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In its latest fawning sycophancy towards America’s corporate overlords, the editorial board at The Wall Street Journal blamed recent layoffs at John Deere on the UAW. Of course, as the high priests of corporatism at the WSJ well know, the fault couldn’t possibly lay with the company that actually issues the pink slips. That would mean that companies had some kind of responsibility to their employees!
As surprising as it is that the board was able to peel itself away from running hit pieces on Lina Khan, their argument here is even more unbelievable. They say:
The UAW naturally denounced the job cuts as pure avarice. The union says Deere earned $7 billion last year so it can sustain lower earnings. “There is no question that there is enough profit to go around,” it said in a statement.
“But the UAW conveniently ignores its contribution to the job losses. The union halted work for a month at Deere in 2021, and the company acquiesced to a blockbuster contract. Employees received a 20% raise over five years, plus an $8,500 bonus and annual adjustments for cost of living. The strike paid off for union workers in the short term, but the increase in labor costs made layoffs more likely if harder times struck.”
There are a lot of issues here. First, as I’ve written before, strikes are not the fault of workers or unions (usually). If management is willing to really work on a mutually agreeable deal in good faith, there usually won’t be a strike. Strikes don’t just cost the company, they cost the workers. They don’t get paid, accrue leave, or get retirement contributions while on the picket line. Sometimes, as with the ongoing NEA strike, management will move to take away healthcare. Striking is an exhausting, costly, grueling process for workers. And, if the strike is over economic factors, the company can bring in permanent replacements. Not to mention that outlets like The Wall Street Journal editorial section will inevitably publicly undermine any and all labor activism and point to it as a reason why the poor little corporations can’t make money anymore. That’s why it’s a last resort.
The almost-strike from rail workers in 2022 is emblematic of this. The rail companies literally would not consider providing employees time to go see a doctor. What option is there other than a strike at that point?
Also, what “harder times?” John Deere was able to afford $43 billion in stock buybacks over the past twenty years, including $7 billion last year. The year that the UAW contract was agreed to, Deere projected a net profit of $6 billion, which would have shattered their previous record. This year, they are projecting $7 billion. The CEO makes $25.8 million on his own. The company is performing worse than last year, but 2023 was an especially profitable year for the company. If you look at the company’s income statement, you’ll notice that, despite a mixed second quarter, the company is on track to post better financials than it did in 2020, 2021, and 2022. The money is there.
Also note where the editorial slips in that “the union says Deere earned $7 billion last year so it can sustain lower earnings.” This is dishonest for a couple of reasons. For one, $7 billion is the projection of Deere’s earnings this year. Right now. At the same time that they’re initiating mass layoffs. Second, this implies that the number is coming from the UAW. It isn’t, that’s Deere’s own projection.
Then the editorialists go on to say:
“But the long-term economic prospects for workers are inevitably tied to the business success of an employer, which means its ability to make a profit. Wage gains that outpace productivity gains, or economic conditions, are unsustainable. That seems to be the case at Deere, and there are many other examples.
Detroit’s Big Three auto makers struck another record deal with the UAW to end a strike last year, and General Motors projects that current contracts will add $9.3 billion in costs over four years. United Parcel Service cut about 12,000 jobs in January, months after it raised part-time wages by 35% to head off a Teamsters strike.”
John Deere definitely has the ability to make a profit! They’re making a profit of $7 billion! And the WSJ’s examples here are both awful. GM makes around $10 billion in net profit a year. And this year, while the deal is in place and those new costs are present, it’s on track to post its best net income of the past five years. As income increases, so should wages. As for UPS, they’ve been cutting jobs for years, those are part of a larger trend. With the glut of demand for goods while people were stuck at home, they hired a lot of new employees, more than they now need. That broader trend cannot possibly be pinned on the Teamsters.
But wait, there’s more:
“But the long-term economic prospects for workers are inevitably tied to the business success of an employer, which means its ability to make a profit. Wage gains that outpace productivity gains, or economic conditions, are unsustainable. That seems to be the case at Deere, and there are many other examples.”
That might make sense, if the premise were remotely true. However over the half-century from 1979 to 2020, productivity growth was quadruple what wage growth was. So even if, in this one particular instance, wage growth is outstripping production (which it isn’t), there should be plenty of slack left over from undercompensating productivity for decades.
Source: https://www.epi.org/productivity-pay-gap/
The point of this screed is to smear labor as an impediment. But, the logical conclusion here, which corporate apologists won’t say plainly, is that workers cannot seek to improve their conditions in a meaningful way. If they do, then the fact that the company can boost profits by, say, moving production to Mexico (which is what Deere is doing) is all the justification needed. Workers should have known that by asking for fair compensation they’d undermine the overriding interest of maximum profits! This seeks to dehumanize the economy and create a race to the bottom where, if workers don’t undercut one another to accept the worst offers, it’s their fault when they lose their livelihoods.
Deere is not just firing people. It is decimating entire communities. In Illinois and Iowa, the two states being hit with layoffs, John Deere has received millions upon millions in state and local subsidies, tax credits, and rebates (over the two decades)—not to mention the nearly $6 billion in federal loans. Illinois has backed the company with $5.8 million in state and local funds. And that is dwarfed by the government support from Iowa: $271.6 million.
As long as corporations are absolved of their sins by citing labor costs, they have no civic responsibility and no shame. They will take the public’s money and use it to abandon the states that have invested in them, immiserate workers, spend obscene amounts on stock buybacks, and ruthlessly line their executives’ pockets. But that’s what the WSJ editorial board wants.
Image Credit: “John Deere 50” by ford8n is licensed under CC BY 2.0.