The dilemma is all around us.  A company has to make money.  A company has to make money today, and be prepared to make money tomorrow.  A company has to “maximize profits,” making the most money it can while it can.

One way to do that is to trim costs everywhere and every way it can.

And two ways to do that involves a bare-bones work force (the fewest possible number of workers, at the lowest possible wages, is practically the goal of every company), and fewer square feet built in the more-expensive areas.  (A “fulfillment center” in an out-of-the-high-traffic area is a less expensive outlay than a retail store in a high traffic area).

We all (okay – at least, many of us) participate in this new economy.  I now buy item after item on-line, and with Amazon prices and Amazon Prime shipping, I save gasoline costs and time (I don’t go out to the store as often), the cost per item is less, and it is way more convenient. — And, I can always get what I want.

But… I confess, I simply do not consider what my decision (and then, multiply that time and again by a nation of folks with transitioning shopping habits) is doing to the work that people need.  A “fulfillment center” employs far fewer people overall than a network of retail outlets.  And the “creative destruction” going on, threatening the total number of retail outlets, is costing this country the very jobs that so many need.

So, I guess, we are all to blame.  If not all, at least “many,” are to blame – including me.

Now, the Hostess story adds an element of complexity to this discussion.  In a terrific article by James Suroweicki, WHO KILLED THE TWINKIE? (Yes, as I write this, I know that there is hope yet for the Twinkie), Suroweicki sums it up:

Management, of course, blames the company’s demise on the greedy, unreasonable unions. But, while the strike may well have sent Hostess over the edge, the hard truth is that it probably should have gone out of business a long time ago. The company has been steadily losing money, and market share, for years. And its core problem has not been excessively high compensation costs or pension contributions. Its core problem has been that the market for its products changed, but it did not. Twinkies and Ding Dongs obviously aren’t anyone’s idea of the perfect twenty-first-century snack food. More important, the theoretical flagship of Hostess’s product line, Wonder Bread, has gone from being a key part of the archetypical American diet to a tired also-ran.
Hostess’s management certainly bears some of the blame for its failure to successfully adapt, though the company made numerous (and failed) attempts to introduce healthier products. But the simple truth is that this kind of failure is endemic to the system—there are always going to be companies that are unable to change in response to the marketplace. And those companies are supposed to go out of business. Not to be too clichéd about it, but this is what creative destruction is all about.

But, whether it is the “greedy unions,” (that’s not my view), or the “creative destruction” of a necessary change , it is certainly possible that Hostess, and many other companies, may be nearing the end of their roads.

And as such companies go under, and more and more jobs at the “lower end” of the work hierarchy are squeezed out, the least educated among us will compete for a shrinking number of such jobs.  Simple supply and demand will keep wages low — there will be too many workers seeking too few jobs that are available for their level of training and education.  Thus many such wages will continue to be barely over the poverty line, if that, and the possibility of a true, vibrant middle-class-life will seem ever more daunting.

This Friday, it looks like there will be a large protest against Walmart over its low wage practices (and, apparently, policies), by many of its workers.  (Read about this here).  In this article, Walmart’s Internal Compensation Documents Reveal Systematic Limit On Advancement, that links to internal Walmart documents, we read:

…Walmart’s official compensation policy, an internal company document obtained by The Huffington Post, titled the “Field Non-Exempt Associate Pay Plan Fiscal Year 2013.” The plan details a rigid pay structure for hourly employees that makes it difficult for most to rise much beyond poverty-level wages.

Back to Suroweicki:

The problem, of course, is that that destruction is going to upend the lives of thousands of workers. And to the extent, then, that Hostess’s demise shows us something important about the plight of organized labor today, it’s not that greedy workers have precipitated their own demise. It’s rather that one of organized labor’s biggest challenges over the past four decades has been that union strength was concentrated in industries and among companies that, though once dominant players in the postwar American economy, have often ended up in a slow slide to obsolescence, employing fewer and fewer workers and having less and less money to pay them with. In theory, unions could have made up for this by organizing those companies and industries that have become ascendant since the nineteen-seventies, but for a variety of reasons (including a tougher corporate approach to union-busting, a less friendly legal climate, the difficulty of organizing many small enterprises as opposed to a few big factories, and a tendency to protect existing members rather than put real money into organizing) they haven’t. And the paradox is that as unions have gotten smaller and less influential, they’ve also gotten less popular. That’s why it’s so easy for Hostess’s management to spin the anti-union narrative.
It was once taken for granted that an industrial worker who worked for a big company for many years would get a solid middle-class lifestyle, and would be taken care of in retirement. Today, that concept seems to many like a relic. Just as Wonder Bread does.

I have written often on this blog about “where will the jobs be?”  We live in North Texas, a pretty “healthy” area economically.  But even here, there are more jobs than qualified people at the high end of the education spectrum, and more people than jobs at the low end of the education spectrum.

As Jim Clifton puts it in The Coming Jobs War:

What would fix the world — what would suddenly create worldwide peace, global wellbeing, and the next extraordinary advancements in human development, I would say the immediate appearance of 1.8 billion jobs — formal jobs. Nothing would change the current state of humankind more.
If there was a U.S. Department of Job Creation and it was successful, its results would overwhelm the success of the U.S. Department of State or the Department of Defense.