?
Why is the playing field defined in a way that is so obviously hurting us and funneling all the benefits of our economy to a very few at the top? This restructuring is occurring the way it is because we let these businesses do these things to us. Businesses are not good or bad — they can’t be, they are not sentient and do not have morals. They are just bundles of contracts. Again, businesses are neutral, operating on a playing field defined by us. We can change that.
Our problem today is that a few people are able to change the rules of that playing field, for their own benefit. Once we allow money to influence our government decision-making and our public attitudes and understandings at all, then of course it will influence that decision making to their advantage, and will do so more and more as they gain more wealth and power from it, until there is nothing left. This is the road we are on.
The playing field is tilting and tilting and We, the People are starting to fall off the edge.

What Can We Do?

Cut to the chase. We currently operate under an economic paradigm, or system, in which the Romneys have so much power they can fire masses of people or force people to take pay cuts, and then pocket the difference for themselves. They can squeeze their suppliers for greater and greater concessions and then pocket the difference for themselves. We have to come to grips with that.
Romney/Bain didn’t really create jobs with Staples, they put small office and stationery retailers and other already-existing competitors out of businesses and moved the workers from those outlets into jobs at Staples that pay very little. In other words, they didn’t create 100,000 jobs, they lowered 100,000 people’s wages.
Romney made his money opertating on a playing field of business rules that let him and Bain and Wal-Mart and the rest do what they do. They were all able to tilt that playing field in their favor using the wealth and power they already had, and they tilted it in ways that gain them more wealth and power.
Mitt Romney gained his wealth and power on that playing field, and is campaigning with a promise to further tilt that playing field in favor of the few who already have great wealth and power.
We can change those rules. We can demand better pay, higher taxes at the top, better products, better service, and all the things sensible people would demand if We, the People were really in charge.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Note – while researching this post I came across Jonathan Tasini making a number of these points in the LA Times in January, in Not all jobs are equal,

Even if he’s telling the truth by some measures, the fact is that private equity buyouts often enrich those who arrange them by sharp cost-cutting, including dismantling pay and benefits for most of the workers who remain or new hires who join the more “efficient” enterprise. It’s simple math: To service the huge debt taken on in virtually every buyout, workers take cuts. And the new jobs aren’t necessarily a path to the American dream.
Take Staples, which Romney trumpets as one of his successes. The company certainly pays some of its employees well: Staples Chairman and Chief Executive Ronald L. Sargent received a total pay package of more than $15 million in 2010. But jobs in retail — one of the fastest-growing job sectors in recent decades — tend to pay poorly, and Staples jobs don’t seem to be an exception to that rule.

Erie, PA Town Hall: “No Country Ever Went Broke Investing In Its Own People”

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Last night’s “Keep It Made In America” Town Hall meeting was at the Bayfront Convention Center in Erie, Pennsylvania. Kyle Foust, Chairman of the Erie County Council welcomed the attendees and led off the Town Hall meeting, quoting Hubert Humphrey: “No country ever went broke by investing in its own people.”
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I recently spoke with a Tea Party member who did not know that it is government that builds the roads, airports, sewer systems, etc. that make up the infrastructure that is the foundation of our country’s ability to have companies at all. He actually thought that private companies do this, and that “government spending” just “takes money out of the economy.” Maybe this is why so many candidates in this election say that “government spending” is bad but will not say, no matter how hard they are pressed, what spending they plan to cut in their quest for “smaller government.”
The Town Hall
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Following a Unitarian invocation by Rev Steve Aschmann, Scott Paul of the Alliance for American Manufacturing (AAM) — the organization that is putting on these “Keep It Made In America” Town Hall events — explained what AAM is about, strengthening manufacturing in this country. Scott gave the audience several facts about manufacturing:

  • 74% of Tea Party supporters support more manufacturing, as do 82% of union members.
  • 563,500 in Pennsylvania work in the manufacturing sector
  • This is down from 864,000 in 2000
  • And represents a 35% cut in manufacturing jobs.

Candidates Speak
Two local House candidates spoke at this meeting. Mike Kelley, Republican candidate for Congress spoke first.
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“We can’t control unfair competition. Just make it fair, that’s all, make it fair. Enforce the rules. We play by the rules, other people don’t. Chinese currency.”
Q: “Will you support buy American policies?” A: Who would not? Especially in taxpayer-funded projects.
Q: “Hold China accountable?” A: The world has been waiting for America to take the lead. China has to be held accountable when they break the rules.
Q: “Policies?” Competition, we never back away from competition. We need to get a national strategy in place. Taxes – need a VAT. Others all do it. (Note, Kelley’s answer is good for manufacturing. Short explanation: Other countries use a VAT to boost their manufacturing sector. Their manufacturers get a VAT rebate, but goods imported from the US do not, so in effect a VAT is a either a subsidy of their companies or a tariff on imports from us.)
Next up was his opponent in the race, Congresswoman Kathy Dahlkemper:
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We need to get back to a manufacturing economy, to provide that good family-sustaining wage.
How to keep it made in America, three points:
1) Close the loopholes, Republicans’s did not vote with us on this. My opponent has pledged, signed a pledge no to remove the tax advantages given to companies for moving factories out of the country and outsourcing American jobs. (Note see my post on this today.)
2) Stop China’s cheating. Everyone knows China cheats. The currency bill, voted for it, the Chamber of Commerce – that’s the national Chamber which is a very different thing from the local Chambers — is against it. We also have to stop China’s illegal trade practices and dumping (selling below cost to capture markets).
3) Invest in our domestic manufacturing base. The COMPETES act has passed the House, but Senate… Education.
Raw materials – rare earth elements, China is saying they can get these IF they bring manufacturing t their country.
We can produce them here, but don’t. Because China subsidizes, it is not profitable to start production here.
The Panel
This Town Hall’s panel of local experts:
• Kenneth Boothe Jr., General Manager, Donjon Ship Builders
• Reverend Jeffery Priscaro, St. Ann’s church
• Ron Oliver, Community Labor Leader
• Tim Ryan President, Apex Offshore Wind.
• David J. Rosenberg, Head of Marketing, North America Gamesa Energy
• Hillary Bright, Blue/Green Alliance Field Organizer.
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Priscaro – When people make things It create sjobsm, revenue, they buy houses, participate in economy.
Ryan – Windmills, local wind turbines on old steel mill site, made in the US. Sun Ray project in Texas used GE wind turbines, GE Transport made the gearboxes. Gemasa, of Sain, has set up manufacturing near here. The Export/Import bank financing requires high local content. We need a national Renewable Energy Standard, then there is a tremendous opportunity for American manufacturing in wind energy.
Oliver – the effect on people of losing job, moving, move in with mom, manufacturing is the heartbeat of America.
Boothe – Donjon has recently gone from 13 employees, in 10 months have 118. 125 by end of year, 150 then up to 250.
Bright – Labor and environmentalists share common goals Hadn’t recognized how intertwined manufacturing is with a healthy community, environment, wages, families, healthy communities. And healthy environment. The way we see America in future generations, manufacturing is key to recognizing that.
Q: “Where are we going to get jobs? We need the infrastructure rebuilt, everything reconstructed. How?”
Bright – AAM, others have recognized that one of the largest opportunities is in clean energy. The stimulus was a down payment. Opportunity at federal policy level like Renewable Energy Standard to create the market and the demand to get it going, otherwise we lose the race to countries like China.
Oliver – We need to create the jobs here, the stimulus was using money to buy windmills made in China.
Ryan – We need new power plants as well as wind energy power plants. National policy has been up and down up and down, industry can’t survive on federal programs that last 6 months or a year, we need national policy that looks at the next 20 years or so.
Priest, we lost jobs because of legislation, we can gina jobs by legislation.
Q: “What can we do to stop the leak of jobs from US?”
Scott Paul: Stop tax breaks to ship jobs overseas.
(Note – All pictures by Ike Gittlen, USW, with permission. Click any pic for enlargement, see the entire collection here.)
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Flint, Michigan: A City Ahead Of The Rest Of Us

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I am in Flint, Michigan today, getting ready to drive down to Jackson for this evening’s “Keep It Made In America” Town Hall. Flint has been through it and has come out the other end. Now the rest of us are going through what Flint has been going through.
Many people know about Flint from the 1989 movie Roger & Me. In the documentary General Motors had closed factories in its home town, outsourced the jobs, and left the community behind. This sort of corporate behavior was becoming common by 1989 but it was still shocking that an American company would do this to Americans and America. The movie focused on the effect this had on Flint and its people. You might remember seeing block after block of boarded-up homes and people talking about how the try to get by.

This has now been a familiar story for decades, companies closing factories, outsourcing the jobs, abandoning the communities, a few at the top pocketing the money and leaving absolute devastation in their wake.
I was last in Flint three years ago, visiting relatives. Twenty years after the movie Flint was still struggling, in depression, its downtown full of closed stores and many of the blocks of boarded-up homes were worse, if anything. There were “For Sale” signs everywhere, and this was before the national housing bust. But there were many signs of people learning to cope. The Farmer’s Market was going strong. The University of Michigan was working on a new campus, the Mott Foundation and others were working on various approaches to try to help the community…
So here I am again. You can see three years worth of progress here. Revival is clearly occurring. The new U of M Campus is open and clearly making a difference. Part of the downtown is clearly revived, including the Durant Hotel restoration, while other parts are under construction. The Farmer’s Market was named one of the best in the nation. There are fewer “For Sales” signs around. All around there is a better mood. Crime is still bad, there are still abandoned buildings, but a corner is turned.
Flint Farmer’s Market:

Flint Ahead Of Nation
So Flint has been through it and has come out the other end. Now the rest of us are going through what Flint has been going through. And the rest of the country has a ways to go before we will see the other end of this. Roger & Me was 1989 and now it is 2010. The same crap is still going on, and more so. As I said, in 1989 it was still shocking that American corporations would treat Americans and America the way they did. But now we have been through another two decades of the few at the top closing factories, outsourcing the jobs, devastating the communities, pocketing the money and then using their financial power to demand tax breaks to further defund government. The difference is that now we all live with the effects, not just Flint.
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One Effect Of Money’s Influence On Policies

This post originally appeared at Speak Out California
A new briefing paper from the Economic Policy Institute titled The China Trade Toll [PDF document] says that since China entered the World Trade Organization in 2001 our China trade policy “has had a devastating effect on U.S. workers and the domestic economy.”
The report shows that since 2001 California has lost 325,800 jobs (55,400 of these just in the last year) to China due to these policies. And since 2001 2.3 million jobs were lost nationally. According to the report even those workers able to find new jobs saw their wages drop an average of $8,146 per year. (These figures are only for jobs and income lost to China and do not include jobs and income lost to other countries.)
And, of course, this effect is not limited to the workers who lost their job. This also has an effect on works’ ability to ask for raises and imporvements in working conditions. From the report,

It is also critical to recognize that the indirect impact of trade on other workers is significant as well. Trade with less-developed countries has reduced the bargaining power of all workers in the U.S. economy who resemble the import-displaced in terms of education, credentials, and skills. Annual earnings for all workers without a four year college degree are roughly $1,400 lower today because of this competition…

Specific industries were affected more than others by our massive trade deficit with China. Computer and electronic product manufacturers were hit hardest, losing an eliminated 561,000 jobs in this period. Jobs lost to the deficit tended to be better-paying ones,

More than two-thirds of the jobs displaced by China trade deficits were in manufacturing, which tends to employ a higher-than-average share of workers with a high school degree or less (43.7% of workers displaced) and to provide those workers with good wages and benefits. More than half (55.6%) of the jobs displaced came from the top half of the U.S. wage distribution, and among this group a disproportionate share came from the top 10th of all U.S. wage earners. African Americans (230,000 jobs lost), Hispanics (339,000), and other ethnic groups (219,000) all suffered from the loss of jobs such as these that pay substantially more and offer better benefits than jobs in other industries.

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